Since John Towers, chairman of MG Rover, announced in November that he was to bring a lifeline deal with a Chinese car manufacturer 'to the table' by the end of this month, the company has retreated behind a wall of silence.

The revelation of a 70:30 joint venture with the Shanghai Automotive Industry Corporation, worth up to £1.5 billion and intended to'save' the British company's Longbridge plant, came as the brand's sales collapsed and the directors suffered astorm of adverse publicity generated by their multi-million-pound pay and pension-fund awards. It was to counter this stream of bad news that the announcement was made.

But SAIC, the proposed majority partner, reacted by accusing Towers of being 'premature'. Now he and his co-directors apparently see no benefit in revealing details about what are, by all accounts, extremely complicated negotiations with SAIC and the Chinese government.

The company says that it is confident a deal will be signed soon. For its part, the Chinese group says: 'SAIC is still in talks with MG Rover on the potential co-operation. Everything is in progress. However, we don't have any timetable to announce at this moment.'

SAIC has other things on its mind: a controlling stake in Korean carmaker Ssangyong and floating on the Hong Kong stock exchange. On top of this, it has suffered, like other car companies in China, from the slowing of massive growth rates in sales in 2004. SAIC, which manufactures more than 600,000 cars under restrictive licence agreements with Volkswagen and General Motors, saw sales of its best-selling VW Passat saloon fall some 30 per cent to 68,000 last year. Beyond China, the industry is sick with overcapacity, as the reported bailout of Japan's Mitsubishi and losses in carmaking at Ford show.

Meanwhile, there are rumours of interest in deals with other European companies - last week, Fiat was put in the frame. So will there be a Rover deal? And, if so, what and when?

Last week, Tony Woodley, general- secretary of the Transport & General Workers' Union, who backed Towers when Rover was up for sale to venture capital group Alchemy in 2000 and recently visited Shanghai, said: 'The deal with SAIC will go ahead. I am confident of that.' When, he was asked? He was unable to say, but it would not be this month.

Others, allegedly, are less confident. Senior manufacturing industry sources say Trade and Industry Secretary Patricia Hewitt, who also went to Shanghai, is worried that negotiations will founder in the run-up to an election and that MG Rover will appear with its 'begging bowl'.

Rover is apparently not even talking to the British government. Tim Dunne of Shanghai-based consultant Automotive Resources Asia, says: 'I get calls from people in the industry and in government asking "What are you hearing?" because Rover is not saying anything.'

Woodley does not talk much to Towers these days either, disgusted by what he sees as the greed of the chairman and the three other men who, as the'Phoenix Four', took MG Rover off BMW for £10 five years ago in May. But he reiterates: 'It is the last chance saloon for Rover. It is the only game in town.'

The situation sounds desperate, but Woodley believes the company has a strong brand, design expertise and assets the Chinese want. Dunne is also optimistic: China needs a deal like this one to get beyond its strictly controlled relationships with VW and GM - and to secure access to proprietary technical knowledge.

'The big thing for the Chinese is research and development - they have no R&D or proprietary knowledge, and Rover is willing to open up,' Dunne says. 'I am not sure they are after the brand, but there is a well-developed distribution network in Europe.' He adds that one company supplying Rover with automated production-line components in the UK has already approached him through a third party to ask about setting up in China - on Rover's instructions.

Others, including Peter Wells, senior research fellow at Cardiff University's automotive group, are more sceptical: 'I am not sure how much of that [proprietary technology] Rover has any more - they have not developed a car by themselves for a long time now.'

Assessing the value of assets in the long list of companies that make up MG Rover is extremely difficult, but unions and industry watchers agree that attention is focusing on the Longbridge Powertrain engine and gearbox business, which was sold separately to Phoenix Venture Holdings by BMW in 2001.

Last week, it was reported that machinery at the Powertrain plant was being packaged ready for shipping to China. Unions were concerned about the impact on jobs were the business to be transferred, but the company said the move was limited to giving the Chinese an insight into casting techniques. Powertrain generates some £200 million in revenue, supplying engines to Rover and other manufacturers.

Woodley says: 'The Chinese love assets, and Rover has good assets. What will happen with Powertrain?' In Shanghai, Dunne says: 'SAIC have been talking about engines. They want a four-cylinder and a six-cylinder. They cannot make a standalone car now, and need an engine. My understanding is that this is the number one thing they are talking about.'

There are possibilities here for Rover. Wells says the K-series engine made at the Powertrain plant needs major work to comply with the tighter new emissions regime known as 'Euro Four', introduced this month and due to come fully into force in January 2007. MG Rover says it is confident that it has the resources and capacity to upgrade the engine.

'The Chinese are adopting Euro Two standards [with which the current K-series engine comply],' Wells says. 'There is the possibility of taking the Euro Two K engine, either under a licence manufacturing agreement or as a finished product, to China and allowing it to run there for a few years. There is some sense in that.'

But the Chinese appear to be looking ahead as well. They want to develop the engine to comply with Euro Four. An industry insider says: 'They have asked engineering consultants to determine how much it would cost to get it up to Euro Four standards. They would be interested in doing something on Powertrain at the right price - it is the only real bit of intellectual property left in the company - but if it is going to cost too much it could kibosh the whole deal.'

But there there are other, longer-term, reasons for SAIC to show interest in Rover. Wells says: 'Chinese companies - like Indian ones - are looking to break into European and other countries. It is about market entry; they want knowledge about how markets work, operational expertise, distribution and so on. They have to ask: "Do we do it on our own or with partners?", and at first they are likely to choose partnership.' Against this background, Dunne says, Rover provides distribution within Europe and a - somewhat battered - brand.

But are there other players with wider operating, marketing and distribution skills. China is full of rumours about deals with European carmakers. 'The talk now is that SAIC is going to take a stake in Fiat,' says Dunne. The Italian giant, which has had significant financial troubles of its own, says it signed a deal for SAIC to manufacture its Iveco heavy trucks just before Christmas, and already has a carmaking joint venture with another manufacturer, Yeujin of Nanjing, which turns out 40,000 cars a year. It plays down an imminent car making deal between Fiat Auto and SAIC, but it has not been ruled out.

Although not an immediate prospect (Fiat currently also has an agreement with GM that would force the Detroit giant to buy Fiat Auto should Milan want to sell it), a deal with such a maker, were it prepared to share intellectual property, would be on a different scale altogether to Rover.

'There could be a lot on offer from Fiat,' says Wells. 'It has production,intellectual property, product design and engineering skills. It is very broadly based. It operates around the world. If they had an opportunity to go with Fiat, why would they continue with Rover?'

However, Dunne believes that, despite SAIC's irritation at November's unilateral announcement by Towers, the odds are on a deal with Rover: 'They have been talking for so long now, I think they will have to agree something.'

The Chinese are not likely to want to overpay, but Towers knows he needs to save the Longbridge workforce. A deal for all or part of Rover would be a delicate balance and one likely to take more time to clinch - if it can be struck at all.