General Electric has set up a 50-50 gasification joint venture with Shenhua Group, the country's largest coal producer, as the US conglomerate further consolidates its foothold in China.
The signing of the joint venture - which will specialise in a technology that converts coal into a synthesis gas - came just three days after GE announced it is buying a 15 per cent stake in China XD Electric Group for 3.38 billion yuan (HK$4.2 billion).
Synthesis gas is a mixture of gases made as feedstock and produced by controlled combustion of coal in the presence of water vapour.
The tie-up with Shenhua would help GE secure more large clean-energy projects, said Paul Browning, chief executive of GE's thermal products businesses.
Neither party would disclose how much they will invest in the venture, which will sell gasification technology licences across China.
The synthesis gas produced can be used to make chemicals or other products. Gasification technology is also an important tool needed in the process of coal-to-liquid fuel conversion.
'The collaboration will create a leading gasification technology business in China with significant local presence, focus, resources and expertise,' said Wang Xiaolin, deputy general manager of Shenhua.
Shenhua is the country's leading player in developing coal-related technologies and projects such as coal-to-liquids, capitalising on the country's abundant coal resources.
GE said most of its gasification business was derived from operations in China. 'Coal plays an important role in the economies of both the US and China,' said Browning. 'Gasification technology allows us to use this abundant and low-cost resource in a much cleaner way.'
GE said the partnership with China's largest coal producer would pave the way for it to further penetrate the multibillion-yuan market. That could create openings for its other businesses related to gasification such as gas turbine production.
Jack Wen, chief executive of GE Energy, said the joint venture with Shenhua was not just a deal of 'market access in exchange for technology'. He said the partnership would help both sides explore new business opportunities.
The US corporate giant has recently stepped up its efforts to profit from China's rapidly growing economy. On Monday, GE announced it would buy a 15 per cent stake in China XD Electric, one of the country's largest manufacturers of electricity transmission and distribution equipment.
GE will hold 41 per cent of the venture while XD will own the rest.