GM sets up clean fuel research lab in China

US giant General Motors said Monday it would launch a 250-million-dollar alternative fuel research centre in China, as it looks to dramatically ramp up production of more environmentally friendly cars.

The new centre in Shanghai, which will conduct research into fuels and vehicles, will be launched in conjunction with the firm's Shanghai auto partner, SAIC, GM's chief executive Rick Wagoner told reporters.

GM also said it would begin selling a hybrid vehicle model in China next year using locally made engines.

"GM is proud to be announcing one of the most important and far-reaching collaborative strategies to promote energy efficiency and environmentally friendly transportation in China and around the world," Wagoner said.

GM expects hybrid and biofuel vehicles will comprise around 10 percent of its worldwide production of 9.2 to 9.4 million units this year.

"(But) if you look out five years or so, I think that number is going to be significantly higher. It could be 50 percent of global production," Wagoner said.

The first phase of construction, in which the Chinese government is a partner, will be completed next year.

The centre will focus on developing bio and other alternative fuels, and the engines for them, Wagoner said.

An additional agreement with SAIC and Beijing's Tsinghua University will establish a five-million-dollar clean fuel research laboratory in the Chinese capital.

"The centre is responsible for reducing China's dependence on petroleum-based fuels," Wagoner said.

"China has the potential to become the market leader in the adoption of alternative propulsion systems."

With climate change and pollution in the global spotlight, China's auto industry, one of the main engines of its booming economy, has come under scrutiny.

A recent report from the State Environmental Protection Administration said car fumes caused 79 percent of air contamination in China's highly polluted cities on bad days.

Auto sales in China, the world's second largest car market after the United States, soared in the first nine months of 2007 to 4.58 million units, a 23.84 percent increase from a year ago, Chinese state media said.

Detroit-based General Motors expects to sell more than one million vehicles in China for the first time this year, compared with 876,747 units in 2006.

For his part, SAIC chairman Chen Hong said his company planned to produce 10,000 hybrid fuel vehicles a year by 2010, as it steps up a commitment to find cleaner ways to power vehicles.

The global automobile industry is in the process of movoing production away from highly-developed countries and into emerging markets.

Sales in countries like China, India, Russia and South Africa have taken off. GM said in August these markets will account for a quarter of its new car sales, exceeding North America.