The announcement illustrates Chief Executive Officer Rick Wagoner's strategy of banking on Asia to offset the impact of declining sales in mature Western markets.

GM plans to expand capacity despite sharp declines in prices during the past three years. Average vehicle prices in China have been falling at a pace of 7% a year, and fell 5% in the first quarter of 2007 from a year earlier, said GM China President Kevin Wale.

Still, Mr. Wale is bullish on China. By 2020, he said, China will be the biggest single car market in the world---sooner if growth doesn't slow from the current 15% a year rate.

But even as GM talked up such growth, it separately said it will cut 1,400 jobs in Belgium.

The cuts highlight the broader trend of slashing jobs in high-wage developed countries while adding them in lower-cost nations. In Shanghai, for example, workers assembling GM compact cars cost GM $9 an hour for total wages and benefits---compared to more than $60 for wage and benefit costs of U.S. hourly workers. Labor efficiency and quality at the plant are close to the best levels anywhere in GM's global operations, says Julian Blissett, deputy executive director of manufacturing for the operation.

The Shanghai-GM factory outsources most of its subassembly work and support jobs to contractors who pay 20% to 30% less than the GM wage rate. Absenteeism is at 1%, and the average car requires 15 hours of labor to build, on a par with the best GM plants in North America.

The Shanghai GM plant, Mr. Blissett said, "is exactly what [GM] should look like."

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