Volkswagen has extended a contract with Chinese partner First Automotive Works (FAW) by 25 years and may form more joint ventures in the country, according to a Reuters report.

Executives from both companies signed a memorandum of understanding in Beijing in the presence of German Chancellor Gerhard Schroeder and Chinese Premier Wen Jiabao, the report said.

Reuters said the move, although largely symbolic, would lead to closer cooperation on developing new products and could lead to the founding of new joint ventures to produce components.

The news agency noted that FAW-Volkswagen Automotive, VW's current venture with FAW in the northeastern city of Changchun, sold just over 130,000 cars in the first six months of the year, giving it about 15% of the market, while VW, whose other Shanghai Volkswagen Automotive joint venture is China's biggest car maker, plans to double its annual production to 1.6 million vehicles in five years.

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