AMBITIOUS Chinese automaker Dongfeng Motor and France's Renault may sign a deal this month for an 11 billion yuan (US$1.8 billion) joint venture after a decade of talks, a report said yesterday.

The project, to be restructured from an existing venture between Renault and China Sanjiang Space Group, was approved by state officials in May, a source told the China Business News paper.

Dongfeng, China's second biggest automaker, has previously been reported to be negotiating to buy a stake in another French car firm, PSA Peugeot Citroen.

The Sanjiang operation was set up in 1993 to produce the Traffic minibus, but production stopped in 2003, and Dongfeng and Renault have been in talks since then.

Dongfeng acquired a 55 percent stake in the Sanjiang-Renault project in June and the new joint venture will be based in Wuhan, said the source.

The Wuhan project is expected to start production of mainly sport-utility vehicles and multi-purpose vehicles in 2014, and will have a first-phase capacity of 150,000 units a year, the paper said.

A Dongfeng spokesman said it was "actively pushing forward the Dongfeng-Renault joint venture project."

Renault in China declined to comment.