Nanjing Automobile's investment in MG Rover could be a trailblazer for other Chinese firms investing in the region, the country's ambassador said.
An increasing number of companies from China are looking to set up overseas ventures with encouragement from the govern-ment, said Zha Peixin.
Mr Zha was speaking at the Confederation of British Metalforming on the opening day of his two trip to the Midlands yesterday.
Although he would not be drawn on the Beijing government's support for Nanjing, he said it backed overseas ventures by all its companies.
This included financial support in some cases, Mr Zha said, although he would not say if Nanjing was getting funds.
He said: "Birmingham is the manufacturing centre of Britain, and I think there is great potential for co-operation between China and the West Midlands because China is new in the process of industrialisation."
Mr Zha acknowledged that while China was a huge exporter, it was also a large importer for all kinds of goods.
There could also be more Chinese firms coming to the Midlands and linking up with local firms through joint ventures.
He said: "Chinese policy is to open up to the world in all aspects. We want to encourage those companies which have the capacity to do it to go abroad and invest there. I would say in recent years more and more companies have established a presence in the UK, and many more are looking."
Meanwhile, struggling British retailers accused the European Union of being "overwhelmingly in favour of protectionism" as it prepared to slap duties on cheap goods imported from Asia.
The move, previously condemned by CBI director general Sir Digby Jones, will see tariffs imposed on leather shoes made in China and Vietnam on April 7 after EU Trade Commissioner Peter Mandelson found evidence of "dumping" - shoes being sold to Europe at knockdown prices with the help of state subsidies.
The European Commission said it had not made a decision on the size of the anti-dumping duties, but it is thought they could be up to 20 per cent.
The move followed complaints from 30 EU manufacturers in countries such as France and Italy who demanded measures were imposed to stop them going out of business.
But the move left Mr Mandelson on collision course with retailers and shoppers in the UK worried that higher costs will increase high street prices and lower profit margins.
And it could spark a repeat of last year's lengthy " bra wars" dispute between Brussels and Beijing over Chinese textile exports.
The British Retail Consortium warned punitive measures would cause "a lot of pain" to the struggling retail sector in the UK.
BRC Brussels director Alisdair Gray also branded Italy's demands for tariffs of 50 per cent "outrageous".