The 35-year-old spent a week in the Far East at the end of November, weighing up the pros and cons of the move, and played in a trial game for South China, scoring a free-kick and missing a penalty in a 2-1 win over local side TSW Pegasus.
Butt will play for the 'Caroliners' from January until May, after which he’ll return to the UK to begin his coaching badges.
The Treble-winner hung up his boots at the end of last season but denied money was the reason he was tempted out of retirement.
"I’m not going to lie, the financial side of the deal is obviously attractive to me, but it’s not the £200,000 a week that some of the papers have been quoting!” he told ManUnited.com.cn.
"If it were just about money, I could have stayed in England. The most important thing for me is the timing. After spending Christmas my family, I would have had nothing to do until I start my coaching badges, so the length of the contract is perfect.
"Hong Kong itself is a great place to live: it’s very safe, a mixture of eastern and western cultures and the people are extremely courteous, so it ticks all the boxes."