BMW AG said on Friday it had won key approval from Beijing to start building cars in mainland China from the second half of 2003, a major step in its bid to double Asian sales over the next five years, Reuters reported.

Confirming an earlier Reuters report, BMW said Beijing had approved a feasibility study on a planned deal with Brilliance China Automotive Holdings to build up to 30,000 BMW 3 and 5-series cars per year in the northeastern Chinese province of Liaoning.

"The joint venture represents a fundamental step forward in one of the most important automobile markets of the future," BMW chief executive Helmut Panke said in a statement according to Reuters.

An industry source told Reuters earlier the two companies would sign the deal this month. Although the joint venture contract still needed final approval, Panke said he now saw no hindrance to starting production in the second half of 2003.

Reuters said BMW will invest 450 million euros ($US486.6 million) and hold a 50% stake in the venture, while Brilliance China, the country's largest van maker, will hold 40.5%.

The remaining 9.5% of the company, which will have registered capital of 150 million euros, will be owned by the Liaoning provincial government, Reuters added.

Reuters said BMW has been present in China since 1994 but is on an ambitious growth path in the world's fastest growing car market. It aims to double sales in Asia to 150,000 cars a year by 2008, with much of the growth coming from China where it has said demand is already rising fast, particularly for its high-margin 7-series executive saloon, the report added.

BMW's Asian sales, including its diminutive Mini hatchback, rose 28 percent in 2002, with China, including Hong Kong, its second-largest market in the region after Japan.

Reuters said China-based car makers, including foreign joint ventures, sold 3.25 million vehicles in 2002, a jump of 37.1% from the previous year, according to official Chinese statistics.

China's car industry is crowded with around 110 manufacturers, the news agency added, but only 12 have an annual capacity of more than 50,000 vehicles. Beijing has called for consolidation of the sector, mindful that some domestic players produce only a handful of vehicles a year.