Toyota has signed a deal with a Chinese car technology institute to develop technologies for environment-friendly car engines such as hybrid engines that operate on petrol and electric power, Dow Jones reported, citing the Kyodo news service.

The Dow Jones report said that, by lending its engine technology to China, Toyota apparently hopes the project will give it an edge in the rapidly growing Chinese car market.

According to Dow Jones, Kyodo, quoting sources familiar with the Toyota project, reported that the car maker concluded an agreement with the China Automobile Technology Research Institute, a Chinese government affiliate based in Tianjin – the deal was formalised on July 31.

The joint research programme involves demonstration tests and policy research on fuel-efficient technology and research of alternative energies for cars, Dow Jones said.

Specifically, Dow Jones noted, citing Kyodio, Toyota plans to ship its Prius hybrid-engine cars for road tests in China and the two parties also plan to research the role of government in promoting the use of low-pollution cars, which are gaining popularity in Japan, the US and elsewhere.

Dow Jones noted that, last September, Toyota signed a deal to provide hybrid-engine technology to Nissan Motor.

Toyota apparently hopes that establishing hybrid-engine technology in China would help cement its leading position in the hybrid-car market, Kyodo reported, according to Dow Jones.