Automotive firm Toyota says it is planning to ramp up its Chinese capacity with a new plant in the southern Chinese city of Guangzhou.

The world's second largest car manufacturer said that it would invest $461 million in the joint venture as it seeks to boost production.

The firm says it is aiming to deliver a 40 per cent increase in output, underlining the potential for growth in the nascent Chinese market.

Kosuke Shiramizu, executive vice president of Toyota, expressed confidence in the scheme and the wider prospects for growth.

"The China market is very big. We are looking for the long term," he said.

The plant will start producing cars in 2006, with the firm following in the footsteps of Honda, General Motors and Volkswagen, who have all targeted the Far East as a source of growth.

Guangzhou Auto, the fourth largest automotive firm in China, will operate on a 50/50 basis with Toyota.