The plant will be the joint venture's seventh assembly plant and parent company Volkswagen AG's 13th plant in China. It also will be the first assembly plant built by a foreign automaker in northwest China.

The 2 billion yuan ($315 million) facility will be located in a suburb of Urumqi, the capital of Xinjiang. It will start production in 2013, and will produce up to 50,000 vehicles a year.

Earlier this month, Shanghai Volkswagen obtained government approval to build a plant in Ningbo of east China's Zhejiang province, according to the Ningbo Evening News, a local daily newspaper.

Volkswagen currently has nine assembly plants operating in China. Five are owned by Shanghai Volkswagen, a 50-50 joint venture between Volkswagen and Shanghai Automotive Industry Corp.

Four other plants are owned by FAW Volkswagen Automobile Co., a joint venture between Volkswagen and China FAW Group Corp.

Two more facilities are under construction. FAW Volkswagen is building an assembly plant in Foshan in south China's Guangdong province, while Shanghai Volkswagen is constructing one in Yizheng in east China's Jiangsu province.

In the first ten months of this year, Volkswagen sold 1.9 million Volkswagen, Audi and Skoda vehicles in China, accounting for nearly 18 percent of the country's passenger vehicle sales.