The venture will be the second Chinese partnership for Peugeot.

In France, Peugeot-Citroën was scheduled to reduce production at most of its European plants from Wednesday due to shortages of the airflow sensor.

Mr Feillard acknowledges that Peugeot is still asking whether "we as car manufacturers can make any money" from mobility programmes like its own.

The car, to be sold in both Peugeot and Citroën versions, would initially be marketed in Mediterranean countries, the Middle East and Africa.

Peugeot is not alone in heading east in search of skilled workers at lower wages.