Agriculture minister Barnaby Joyce said Australia had agreed to health protocols that would be finalised by his Chinese counterpart.
This comes after Indonesia slashed live cattle imports from Australia.
Mr Joyce said the trade in live cattle between Australia and China could be worth up to $A2bn ($1.5bn, Â£950m) each year.
Now that Australia had agreed on the health conditions, farmers could prepare to export cattle once China made the deal official, Mr Joyce said in a statement.
"I was very pleased today to sign the agreement of health conditions for trade of Australian feeder and slaughter cattle to Chinaâ€”now it's over to my counterpart, Minister Zhi Shuping, to sign on the dotted line and finalise the agreement between our two nations," Mr Joyce said.
"Over the past five years we've had a significant trade in breeder cattle with China, primarily for dairy heifers.
"Now, I'm pleased to announce we are a step closer to the commencement in trade in live slaughter and feeder cattle to China," he said.
Feeder cattle are those mature enough to be fattened in a feed lot before slaughter.
Earlier this month, Australian cattle producers were told Indonesia would only allow 50,000 head of cattle to be imported into the country between July and September, compared with an expected 200,000 permits for that quarter.
The Australian Livestock Exporters Council said that decision was both a surprise and a disappointment.
The Council's chief executive, Alison Penfold, said the deal with China was a "major breakthrough".
"Australia will be the first country to export feeder and slaughter cattle to China," Ms Penfold said in a statement.
In recent years, the live cattle industry has been rocked by a series of scandals about poor treatment of the animals in some of the countries Australia exports to.

Jemma Beale, 25, claimed she was raped by nine men and sexually assaulted by six, all strangers, in four encounters spanning three years.
One allegation led to the conviction of a man who was jailed for seven years.
Beale from Hounslow was found guilty of perjury and perverting the course of justice at Southwark Crown Court.
Judge Nicholas Loraine-Smith told Beale, who was in a relationship with a woman: "This trial has revealed, what was then not obvious, that you are a very, very convincing liar and you enjoy being seen as a victim.
"The prosecution described your life as a 'construct of bogus victimhood'.
"These offences usually began as a drunken attempt to get your partner's sympathy or perhaps to arouse her jealousy.
"They each began impulsively, but what is particularly chilling is the manner in which you persisted in making allegations which you knew were untrue even to the extent of committing and repeating perjury."
Prosecutor Madeleine Wolfe told the court police spent 6,400 hours investigating Beale's lies at a cost of at least £250,000, and the trial cost at least £109,000.
"Cases such as this bring a real risk that a woman who has been raped or sexually assaulted does not complain to the police for fear of not being believed", the judge added.
"False allegations are likely to have the perverse impact of increasing the likelihood of guilty men going free."
In a victim impact statement, Mahad Cassim, who was wrongly convicted of raping Beale in 2010, told the court he had been hugely affected by the false claim.
"One of my goals is to be a successful businessman, to have a nice family and be happy," he said.
"I am working on the happiness - I have a long way to go."
Beale had also falsely claimed she was groped by a stranger, Noam Shahzad, in a pub in July 2012.
She alleged she was then gang-raped by him and other men, and even self-inflicted injuries to back up her claims she was assaulted with barbed wire.
The following year Beale fabricated similar allegations against six other men.
She claimed two strangers sexually assaulted her and said she was gang raped again, by four others, two months later.
Australia is a step closer to exporting live cattle to China, opening a new market for its farmers.
[NEXT_CONCEPT]
A "serial liar" who made a series of bogus sexual assault allegations against 15 men has been jailed for 10 years.