Toyota, Japan's top and the world's third-biggest carmaker, said it had received permission to produce and sell buses and had formed a Chinese joint venture.

It said negotiations on forming the bus venture began in early 1995.

Toyota is still seeking permission for the Chinese government to jointly develop and produce passenger cars in China with Tianjin Automobile Industrial Corp, a Toyota spokesman said.

Toyota formed its first joint car component venture in July 1997 with Tianjin Automobile to make steering systems and drive shafts for use in Charade and Hijet cars made by Tianjin Automotive, which produces them with technical assistance from Daihatsu.

Toyota now has four component joint ventures in China, including one which make engines for the Charades.

The new bus venture will start operations in 2001 with an annual output of 3,000 buses, and plans toincrease that to 10,000 by 2005, Toyota said.

The buses will be sold under the Toyota brand name, and the venture will create about 1,150 jobs, it said.

Another Toyota spokesman said the bus venture, named the Sichuan Toyota Motor Co Ltd, was capitalised at $67 million and owned 50 per cent by Sichuan Station Wagon Factory, 45 per cent by Toyota and five per cent by Toyota Tsusho Corp.