General Motors is planning to establish a $US250m alternative fuel research centre in Shanghai, China.

"We believe China has the potential to become a leader in the adoption of alternative propulsion systems," GM CEO Rick Wagoner was quoted as saying by the Associated Press (AP) at a news conference in Beijing.

Wagoner reportedly said GM picked China for the research centre because of its fast-growing vehicle market, large pool of talented researchers and the communist government's push to develop alternative energy sources.

"We see a lot of (government) interest in working with auto manufacturers to bring those to market as quickly as possible," he said, according to the news agency.

GM also will contribute $5m to create an automotive energy research centre in Beijing with Tsinghua University and Shanghai Automotive Industries, one of GM's local partners, AP added.

Construction of the first phase of the General Motors Centre for Advanced Science and Research in Shanghai is due to be completed late next year, Wagoner told AP, which added that the centre would be at GM's China headquarters in Shanghai, where the company already has an Asian regional product-development centre.

Wagoner reportedly said the new centre would work on alternative fuels, alternative propulsion systems, such as fuel cells and technology to improve energy efficiency, while its technology would also be exported to other markets.