Xinhua News Agency, quoting the automaker, said the plant with a production capacity of 150,000 units would be located in Shanghai's Jinqiao district and construction is expected to begin next month.
GM has been seeking to drive up sales of its Cadillac and other luxury brands in China. The company already is reported to have 15.2 percent of China's automotive market, the world's biggest by sales volume.
"We want to build where we sell. That is very important to us," GM spokesman Alan Adler in Detroit was quoted as saying.
The Los Angeles Times, quoting HIS Automotive Consulting, said automotive sales in China are expected to be about 20.5 million vehicles this year and expanding to more than 30 million by the end of the decade.
"If Cadillac can capture even a small share of that growth, it will be a very large number," said Michael Robinet, IHS' managing director.
"The luxury side of the market has expanded exponentially in China," he said, with Audi being the first to establish a strong foothold in the country, followed by BMW and Mercedes-Benz. Other competitors in the luxury market are Jaguar and Land Rover, he said.
Earlier, the Wall Street Journal reported GM has about 100 Cadillac dealers in China but wants to double that number by next year.