A framework agreement has been inked between JAC and Hybrid Kinetic's wholly-owned subsidiary HK Capital Company Limited to set up a 50-50 venture in Anhui Province's capital city Hefei, JAC said in a filing with the Shanghai Stock Exchange.

Total investment is about 30 billion yuan ($4.43 billion), with an initial investment of no less than 2 billion yuan ($295.30 million).

"JAC is expanding its product portfolio from commercial vehicles to passenger vehicles and green cars. Hybrid will help JAC accelerate its pace by buying technologies abroad," senior market analyst Zeng Zhiling with Global Insight's global automotive told the Global Times earlier.

Ranked by Forbes as the third-richest man in the country in 2001, Yang Rong, the chairman of Hybrid, helped to restructure Brilliance Automotive from a stagnant State-owned automobile firm into the largest producer of mini-vans in the country.

Brilliance later became China's first company listed in New York. Yang was charged with economic crimes in 2002 and went to the US later that year, although he denies having fled the charges.

A senior executive of JAC close to the deal told the Global Times that JAC strives to produce world-class vehicles using resources worldwide available and the executive believed Hybrid Kinetic's technology, product and operation model are basically feasible.

The source confirmed under the condition of anonymity the possibility that Hybrid Kinetic will bring in technologies developed jointly with German-based global engineering services leader FEV Inc.

"JAC is doing a product feasibility study right now. We will develop hybrid vehicles first, and then full-electric vehicles," said the source.

The source said the State-owned company had submitted the deal for approval to State-owned Assets Supervision and Administration Commission of Anhui, and the deal need further approval from other relevant government bodies.

Asked if JAC is worried about risks brought by Yang, whose case hasn't yet been cleared up, the source said the company only is worrying about risks concerning technology, investment and market conditions. It is normal for the public to worry, but it is not actually relevant, said the source.

JAC shares slid 1.85 percent to close at 9.53 yuan ($1.41) Tuesday, while Hybrid Kinetic climbed 1.54 percent to H$0.33 ($0.04).