Cardinal Joseph Zen publicly criticised Pope Francis for the deal that appears to be imminent.
Speaking in the Wall Street Journal the former head of the Church in Hong Kong said the deal is "absolutely unacceptable."
Vatican officials have been banned in the country since the 1950's and the authorities and the Holy See have not always seen eye-to-eye.
At present China classes bishops appointed by the Vatican as 'unofficial' and their churches are 'underground'.
The Vatican does not approve bishops appointed by the Communist government.
In recent months the two bodies have been working towards reconciliation over this issue.
But this move would make the Church "totally subservient to an atheist government" according to Cardinal Joseph Zen.
He went on: "The Holy Father knew the persecuted communists, not the communist persecutors.
"He knew the communists killed by the government, not the communist governments who killed thousands and hundreds of thousands of people."
The cardinal also said that he would not protest should the deal go ahead.
