The joint venture has pledged to invest more than 1 billion euros ($1.2 billion) over three years, but has so far not provided further financial details.
It is developing cars under the Hongqi brand, which it will manufacture in Italy and China. Its first model, the plug-in hybrid Hongqi S9, was unveiled last month at the Shanghai Auto Show.
"This is an iconic area for the entire automotive network and an ideal location to meet our logistic and production needs for the Hongqi S Series," Silk-FAW Chairman Jonathan Krane said in a statement on Monday.
Italy's Motor Valley is home to some of the country's best known luxury carmakers, including Ferrari, Lamborghini, Pagani as well as motorbike maker Ducati.
Production at the Reggio Emilia site is expected to start at the beginning of 2023, said Silk-FAW, which last week appointed former Ferrari CEO Amedeo Felisa as a special adviser.
($1 = 0.8293 euros)
(Reporting by Giulio Piovaccari; Editing by Alexander Smith)