TOKYO — Asahi Breweries will invest 4 billion yen ($36 million) to build a new plant in China amid intensifying competition in China's beer market, the world's biggest, a news report said Sunday.

The plant, to be built in the southern city of Huzhou in Zhejiang province, will start production in May 2007 with an annual production capacity of 26 million gallons, Japan's business daily Nihon Keizai said.

That would increase the company's total annual beer production in China by 15 percent to 200 million gallons, the largest among Japanese breweries in China, the paper said, without citing sources.

Officials at Asahi were not available for comment Sunday.

Asahi, which has the largest share in Japan's beer market, aims to increase beer sales to 192 million gallons a year in 2007, up 26 percent from 2005, the paper said.

The paper said that the China's beer market became the world's largest in 2003 surpassing the U.S. and major beer companies such as Belgian-Brazilian brewer InBev and American company Anheuser-Busch are expanding businesses in China.