Japan's biggest car maker Toyota Motor Corp. has received approval from Chinese local authorities for an engine production venture in China, the Japanese media said.

Guangzhou city authorities issued the approval on Saturday, the Nihon Keizai Shimbun said.

Toyota and Guangzhou Automobile Group have applied for production permission in Guangzhou with a plan to begin operation in 2005 at an economic development area in the city.

The venture is expected to have the capacity to produce 500,000 engines, worth 420 billion yen (3.8 billion dollars) annually.

Of them, 200,000 engines will be exported to Thailand, Taiwan and possibly Japan, the business daily said.

The remainder, 2.0 liters to 2.4 liters in size, will be used in Toyota Camry models and other midsize sedans that the company expects to produce in China in a separate joint venture with the Chinese company, it said.

The exact amount of investment and ownership ratios in the engine venture have yet to be decided, but the Japanese auto maker is likely to own 70 percent of the new firm.

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