An agreement is of major political significance as Britain prepares to elect a new government on Dec. 12. The lack of opportunities in northern England, where British Steel is based, is an election issue, as the social gap between north and south widens.
The deal has yet to be finalised, but Business Minister Andrea Leadsom said in a video clip she was optimistic it would be.
Jingye Group Chairman Li Ganpo said the ambition was to create a world-class group.
"We believe that this combination will create a powerful, profitable and sustainable business that will ensure the long-term future of thousands of jobs while producing the innovative high-quality steel products that the world needs," he said in a statement.
The value of the deal was not disclosed. Earlier a BBC report saying a deal was imminent gave a figure of 70 million pounds ($90 million), while sources close to the talks said the price was likely closer to 50 million pounds.
Uncertainty over the future of British Steel has hung over its workforce for much of the year. It was put into compulsory liquidation in May after Greybull Capital, which bought it for one pound from Tata Steel in 2016, failed to secure funding to continue its operations.
Its closure would impact 5,000 jobs in Scunthorpe and a further 20,000 jobs in the supply chain.
British Steel, which makes high-margin, long steel products used in construction and rail, would give Jingye access to Europe's large infrastructure market.
But it could face challenges as the European steel industry grapples with weak demand, high costs for energy and labour and exacting environmental standards.
British Steel did not respond to requests for comment.
A previous deal, announced in August, with Turkey's military pension fund OYAK fell apart and on Monday the fund said the purchase was not commercially viable.
British commodities tycoon Sanjeev Gupta's Liberty Steel Group has also expressed interest in buying British Steel.
Henri Murison, director of the Northern Powerhouse Partnership, set up to boost the economy in the north of England, said a rescue, if finalised, would be "very welcome news".
He said it was time to embrace cooperation with China, which is extending its international reach through its Belt and Road global development strategy. Chinese companies also own a steel plant in Serbia and its sole copper mine.
Leading trade union Unite welcomed the prospect of Chinese ownership, but cautioned there had been "a series of false dawns" for the company.
Jingye, which also operates hotels and real estate, employs 23,500 and has registered capital of 39 billion yuan ($5.58 billion), giving it the financial clout to invest.
Under the terms of the agreement, Jingye would acquire certain assets of British Steel from the Official Receiver, subject to regulatory approvals.
The assets include the steelworks at Scunthorpe and Teesside in northern England, as well as its European units FN Steel in the Netherlands and British Steel France.
Chinese ownership may be contentious, especially in the steel industry. The European Union (EU), which does not include Serbia, has agreed safeguards to protect its own steel industry from competition from cheap imports from China and elsewhere.
Britain has said it will leave the EU but has yet to agree a deal on its departure from the political and economic bloc.
John Cullen, business recovery partner at accountancy firm Menzies LLP, said selling the whole British Steel business "in the current trading climate would be no mean feat".
(Reporting by Min Zhang in Beijing, Barbara Lewis and Kate Holton in London, Ceyda Caglayan; editing by Guy Faulconbridge, Josephine Mason and Emelia Sithole-Matarise)
By Min Zhang and Barbara Lewis