The funds injection from the Hawtai Motor group was described as a "mid-term" solution by Spyker, but was hailed as a long-awaited lifeline for cash-strapped Saab, which halted production almost a month ago as suppliers halted deliveries over unpaid bills.

Under the deal, Spyker -- which rescued Saab at the last minute by buying it from General Motors in early 2010 -- will receive from Hawtai 120 million euros in return for a 29.9 percent stake and a 30-million-euro convertible loan.

The partnership marks the second time in under a year that a Chinese carmaker has invested in a Swedish carmaker.

In August last year, China's Geely bought Sweden's Volvo Cars, previously owned by Ford.

Speaking to reporters by phone from Beijing, Spyker chief Victor Muller said the partnership would be beneficial to both parties, just like acquiring Volvo was favorable to Geely.

He however stressed the deal was a partnership and not an acquisition, and thus very different.

Described by Spyker as an "agreement on strategic alliances partnership with respect to manufacturing, technology and distribution," Tuesday's deal comes a day after Spyker said it had secured a short-term cash injection of 30 million euros to restart production within a week.

"Saab is now well financed, it has secured its short and mid-term financing," Muller said. "That puts the liquidity crunch that the company went through in the month of April to bed."

The deal is still subject to approval and conditions including the consent of Chinese government agencies, the European Investment Bank and the Swedish National Debt office, Spyker said.

Muller told reporters he expected regulatory approvals to be obtained in six to twelve weeks and no problems in getting approval from the European Investment Bank, which loaned the carmaker money, were anticipated.

If it goes through, the partnership plans for Saabs destined to the Chinese market to be built at a Hawtai plant in China starting in 2013.

"Production in China is for China, and production in Trollheattan (in western Sweden) is for the rest of the world. There is no cannibalism here in any way, shape, or form," Muller told reporters, adding "the Saab 9-3 would be the first car that would be eligible for such local production."

"There is a tremendous benefit in sharing technologies," Muller said, adding the partnership would allow Saab to take advantage of Hawtai's distribution network, which could pave the way for the import in China of Saabs made in Sweden.

That would boost overall sales, he said, stressing it would not decrease production in Sweden.

Yang Jian, a China-based writer for trade publication Automotive News, described the transaction as a "win-win" situation.

"Spyker gets the money it needed and Hawtai gets access to Saab technology. Hawtai needs the help of an international brand, he said, according to Swedish news agency TT, describing Hawtai as a "small and fairly unknown company in China."

Hawtai has the capacity to produce 350,000 vehicles, 300,000 engines and 450,000 automatic transmissions per year, Spyker said.

In Sweden, Enterprise Minister Maud Olofsson, who previously said Saab would not receive any help from the state, applauded the partnership.

"I've said the whole time that for it to work in the long term there had to be private interests ready to invest the money," she said.

Saab union representatives also reacted positively.

"We have both the news that came yesterday about a short-term solution that will allow us to start production again, and now this for the longer term and it is obviously extremely good news for us," said Haakan Schoett of the Metall union.

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