Uber CEO Travis Kalanick made the admission while speaking at a private event in Vancouver, according to Canadian tech news site Betakit.
The $1bn figure was later confirmed with Uber China by Reuters news agency.
US-based Uber launched in China in 2014 and competes against the country's largest taxi app Didi Kuaidi.
Uber is available in more than 40 cities in China. It announced last year that it would expand into 100 Chinese cities over the next 12 months.
"We're profitable in the USA, but we're losing over $1bn a year in China," Betakit quoted Mr Kalanick as saying.
He described China as the firm's largest international marketplace. But Uber's market share is dwarfed by that of the larger Didi Kuaidi.
"We have a fierce competitor that's unprofitable in every city they exist in, but they're buying up market share."
Mr Kalanick has previously said the firm had gone from a tiny 1% share of China's market at the beginning of 2015 to about 30% to 35%.
Didi Kuaidi, which is backed by Chinese tech giants Tencent and Alibaba, has now also partnered with Uber's rival US ride-sharing service Lyft.
Mr Kalanick said he had recently raised about $200m to help the firm compete in emerging markets, Betakit said.
"I wish the world wasn't that way. I prefer building rather than fundraising. But if I don't participate in the fundraising bonanza, I'll get squeezed out by others buying market share," he added.
Uber is available in 380 cities around the world, according to the website.
App-based car-hire service Uber is losing more than $1bn (Â£699m) a year in China, as it struggles against what it called a "fierce competitor".