Schwarzman will also begin a $200 million fundraising campaign to make the program the largest charitable effort in China's history, a news release said.
The Schwarzman Scholars program will be housed at Tsinghua University in Beijing, and 200 students will attend every year to complete a one-year masters program.
The first class of students is slated for 2016.
Students will be able to choose between four academic disciplines: public policy, international relations, economics and business and engineering.
Schwarzman said he was inspired by the Rhodes Scholarship program and that China's growth and importance in today's economy make it the perfect place for the program.
"The Schwarzman Scholars program will help the United States and China strengthen ties in all aspects of our bilateral relationship by deepening mutual understanding between both countries," Locke said.
Schwarzman is the chairman, CEO and co-founder of Blackstone, a financial services firm, and has donated millions to the New York Public Library and other scholarships.