Smith nears deal to play in China

Denver Nuggets free-agent guard J.R. Smith(notes) is nearing an agreement on the richest contract in China Basketball Association history, sources told Yahoo! Sports.

Under terms of the deal, Smith would make more than $3 million to play the 2011-12 season with Shanxi, but lose his chance at unrestricted free agency prior to the start of the NBA season. Smith, who turns 26 on Friday, has averaged 12.5 points per game in his seven-year NBA career.

Under league rules, the China Basketball Association is no longer signing NBA players who want opt-out clauses to return to the NBA prior to the end of the China season. China’s season runs through March.

Smith, an enigmatic but talented scorer, would risk a multi-year, multi-million dollar contract by signing to play in China. If Smith signs with Shanxi, he will be the second free agent the Nuggets have lost to China. Forward Wilson Chandler(notes) has already signed to play in China, which could hurt the Nuggets if the NBA and players union reach a labor agreement that salvages all, or part, of the 2011-12 season.

Neither player will be free to sign with NBA teams until they return from China.