China Changan Automotive Group signed an agreement on July 9 with French automaker PSA Peugeot to form a 50-50 joint venture in Shenzhen, the Oriental Morning Post reported Monday.

The joint venture will be manufacturing and selling light commercial vehicles and passenger cars. Starting operations in the latter half in 2012, the agreement states plans to produce 200,000 vehicles and 200,000 engines every year.

The venture will mainly produce the line of Citroen DS cars, but will also develop a new brand of its own. Based on the agreement, the two sides will set up an R&D center to develop new energy cars.

The joint venture still needs to be reviewed by Chinese regulators. However, according to auto industry analyst Jia Xinguang, the approval is just a matter of time and will be soon.

Changan Auto is currently the second Chinese partner of PSA Citroen. PSA is the second largest automaker in Europe. In the first half of this year, the French automaker sold a total of 176,000 units, up 49 percent year-to-year.

China's business press carried the story above on Monday. China.org.cn has not checked the stories and does not vouch for their accuracy.