The Chinese company has signed a letter of intent with the regional government in North Korea's northeastern port city of Rason to invest in the construction of the auto plant, South Korea's Yonhap News said, quoting a report by the North's KCNA.
The agreement is a preliminary step to conclude an official deal for the investment, the report said.
Yonhap said the impoverished Communist country has designated Rason as a special economic zone and has been actively seeking overseas investments in the area.
The regional committee on trade promotion in northeast China's Heilongjiang province and Rason's economic committee have already agreed to boost cooperation.
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