Scant details but it is indeed in development.

Found via MercuryNews  

Here’s an opportunity for BioWare to get it right and for all of you fans out there to rejoice. Rumors have been swirling about the possibility of a sequel to BioWare’s Xbox hit, “Jade Empire.” For years, people have predicted it would come and Ray Muzyka, co-CEO of BioWare, even spilled the beans of something coming back in 2005. But I talked with someone who saw code for Jade Empire 2. It’s coming for the Xbox 360, and it’s real. It’s not much as far as scoops go, but I’m on vacation. What do you expect? Happy New Year.Jade Empire was BioWare’s second big game for the Xbox, following the exclusive Star Wars Knights of the Old Republic title in 2003.

Jade Empire launched in spring 2005 on the Xbox and on the PC in 2006. That means the team that created it has probably had a couple of years to work on it. During that time, I would guess that Microsoft secured it as an exclusive and they developed the game for that platform. But there is no law that says such games can’t be ported to the PS 3. And we all know how EA loves to do cross-platform games to maximize profits from a single property.

The original game was an action role-playing game with core martial-arts fighting game play. You play an orphan who is trained in martial arts and on whose shoulders lies the fate of the mystical Asian land, the Jade Empire. The possibilities for the sequel are very interesting given where BioWare took the conversation and RPG system with Mass Effect. Would this be the Xbox 360’s answer to Heavenly Sword on the PlayStation 3? Probably not, given it is an RPG and not a fighting game first.