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UPDATE 3-Bosch, China's Weifu plan 600 mln-euro venture

(Recasts with Bosch comment)

By Ben Blanchard

SHANGHAI, Nov 18 (Reuters) - German engineering firm Robert Bosch GmbH will invest 600 million euros ($705 million) with a Chinese fuel injector firm in a venture to make diesel nozzles for car and truck engines, the Chinese company said on Tuesday.

Bosch [ROBG.UL] and its units would have a 67 percent stake in the venture and China's Wuxi Weifu the rest, making the German firm the latest multinational to jump on China's auto boom bandwagon.

A German industry source said the investment figure of 600 million euros was exaggerated. Bosch said the deal had not been finalised and declined to comment on the amount it would invest in the venture.

"We are still in negotiations and we are optimistic that we will come to a conclusion this year," a Bosch spokesman said, declining to give any further details.

Total registered capital would be 150 million euros, Weifu, China's biggest producer of fuel injection systems for automobiles, said in a statement published in the official Securities Times on Tuesday.

Commercial vehicles are an important component helping to drive economic growth in China, where cities hum 24 hours a day to the sound of construction.

Industrial output in October was 17.2 percent higher than a year earlier, the fastest clip since an annual 19.8 percent registered in February.

The joint venture (JV) would be based in eastern Wuxi, close to the country's commercial capital of Shanghai.

"With China's economic development the demand for vehicles with these engines is booming. We are very bullish about the prospects for the JV," said Liu Yonglin, Weifu's board secretary.

The venture would supply nozzles for diesel engines mainly in trucks to start with, but would expand rapidly into cars once the fuel becomes more popular in the country, he told Reuters.

Bosch is the strategic partner and the second-largest shareholder of Weifu, which is listed on the Shenzhen stock market.

China is planning to raise the proportion of vehicles using diesel from about 30 percent at present to 35 percent by 2005, mainly for commercial vehicles.

The government is also improving emission standards, mandating all vehicles reach Euro II standards by next year and the more stringent Euro III by 2008.

Weifu's net profit jumped an annual 11.31 percent in the first nine months of the year on the back of China's sizzling car market.

Car output in China surged an annual 87.2 percent to 1.44 million during the same period, official figures show.

Vehicle output, which includes car, trucks and buses, is seen reaching four million units this year, from 3.25 million last year.

Analysts expect close to two million cars will be made and sold in China in 2003.

Foreign automakers including Volkswagen AG and General Motors Corp have pumped billions of dollars into China, betting on the boom in the world's fastest-growing major vehicle market.

In April. U.S.-based diesel engine maker Cummins Inc set up a $100.6 million venture with China's Dongfeng Automobile Co Ltd to make 130,000 diesel engines a year. Weifu supplies parts to this plant. (Additional reporting by Alexander Huebner in Stuttgart and Vivian Xiao in Shanghai)