The team discovered Hamilton had sustained gearbox damage in the aftermath of the last race in Bahrain, where the world champion and Williams' Valtteri Bottas collided at the first corner.
Mercedes explained that the subsequent decision to replace the gearbox took into account the fact that Shanghai is a better circuit for overtaking than the next few venues on the calendar.
"The gearbox of [Hamilton's] F1 W07 Hybrid sustained damage in Bahrain which required a physical inspection for full assessment," the Silver Arrows confirmed on Twitter.
"Having done so, the decision has been taken to change the gearbox rather than carry any risk moving forwards. Of the next 4 tracks in the normal cycle, Shanghai is the best place to make the change and take the resulting grid penalty."
Hamilton has won the last two editions of the Chinese Grand Prix for Mercedes, and has four wins in total at the venue - a record no other driver can match. He has also been on pole in Shanghai for the last three years. The Briton is yet to win in 2016, however - he has taken pole for the opening two races, but team mate Nico Rosberg has triumphed on both occasions.