The bond is part of a package of new measures to open up the Chinese currency to the world markets, which will also see UK investors allowed to apply to invest in the country directly.
The new arrangements, covering up to £8.2bn initially, mean investors will no longer have to go through Hong Kong to invest in the mainland.
And Chinese banks will soon be able to set up branches in the UK, letting them invest more directly in Britain.
Both moves are part of a wider plan to internationalise the renminbi and open China’s economy to the world.
The government hopes that by putting the UK at the centre of the changes, London can keep its place as a key financial centre even as new economic powers rise.
Campaign group The City UK welcomed the plan and said it has been pushing for steps to make it easier for Chinese investment to enter Britain.
“This is most easily facilitated by helping Chinese banks to establish themselves here as branches and allowing them to access their parent bank’s balance sheet, potentially increasing funding for UK infrastructure and investment in other sectors,” said the group’s chief Chris Cummings.