Volkswagen AG will expand technology development with Chinese partner FAW Car Co. and prolong cooperation for 25 years to defend its leadership in the world’s fastest-growing major car market and fend off General Motors Co.

Europe’s largest automaker will additionally invest 100 million euros ($126 million) together with its second local partner, SAIC Motor Corp., in a new testing ground near the factory in Urumqi, Wolfsburg, Germany-based Volkswagen said Friday in a statement.

The ventures with FAW and SAIC are “set to benefit from a sustainable development of the automobile industry in China,” VW chief executive officer Martin Winterkorn said in the statement. Robust growth in China has helped VW offset shrinking demand in other emerging countries and a sluggish recovery of the European car market from a 20-year low. China is also vital to VW’s goal of overtaking Toyota Motor Corp. to become the world’s No. 1 automaker by 2018 and stay ahead of GM, which ranks third in global sales volume.

VW delivered 2.7 million vehicles to Chinese customers in the first nine months of 2014, a 15 percent jump from last year. GM said earlier Friday that sales in China rose 12 percent to 2.58 million vehicles.

China is VW’s largest sales region, accounting for about a third of the group’s global volume, and a key earnings generator. The two ventures’ contribution to VW’s first-half net income widened to 2.62 billion euros from 2.37 billion euros a year earlier. VW also received 2.8 billion euros in dividends from the two ventures in 2013.

The agreements were among almost two dozen bilateral accords signed in Berlin Friday as Chinese Premier Li Keqiang met German Chancellor Angela Merkel at the start of a two-day visit.

Daimler AG, which ranks second to VW in Germany’s car industry, reiterated earlier Friday that it will invest about 4 billion euros by 2015 with joint venture partner BAIC Motor Co. to expand production in China, including a newly signed, 1 billion-euro agreement to add more compact vehicles. (Bloomberg)