A joint venture between MG Rover and China's Shanghai Automotive Industry Corp (SAIC) would lead to job losses at the company's Longbridge plant near Birmingham, union leaders said today.

The Transport & General Workers Union (TGWU), which represents more than 6,000 workers at Longbridge said most mergers led to job losses and a tie-up with SAIC, China's biggest car maker, would be no exception.

"What is important right now is to make sure we secure the much-needed investment for Longbridge to save and preserve jobs in MG Rover and in the component suppliers," said Tony Woodley, the TGWU general secretary.

Mr Woodley's comments followed a report in the Financial Times suggesting that up to 2,000 factory workers at the plant would lose their jobs if the £1bn joint venture went ahead. There has been speculation that as many as 3,000 jobs could be lost at Longbridge in the event of deal.

The chancellor, Gordon Brown, who was in China this week, spent part of his visit lobbying Chinese officials to give the green light to the joint venture, which is seen as crucial to the survival of the Longbridge plant. Some 45,000 jobs in the area depend on the MG Rover factory.

Britain is believed to have offered a "sweetener" in negotiations with the Chinese government, probably deferring VAT payments from SAIC. That would save the company from having to pour millions into the company immediately after purchase.

Under the current plans, production of the small Rover 25 model would be moved to China. The cars would then imported back to the UK. Coupled with plans to shift production of at least some engines to China, the move is expected to lead job losses at Longbridge.

SAIC says none of its money will be paid to the four owners of Rover, who have come under fire for paying themselves £1.5m each in 2003 after buying Rover for £10 from BMW in 2000.

"SAIC is extremely concerned to ensure that its money is used to invest in the business rather than be distributed to the shareholders," a source close to SAIC told the FT.