Tengzhong, which makes industrial vehicles and equipment, will employ Hummer's senior management, keep its existing dealer arranagements and pay GM to assemble and supply components for the vehicles.
If the deal goes through it will be the first time a Chinese company has acquired a car brand from a US manufacturer.
It echoes the 2005 sale of Britain's MG Rover to Nanjing Automobile Group, which secured the rights to the MG brand. BMW, which retained the rights to the Rover brand, sold it to Ford, which sold it on to India's Tata Motors along with its Jaguar Land Rover business in June 2008.
Tengzhong indicated it would spend money on addressing concerns about the fuel inefficiencies of Hummers, which have declined in popularity since the first part of the decade due to environmental criticism and the rise in the cost of petrol.
The number of Hummers sold in the US last year was down 51% on 2007 to 27,485.
Yang Yi, chief executive of Tengzhong, said: "We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demands for new products such as more fuel-efficient vehicles in the US."
GM, which on Monday filed for bankruptcy protection, is also attempting to sell its Saturn and Saab brands. It said that 16 investors had registered interest in the former and three in the latter.
The deal does not include the military model Humvee, which is manufactured by AM General Corp, which first produced the Hummer in 1992. It went on to sign a deal to jointly produce, market and distribute the Hummer.