Khodrocar - The 50-50 owned venture will make battery-powered vehicles for both partners at a new plant in Jiangsu Province, BMW said in a statement on Tuesday.
The deal is the automaker's second this week in China following the signing of a Memorandum of Understanding with tech giant Baidu to join its autonomous driving platform Apollo as a board member.
Both announcements are part of a parade of accords announced at a Berlin summit with Chancellor Angela Merkel and Chinese Premier Li Keqiang in attendance.
"Today's signing represents a new level of cooperation between China and Germany," BMW CEO Harald Krueger said in the statement on the Mini JV.
In September, Mini revealed an electric Mini concept at the Frankfurt auto show. A production model is expected to go on sale in 2019.
The creation of the venture with Great Wall, called Spotlight Automotive, coincides with China's April decision to ease foreign-ownership restrictions in the country, with the possibility that Western automakers could eventually buy out their local partners.
On Monday, BMW agreed to lift output at a separate venture with Brilliance China Automotive Holdings that will lessen the sting of higher Chinese import tariffs on its U.S.-made SUVs.
The company sold 560,000 BMW brand vehicles to customers in China in 2017, more than the U.S. and Germany combined. China was Mini's fourth-largest market, with around 35,000 units delivered, it said.
"This underlines the brand's additional global potential, which will now be significantly supported through the joint venture with Great Wall Motor," BMW said.
The company pledged last year to build electric models at its factory in Oxford, England. BMW said Tuesday that any plans to expand in China don't affect the brand's commitment to Britain.
Founded by billionaire Chairman Wei Jianjun, Great Wall has become China's leading SUV producer by offering consumers spacious models at prices cheaper than vehicles from automakers including Volkswagen Group and General Motors.