The owners of the famed Chateau Lafite wine brand will plant the vineyard on 25 hectares (62 acres) on a peninsula in eastern China's Shandong province, according to a statement.
The joint venture vineyard will be developed with China International Trust and Investment Company (CITIC), a state-owned investment company.
"I am very pleased to develop a vineyard in a country where the interest in fine wines is increasing every year. It is particularly exciting to participate in the creation of an exceptional Chinese 'grand cru,'" Baron Eric de Rothschild said in the statement.
The Penglai peninsula was chosen as the site after a nationwide search because "it proved to be the most promising area to produce a great wine, in terms of both its climatic and geological conditions," the statement said.
Consumption of wine has surged in China along with that of other consumer goods as its economy has boomed in recent years.
The country became one of the global top ten wine consumers in 2005, but there remains a lot of potential for foreign labels as 95 percent of the wines now consumed are Chinese-made.
The pleasing minerality was balanced with just a hint of melamine.