Pepe has decided to join Hebei China Fortune once his Real Madrid contract expires, reports Cadena Cope.
The defender, who turns 34 next month, will see his deal at the Bernabeu expire at the end of June.
Real Madrid had offered him a new one-year contract, but the Portugal international was seeking a two-year extensión.
And now, according to Cadena Cope, he will move to Hebei China Fortune, who are coached by former Real Madrid and Manchester City boss Manuel Pellegrini.
Pepe will earn €15m a year in China, an amount which nearly triples his current €5.5m salary.