The Office of Chinese Language Council International (OCLCI) and the State Government of Victoria of Australia signed a letter of intent here Monday.
Bronwyn Pike, Minister for Education of the Victoria State, said the proposed center in Melbourne would act as a think tank with experts from China and Australia who will explore how best to teach Chinese language and culture.
"The center is also expected to significantly boost the number of Victorian students studying this important language," said Pike.
Currently, there are 27,000 students in Victoria learning to speak Chinese.
The state government is funding the start up of the teacher center with 200,000 Australian dollars. China is expected to provide high-quality teachers, materials as well as some funding.
The center won't just benefit Australia but also Oceania, Pike added.
"The cooperation will help boost sustainable development of the Chinese language," said OCLCI director Xu Lin.
China set up a Confucius Institute which specialized in overseas promotion of Chinese culture in 2004. As of January, a total of 210 Confucius Institutes have been set up in 64 countries and regions.
As the Chinese language becomes more popular the country is dealing with a language teacher shortage.
OCLCI statistics from 2007 estimate there will be 100 million people in other countries learning to speak Chinese by 2010. Right now, there are only 40,000 overseas Chinese language instructors.
To meet soaring demands, China has trained more teachers as well as innovated language instruction methods.