Japan's Mitsubishi Rayon Co revealed on Monday it has won official backing from the Chinese government to set up a joint venture with a Chinese firm and three Japanese trading houses to produce acrylic fibre in Zhejiang Province.

The Tokyo-based firm said in a statement that it will be the first joint venture involving foreign capital in China to manufacture the product, with the new business based in the economic development zone in the city of Ningbo with capital of some $50 million.

Of the start-up sum, Mitsubishi Rayon will fund 55 per cent, a Ningbo investment firm 15 per cent, with the remaining 30 per cent split equally between the three trading companies - Mitsubishi Corp, Marubeni Corp and Itochu Corp.