PSA/Peugeot-Citroen on Friday said it was studying the feasibility of setting up a 50-50 vehicle manufacturing venture with China's Harbin Hafei Automobile.

The new venture would manufacture small 'people movers' (under 10 passengers) for the Chinese market in Hafei's plant in Shenzhen. The Chinese automaker specialises in MPVs/minivans.

"[This] demonstrates the group's commitment to speeding up its development in China, one of its three international strategic growth regions," PSA said in a statement.

PSA Peugeot Citroën already operates in China through Dongfeng Peugeot Citroën Automobiles (DPCA), a 50-50 marketing and manufacturing joint venture established in partnership with Dongfeng Motor.

The venture builds, among other vehicles, unique sedan versions of the Peugeot 307 and Citroen C4 tailored to the local market.

DPCA sold 201,300 vehicles in 2006 and 87,100 vehicles in the first five months of 2007.

Hafei is a subsidiary of the AVIC aeronautics company. Its production reached 260,000 cars in 2006.