The agreement enables Chinese companies to invest in Hinkley Point C, the first nuclear reactor plant to be constructed in the UK for a generation.
Additionally, the nations will also cooperate on the wider nuclear fuel supply chain cycle by developing and exporting innovative solutions jointly in areas such as waste treatment and decommissioning.
The two nations have also agreed a ground-breaking joint statement on climate change, as part of joint broader work to reduce emissions and enhance energy security, central to which will be achieving a global, legally binding, and ambitious climate change agreement in Paris in 2015.
As part of a separate landmark agreement, the Chinese companies can own and operate a Chinese designed nuclear power station, upon meeting the stringent requirements of the UK’s independent regulator.
A joint £20m research program on Low Carbon Innovation has also been launched which includes research on offshore renewables, low carbon manufacturing processes and technologies, and low carbon cities for the two nations.
Energy and Climate Change Secretary Ed Davey said China and the UK stand united in UK’s aim to achieve long lasting energy security in own countries.
"Both governments recognise that tackling climate change is fundamental to our future and have committed to reduce emissions while enhancing energy security by investing in nuclear power," Davey added.
