Nanjing Automotive, the Chinese car maker which bought the MG sports car business from its administrators for £52 million this year, is talking to the government about attracting state aid for building MGs in the UK, according to a Daily Telegraph report.


The paper said officials from Nanjing met trade secretary Alan Johnson during prime minister Tony Blair’s visit to China earlier this month. The early-stage talks reportedly addressed key issues such as the state aid available but final figures were not discussed. “They have not got a costed business plan,” one person familiar with the situation told the newspaper.


A DTI spokesman told The Daily Telegraph: “Introductory meetings took place recently and covered a range of issues. As you know, our policy is not to give a running commentary on private meetings or discuss commercially confidential matters. Help is available in certain circumstances under strict European Union state aid rules. It would be for the company to discuss any details of an application.”


The paper said Nanjing is also discussing setting up a manufacturing operation, probably at the former Longbridge site, to make MGs with British company GB Sports Car.


Tony Lomas, MG Rover’s administrator, told the Daily Telegraph Nanjing had signed a “licence agreement” to use the Longbridge site in Birmingham with property developer St Modwen, which owns it, and had now completed the transaction. “It was paid in full weeks and weeks ago,” he reportedly said.


The paper noted that MG Rover’s creditors were owed £1.4billion when the car maker collapsed in April and Lomas, who has previously warned that they would receive “next to nothing”, said he still did not know a final figure because it depended on sorting out complex tax issues. He told the Telegraph: “We are a long way from that. The tax needs to be sorted out.”


Meanwhile, the Daily Telegraph added, Chinese car giant Shanghai Automotive Industry Corporation, which bought the rights to the cars for £67 million last year, is planning to start selling new Rover 75s in Britain within a few years.


Sources close to SAIC confirmed to the newspaper that the company’s long-term plan was to start making Rover 75 saloon cars for the local Chinese market before exporting them back to the UK.


One told the Telegraph: “SAIC is looking to start production towards the end of next year. They will start with China before seeing what they can do over here.”


According to the paper Richard Cort, chairman of the MG Rover dealers association, declined to comment on SAIC’s plans. He told the Daily Telegraph: “We are cautiously optimistic about the outcome.”