The two plants would produce agricultural equipment including tractors and combines, with construction due to start in the first half of 2010, said Hubertus Muehlhaeuser, general manager for Eastern Europe and Asia.

Agco, which makes farm equipment under the Massey Ferguson, Challenger, Fendt and Valtra brands, aimed to lift its total tractor sales in China to 20,000 over the medium term from 500, all of which are imported, he said.

The company also had a sales target of 1,000 to 2,000 combines in China, where it sells none at present, he said.

Despite the economic slowdown, long-term drivers of the global agricultural sector, such as limited arable land and increased biofuel production, remained in place, Muehlhaeuser told reporters.

Agco expected its global net sales to fall 20 percent this year to $6.6 billion, he said.

In China, the company was looking to benefit from Beijing's efforts to expand mechanisation in the agricultural sector as farmers left the land and moved to cities, Muehlhaeuser said.

"If you compare the level of mechanisation (in China) to that of North America or Europe or South America, there is still tremendous room to grow," he said.

Farm vehicles made at the two Chinese plants, located in the provinces of Heilongjiang and Jiangsu, would be sold domestically and exported to North America, South America and Europe, he said.