THE Chinese venture of General Motors Corp has won approval from a local environment authority in central China to add a new 300,000-unit carmaking plant after China tightened its control on foreign investment in the automotive industry.

Shanghai General Motors, GM's flagship passenger car venture with SAIC Motor Corp, is likely to locate the new plant in Wuhan in Hubei Province with an investment totaled at 7 billion yuan (US$1.1 billion), according to the Hubei Environmental Protection Bureau.

The Chinese government earlier announced plans, from the end of January, to exclude car manufacturing from industries in which foreign investment will be encouraged. The move signals the central government's intention to boost China's own auto industry.

Shanghai GM, which makes Buick, Chevrolet and Cadillac in China, has been increasing investment to ease production restraints despite the expiration of government incentives, which slowed overall auto sales growth to 2.5 percent last year from 32 percent in 2010.

Officials from Shanghai GM said the carmaker would expand the production capacity in accordance with market conditions but no final decision has been made.

According to Chinese regulations, companies, among other conditions, are required to produce only their own-brand vehicles as well as new-energy vehicles in newly-built factories.

Shanghai GM has three production hubs in China with a total designed capacity of around 700,000 units. It sold 1.2 million vehicles in China last year.

The carmaker, which is also expanding the capacity at its Shenyang plant in northeast China's Liaoning Province and Yantai plant in east China's Shandong Province, aims to boost annual sales to 2 million units by 2015. The venture plays an important role in helping GM to compete with rivals such as Volkswagen and Toyota in China.

GM, which sold 2.5 million cars in China last year, has plans to introduce more than 60 new and upgraded models during 2011 to 2015 while doubling sales to 5 million units.