The Chinese state-owned car maker Shanghai Automotive Industry Corporation will inject another £130m-plus into its joint venture with MG Rover under a deal which could be submitted to the Beijing government for approval within the next week.

The cash will be in addition to some £67m already paid to the British company, taking the total Chinese investment in the joint venture, where SAIC will have a substantial majority, to about £200m.

The money will be used to help finance the continuing development of badly needed new models and, according to some reports, to meet redundancy payments over the next two years as MG Rover trims its 6,100-strong workforce at its Longbridge plant.

MG Rover has consistently refused to comment on possible job losses but the plant is running well below capacity. Last year, for example, the 4,000 workers employed on the Longbridge production lines turned out 106,000 cars, compared with more than 130,000 the previous year. Though the deal with SAIC envisages an eventual rise in production at Longbridge, it will be some time before that increase would come into effect. There are also questions over the location of future engine production.

SAIC, which already has joint ventures with both General Motors and Volkswagen, is keen on the deal with MG Rover because the joint venture - unlike its agreements with the German and US car makers - will give it ownership of the technological capability involved.

Though the £200m is much less than the figure of £1bn reported last year, the Chinese investment would be expected to rise as more new models were brought into production.

Yesterday neither MG Rover nor SAIC would comment on the terms nor the timing of the deal, saying only that the project was progressing.