China's third-largest carmaker, Dongfeng Motor, which is building a 300,000-car-a-year plant with PSA Peugeot Citroen of France, could use the new facility to export cars and compete with its joint-venture partner overseas.

Citroen's chief executive Jean-Martin Folz told reporters that their contract does not contain any clauses that would prevent the Chinese carmaker from shipping its cars to Europe.

Peugeot and Dongfeng have filed for permission to build a car plant in either Wuhan, in central China, or in eastern Zhejiang Province. The plans call for production of 150,000 cars a year by 2006, rising to 300,000 when demand warrants.

Folz says China recently eliminated a two-stage application procedure that separated feasibility studies from applications for actual projects, which should speed up the approval process.

The new capacity comes as the Peugeot-Dongfeng venture faces falling sales in China. The domestic market will become increasingly crowded with production capacity if all the carmakers complete their existing plans.

(CRI.com October 11, 2004)