The two regions hope to agree on the concept, functionality, main technologies and time plan for 5G by the end of this year, and aim to set up join research projects, the European Commission said.
The EU and China will promote global standardisation for 5G technology by working with the 3rd generation partnership project, which is a partnership of seven telecommunications standard development organisations, and the International Telecommunication Union (ITU).
The agreement also covers the identification of globally harmonised radio frequency bands to meet the spectrum required for 5G, and encouraging cooperation through the ITU and the world radiocommunication conference.
Finally, the EU and China have agreed to "strive to explore jointly the possibilities for cooperative research on the services and applications for 5G, especially in the area of the internet of things".
The agreement recognises the importance of public private partnerships in the development of 5G, and China and the EU will encourage interaction between their respective industry associations, it said.
Under this agreement the EU telecoms and ICT industry are likely to have easier access to the Chinese market. "In particular, European companies will be able to access and participate in China's publicly funded 5G research, development and innovation initiatives on the same terms as Chinese companies currently participate in the EU's 5G activities", the Commission said.
Commissioner Günther Oettinger said: "5G will be the backbone of our digital economies and societies worldwide. This is why we strongly support and seek a global consensus and cooperation on 5G. With today's signature with China, the EU has now teamed up with the most important Asian partners in a global race to make 5G a reality by 2020. It's a crucial step in making 5G a success."
The Commission announced in at the Mobile World Congress (MWC) in Barcelona in March that it would work with Japan, China and the US on the 5G mobile standard.
The Commission launched a Public-Private Partnership on 5G at the 2013 MWC and will invest €700 million by 2020. EU industry is set to match this investment by up to five times, to more than €3 billion euros, the Commission said.
Telecoms expert Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com said: "This is not only a box ticked for the European Commission in its agenda for a single digital market, but reflects a deeper commitment to developing the digital economy and society. The prompt development of these networks will certainly support the development of the internet of things through a higher use of connected devices and machine-to-machine services, thus supporting the development of new services and businesses. At a broader scale, this is a cornerstone to the development of smart cities."