Hong Kong and mainland Chinese authorities signed an agreement on Friday (Dec 23) to set up an outpost of Beijing's famed Palace Museum in Hong Kong, as the city gears up to celebrate the 20th anniversary of its return to China next year.

The HK$3.5 billion Hong Kong Palace Museum will feature permanent exhibition galleries to showcase the treasures of imperial China , the city's government said in a release posted on its website www.news.gov.hk.

To be built on a 10,000 sq m site in West Kowloon Cultural District, it will also feature activity rooms, a lecture theatre, souvenir shop and restaurant when completed in 2022, according to the release.

The West Kowloon Cultural District authority's Board Chairman Carrie Lam, who is also Hong Kong's no. 2 official as Chief Secretary, signedthe project's memorandum of understanding in Beijing with Mr Shan Jixing, director of the Palace Museum.

The signing ceremony was witnessed by Hong Kong Chief Executive Leung Chun Ying and China's Minister of Culture Luo Shugang.

Mrs Lam said at a media briefing after the ceremony that the museum will have permanent exhibitions to showcase relics on imperial life, as well as the history and culture of the Palace Museum, the former symbol of imperial power perhaps better known as the Forbidden City.

The sprawling Beijing museum is one of the main tourist attractions of China, with more than 14 million visitors a year.

The cost of the Hong Kong project will be funded by the Hong Kong Jockey Club Charities Trust, the city's government said.