The Beijing-based Palace Museum, also known as the Forbidden City, will build a museum to exhibit foreign items on the scenic Gulangyu Island in east China's Fujian Province.
The new museum is expected to be completed in 2016, according to an agreement signed off Monday by the Beijing museum and the Xiamen City government, which administers the island.
The Palace Museum owns more than 1,800 foreign cultural relics, including paintings, lacquer ware, ceramics, timepieces and scientific instruments, said museum curator Shan Jixiang.
This move aims to address the fact that currently many items, some of which date from the 16th century, are stored in warehouses due to exhibition space limitations.
"These precious relics are 'deeply hidden', they will more accessible to the public in the new museum," Shan said.
Located in the heart of the capital city, the Palace Museum is on the original site of the imperial palace of the Ming and Qing dynasties and features their collection of treasures.
The museum has over 1.8 million registered items in its collection, but only has room to showcase about 10,000 each year.