April 21 (Reuters) - Fuji Heavy Industries Ltd has shelved plans to manufacture passenger vehicles at a joint venture plant in China next year, as it is yet to receive government approval, Japanese business daily The Nikkei reported.
The Chinese government, which is looking to eliminate excess capacity, has been stringent in screening foreign automakers setting up production units in the country, the business daily said.
The Japanese carmaker was to build a factory with Chery Automobile Co in Dalian, Liaoning province. Production was to begin in 2013, with an annual output of 50,000 vehicles, the paper reported.
The company, which manufactures the Subaru brand, will continue to negotiate with the Chinese government for approval, the Nikkei said, citing company sources.
Fuji Heavy, which currently exports assembled autos from Japan to China, will increase production capacity in Japan and the United States by 50,000 units to offset the setback, the business daily reported.