Xinhua news agency said President Xi Jinping and Egyptian President Abdel Fattah al-Sisi, who is on a four-day visit to China, signed a joint document setting up the partnership.
The deal is believed to focus on Chinese investment in Egypt, including projects around the Suez canal, which Egypt is expanding to boost the country's ailing economy.
China is also looking to increase cooperation on security and law enforcement. On Saturday al-Sisi met Xi’s special envoy Meng Jianzhu in Cairo. Meng said China hoped the exchange of law enforcement personnel would enhance their professional capabilities.
Speaking to Chinese media in Cairo on Thursday, al-Sisi described Chinese-Egyptian ties as "very special, strong and stable," Xinhua reported.
He added: "China has balanced policies and does not interfere in other countries' domestic affairs, which is one of the reasons for China's success.”
Egypt recently established a cabinet unit focused on China and led by Prime Minister Ibrahim Mahlab.
Talking about his forthcoming visit, al-Sisi said on Thursday: "Cooperation between Egypt and China is not new and the purpose of the visit is to confirm and develop this cooperation and discuss Chinese investment chances in Egypt.
"Egypt's geographic location is strategic and distinguished and China has relations with the whole world. So both Egypt and China have the right to cooperate, using the Chinese industrial and investment capabilities and the Egyptian distinguished locations."
Al-Sisi praised China's Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives.
"Egypt is the portal for the Arab world, for Europe through the Mediterranean Sea and for Africa and we want the Chinese side to approach Egypt strongly," the president said.
"The Egyptian people are ready to cooperate with the Chinese people for development, progress and peace."
Political turmoil over the last four years has greatly affected Egypt's economy, particularly tourism.
The trade volume between Egypt and China exceeded $10 billion for the first time in 2013, more than 80 percent of which consists of Chinese exports, Xinhua said.