Shanghai Automotive will acquire a 48.9% stake in the South Korean maker of sports utility vehicles and large sedans for about $500m (£271m), according to reports.
Ssangyong workers have demanded higher wages, on job security and a say in company decisions affecting their future.
Creditors have controlled Ssangyong since its parent Daewoo Group collapsed in 1999. Ssangyong now commands about 10% of the local auto market.
SAIC has promised to upgrade Ssangyong's facilities and help it expand its business in China and other countries.
Shanghai Automotive has two major joint ventures in China with auto giants Volkswagen and General Motors but has been looking to branch out on its own.