Shanghai Automotive Industry Corp's (SAIC) planned purchase of troubled British car firm MG Rover had run into difficulties with Chinese regulators stalling on a decision, the Financial Times reported.

It said Chinese regulators were resisting British pressure to fast track approval, angered by Rover's decision to reveal it was in negotiations with SAIC, China's largest State-run automaker.

For the deal to proceed, SAIC needs approval from the Shanghai city government, its owner, and from the National Development and Reform Commission, which is responsible for foreign investments by China's State-owned companies.

However, Rover's decision to reveal it was in talks with SAIC and the resulting public debate over Rover's future had irked Chinese regulators and contributed to a delay in approving the deal, the newspaper said.

Under the proposed deal, SAIC would invest one billion pounds (US$1.85 billion) in Rover, a tie-up that could potentially rescue the failing fortunes of the Birmingham-based factory and its workers.

However, even if the deal comes off, Rover's future is far from assured, with the group suffering with dated models, a poor brand image and falling sales.

Rover refused to comment on possible redundancies, claiming that everything was speculation until the Chinese Government agreed the partnership with SAIC.

"We need to wait until we get the whole partnership agreement and I cannot predict when that will be," a Rover official said.

SAIC, still digesting its acquisition last year of Ssangyong, the South Korean carmaker, has not disclosed the terms of any deal with Rover but its executives said last year the figure quoted by Rover was far too high.

The group refused to comment on the negotiations, saying only that they were continuing. The main attraction of the deal for SAIC is the immediate access it would win to Rover's design and engineering capabilities.

Source: Shenzhen Daily/Agencies