MG Rover's prospective Chinese partner plans to make the Rover 75 car within the next two years.
Shanghai Automotive Industry Corporation (SAIC) hopes to begin production by 2007, according to reports in China.
Citing an unnamed company executive, it was claimed that China's largest carmaker, will manufacture its first domesticmade saloon based on the rights it purchased from the collapsed Longbridge firm.
SAIC, which pulled out of its proposed joint venture with MG Rover in April amid concerns over its solvency, could use the intellectual property rights to the Rover 75 and K series engine to make the car.
In April it approached several suppliers in the West Midlands with a view to commencing production of the 75 and the 25, while it is also believed to be one of the parties interested in buying the Powertrain engine plant at Longbridge.
But it also faces competition from two other Chinese firms - Geeley and Nanjing Automotive - who are both thought to be interested in buying the operation at Longbridge and shifting production to the Far East.
The exact links between the three Chinese firms are unclear, but there is thought to be some sort of collaboration between Nanjing and SAIC.
A spokesman for Birmingham Chamber of Commerce said the development was disappointing.
He added: "Anything which creates or preserves jobs is better than nothing.
"If they are looking to have some suppliers providing parts to Shanghai, that could be good news for them and help many of the firms which are suffering.
"But we feel disappointed that it has come to this. The car was not selling in the required quantities in the UK, but if they can do something with it in China that could lead to some good news amid the horrific happenings at Longbridge."
Meanwhile, it has emerged that SAIC also plans to launch a domestic version of the RX320 series - a sports utility vehicle (SUV) once made by Ssangyong Motor Company.
SAIC officials were not available to comment and no further details were provided.
Control of the South Korean carmaker was sold to SAIC for $500 million late last year.
The roll out of the SUV, and the Rover 75, are part of SAIC's plans to compete with General Motors and Volkswagen.