The city of Wuhan, considered the epicentre of the disease is on lockdown and its 11 million residents have been ordered to stay put by national officials.
Chinese state media says the new hospital will have beds for 1,000 people, and is based on a similar hospital set up in Beijing to help tackle the Sars virus in 2003.
The new center, which is located Wuhan, will be made out of prefabricated buildings and its medical supplies and equipment will be brought in from neighbouring hospitals.
Pictures from Chinese state media shows how work on the massive 25,000 square metres (269,000 square feet) site has already begun.
A second hospital has also been planned and will have capacity for 1,300 people when it is opened in around a fortnight, state newspaper the People’s Daily said.
Engineers will be brought in from across the country in order to complete construction in time.
It took authorities in Beijing just seven days to build a similar emergency clinic during the SARS outbreak in 2003.
Construction of the site operated around the clock and reportedly broke the world record for the fastest construction of a hospital.
It had an X-ray room, CT room, intensive-care unit and laboratory and each ward was equipped with its own bathrooms, according to China.com.cn.
So far the virus has also been detected in Thailand, Vietnam, Singapore, Japan, South Korea, Taiwan, Nepal, and the United States.
There are fears transmission could accelerate as hundreds of millions of Chinese travel during the Lunar New Year holiday, although many have cancelled their plans.
Airports around the world have stepped up screening of passengers from China, though some health officials and experts have questioned the effectiveness of such screenings.
The World Health Organisation this week stopped short of calling the outbreak a global health emergency.
A report by infectious disease specialists at Imperial College, London on Saturday said that despite this, the epidemic “represents a clear and ongoing global health threat” adding: “It is uncertain at the current time whether it is possible to contain the continuing epidemic within China.”