The match will be held at the Bird's Nest stadium, which was built for the previous 2008 Olympic Games, with the date to be released soon.
The Beijing Football Association announced that both teams will revive their ties to China through this friendly, and have named 2010 World Cup final official Howard Webb as the referee.
Arsenal - during last summer's pre-season tour of Asia - made a debut visit to China to take on Chinese Super League side Hangzhou Greentown, and were admittedly pleased at the warm reception they received.
Manchester City was brought to the attention of Chinese citizens when the club signed local player Sun Jihai in 2002, who made a total of 130 appearances for the squad during his stay.
As a precaution, the Bird's Nest pitch will be temporarily unavailable to the public from July 1 until the day of the game.