Oceanalpha, an unmanned vessel company, will also be funding the project.
China has started building the world's largest test site for unmanned ships - a technology with both civilian and military applications - off a port in the disputed South China Sea, state media said Tuesday.
The test area is being constructed off the southern port city of Zhuhai bordering Macau, the state Xinhua news agency said,
China asserts sovereignty over almost all the South China Sea despite competing partial claims from the Philippines, Vietnam, Malaysia and Brunei, and has reclaimed several islands which it controls to bolster its claims.
The test site will be jointly funded by the Zhuhai city government, the China Classification Society, Wuhan University of Technology, and Oceanalpha, an unmanned vessel company, according to Xinhua.
Unmanned or "autonomous" ship technology, still in its infancy, would allow both civilian and military craft to be remotely controlled.
It could revolutionise the shipping industry by creating more cargo space on unmanned ships, which would also save huge sums in labour costs.
As the first of its kind to be built in Asia, Zhuhai's "unmanned boat test site" is expected to become the world's largest with an area of about 770 square kilometres.
Islands in the test zone will be equipped with GPS, sonar, communication instruments or photoelectric components to guide ships and boats, according to the China's Science and Technology Daily.
No commissioning date has been announced.
"Beijing will use this test site to develop a series of new unmanned systems for military but also for civilian purposes, as this technology can potentially contribute to its economic development," said Collin Koh, specialist in regional naval affairs at Singapore's S. Rajaratnam School of International Studies.
"It symbolises its rise as a world maritime power and is meant to position it in the future market for unmanned ships, whether for civilian or military applications."
Various unmanned ship projects already exist in the European Union and the United States. Norway is expected this year to launch the world's first wholly electrically-powered and autonomous freighter.
China is trying to catch up in this field. It plans to launch at the end of the year its own autonomous vessel, the Jindouyun, for river transport and ferrying goods to islands.