Dongfeng Motor, one of China’s biggest automakers, reportedly has gained approval to issue shares on the Hong Kong Stock Exchange in a $600 million initial public offering planned for December, The Associated Press reported, citing state media.

The state-run newspaper China Securities Journal reported that Dongfeng, based in the central province of Hubei, had held back due to a downturn in the market earlier in the year but a rebound in sales has revived its listing plans. However, it said the IPO was scaled back from an original plan to raise $US1 billion.

Hong Kong newspaper the South China Morning Post reported that Dongfeng has joint ventures with Honda, Nissan Motor and PSA Peugeot Citroen and plans to sell about 30% of its shares to the public, AP added.

The reports said the listing would put Dongfeng ahead of rival Shanghai Automotive Industry, which delayed a Hong Kong IPO from last year. Shanghai Automotive, a partner of both Volkswagen and General Motors, is expected to issue shares overseas in 2006.

The Associated Press said the Chinese car market began to break out of a nearly year-long slump in late spring, though intensifying competition and surging prices for oil, steel and other materials are cutting into profits.

Auto sales in China rose 16.8% in the first three quarters of this year, compared with the same period of 2004, the China Automobile Manufacturers Association reported earlier this week, AP noted, adding that was an improvement over the 15% growth seen in 2004, though far below the 75% growth in 2003.

Dongfeng’s appeal to investors comes through its joint ventures, Herbert Lau, research director at CASH Research Ltd, told the Associated Press.

“Dongfeng’s strength is in its foreign-branded car models, which have a more solid sales record,” Lau reportedly said. But he noted that investor sentiment toward the Chinese vehicle sector was not strong given worries of excess supply and rising operating costs.