(Adds Toyota comment in paragraph seven)
TOKYO, May 1 (Reuters) - Toyota Motor Corp will build an engine plant in the northern Chinese city of Changchun by 2005 and its Hino Motors unit will start producing trucks and diesel engines in Shanghai from 2004, a Japanese newspaper said on Thursday.
Toyota, Japan's biggest auto maker but a laggard in China, is rapidly expanding its presence in the burgeoning Chinese car market.
Early in April, Toyota announced a plan to expand its alliance with its Chinese partner, First Automotive Works (FAW) , including construction of a vehicle plant in the northern Chinese city of Tianjin.
The business daily Nihon Keizai Shimbun said Toyota would launch a new company to produce engines with China FAW Group Corp by the end of this year.
The five billion yen ($42 million) plant to be built in Changchun, where China FAW has its headquarters, will start producing 50,000 engines a year in 2005, the paper said.
The engines will be used in Toyota's Crown luxury sedan to be produced at the Tianjin plant as well as FAW's high-end Red Flag model, the paper said.
A spokesman for Toyota said the auto maker had not yet decided where the engines for the cars would be built.
Toyota's truck-making unit, Hino Motors Ltd , will begin producing 10,000 diesel engines a year in 2004 and 20,000 large trucks in 2005, both in Shanghai, the paper said.
Hino will team up with major electronics manufacturer Shanghai Electric (Group) Corp to build the engine factory and will link up with home appliance producer Chunlan (Group) Corp for truck production, it said.
A spokesman for Hino, 50.1 percent owned by Toyota, said the firm was studying various options and had not decided on any specific production plans.
"Nothing has been decided," he said, adding the company had no plan to make an announcement any time soon.
Under the agreement signed in April, Toyota and FAW are to build a plant in Tianjin to produce cars based on Toyota's Crown model from 2005 with output targeted initially at 50,000 vehicles a year.
The two auto makers also plan to jointly produce three other Toyota models at existing factories in China. ($1=118.82 yen)