The newly formed company, Beijing CMI Engineering Ltd, aims to supply "small capacity" steel strip galvanizing and colour coating lines in China.

It will have initial capital of 5 million yuan (US$603,800) with 60 per cent of the shares held by CMI and the rest by BSDI.

The agreement was among a suite of co-operative projects tied to a visit by an economic and trade mission from the Walloon region of Belgium.

The mission arrived in Beijing on Saturday and will stay in China until February 22, visiting Shanghai Municipality and Guangzhou, capital of of South China's Guangdong Province.

The mission includes officials from the government of Walloon Region, Walloon Office for Foreign Investors and Walloon Export Agency as well as representatives from 21 Belgian companies.

China and the Walloon Region of Belgium have laid down a good foundation for co-operation with many projects already started or planned, said Serge Kubla, chairman of the mission, at a press briefing in Beijing yesterday.

He said another agreement had also been reached with Tsinghua Tongfang to distribute and provide after-sales services for the company's products in Europe.

Kubla said the mission was keenly interested in business opportunities ahead of the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai.

China now has 28 colour coating lines with a total production capacity of 1.7 million tons.

Industry experts said the supply of galvanized steel strip had fallen short of demand at home, especially in sectors such as light industry, construction, energy, automotive and household electronic appliances.

China plans to build 19 galvanizing lines and 16 colour coating lines in the 10th Five-Year Plan period (2001-05) and increase production capacity by 3.15 million tons and 2 million tons respectively.

"CMI's strategy is to be a major force in the People's Republic of China (PRC) in flat steel coating technologies. It wants to ensure a permanent presence in the PRC through this joint venture and the opening of a liaison office in Beijing," said the company's press release.

It said BSDI will be able to "take advantage of CMI's highly acclaimed expertise and references in the field of steel strip processing as well as its experience in the management of industrial projects."