MG ROVER’S would-be Chinese partner indicated for the first time last night that it was confident of reaching a joint venture agreement with the British carmaker.

In a significant boost for MG Rover and the troubled carmaker’s suppliers, the Shanghai Automotive Industry Corporation (SAIC) broke its lengthy silence to insist that the Chinese Government was fully supportive of a deal, which has been under negotiation since the summer.

Speculation had been growing that the Chinese authorities were cooling on the prospect of a deal, under which MG Rover would effectively be taken over in a 70-30 joint venture. It has also been suggested that the joint venture would trigger job losses and transfer production from the Longbridge factory near Birmingham.

A spokesman for SAIC, which has just appointed British public relations advisers, said: “We are in the advanced stages of detailed negotiations on a joint venture that will safeguard and secure car manufacturing at Longbridge.

“The Chinese Government at all levels has given these negotiations its full support. SAIC and MG Rover are confident that the deal will be completed within the necessary timeframe to protect the MG Rover group.”

It is believed that the two groups are attempting to complete the deal by late spring.

MG Rover welcomed the first public endorsement by the Chinese. A spokesman said: “This confirms what we have been saying all along. We are very confident that we will be able to conclude a deal and such a positive statement from SAIC is very helpful.”

However, neither SAIC nor MG Rover would comment on the details of the negotiations or whether British employees would be laid off.

There was speculation over the weekend that 3,000 jobs could be cut from the 6,500 workforce. However, such large losses would mean the ending of some production at Longbridge and both sides have denied that that is planned.

Some industry experts think it is more likely that MG Rover will have to cut jobs because its sales have plummeted over the past 18 months. The carmaker, which has suffered big falls on its Rover range in particular, is making only 130,000 cars a year compared with a target output of 200,000.

MG Rover has blamed uncertainty over the company’s future for some of the sales decline.

John Towers, MG Rover’s chairman, is due to meet union leaders next week to hear their concerns on job security, the details of the deal and the length of time the negotiations are taking. Mr Towers angered the Chinese corporation in November when he said that a deal was imminent and that up to £1.5 billion would be invested over several years.