The Chancellor, George Osborne, has announced that the UK will allow Chinese companies to take a stake in British nuclear power plants.
The decision could lead to China taking a future majority stake in the development of the next generation of British nuclear power.
Mr Osborne made the announcement on the last day of a trade visit to China.
The first China deal could be as early as next week, with the go ahead for a new £14bn plant at the Hinkley C site.
Also on Thursday, a report commissioned for the prime minister warned of a growing risk of power shortages over the next few years.
The Royal Academy of Engineering said the closure of older power plants and the slow progress in building news ones was likely to stretch the system “close to its limits”.
Supply is expected to come under strain in the winter of 2014-15.
The Hinkley C project, in Somerset, will be the first new nuclear power station since 1995.
The construction will be led by the French state-controlled giant, EDF, which has been looking for a partner or partners to share the costs.
EDF has been negotiating with three Chinese nuclear giants on the Hinkley C project, CGN, CNNC and SNPTC, all of which have been seen by the chancellor this week.
Our business editor, Robert Peston, says he has been told that one or two of these will end up owning perhaps 30% of Hinkley C.
In future, Chinese companies could have even higher stakes in nuclear plants.
A government statement says that “over time, stakes in subsequent new power stations could be majority stakes”.
At the weekend, the Energy Minister, Ed Davey, said he believed that a “massive” wave of investment from China, Japan and Korea would secure
UK’s power supply into the future.
Mr Osborne made the announcement while on a visit to a nuclear plant in southern China on Thursday which is itself a collaboration between EDF and the China General Nuclear Power Group (CGNPG).
George Osborne said: “Today is another demonstration of the next big step in the relationship between Britain and China, the world’s oldest civil nuclear power and the world’s fastest growing civil nuclear power.”
The memorandum of understanding also includes roles for British companies in China’s nuclear programme.
China has 17 nuclear reactors in operation, which provide about 1% of its electricity production capacity.