The automaker said the zero-emission buses will be delivered next year but did not provide financial details of the agreement. 

"This is a small but significant symbolic step in reducing pollution," said Thomas Weber, member of the DaimlerChrysler board responsible for research, said in a statement. 

Shi Dinghuan, secretary general of the ministry, said the government is in talks with DaimlerChrysler to conduct a similar demonstration in Shanghai. 

"The buses are very expensive, much more expensive than fossil fuel buses, " Shi said during a press conference, without elaborating. 

Shi said the emission-free bus demonstration was part of the government's plan to improve the quality of oil used to make fuel and find alternative sources of energy to reduce the country's reliance on fossil fuels. 

"We expect by 2008 there is going to be a small number of (hydrogen-powered) buses or vehicles that will be travelling on the streets of Beijing that will be servicing the Olympic Games," Shi said, adding it will be sometime before the buses are produced in China. 

Herbert Kohler, chief environment officer for DaimlerChrysler, said the automaker hopes to start serious production of hydrogen-powered vehicles in 2012. 

Currently, DaimlerChrysler has 30 zero-emission buses operating in 10 European cities. 

As for developments in its car businesses, the automaker plans to deliver 60 vehicles based on the Mercedes Benz A-class car to the US, Europe, Japan and Singapore by the end of the year. 

DaimlerChrysler is also considering setting up an auto financing company in China for passenger cars, vehicles and trucks. 

"It's something that we want to do. We have to work through issues such as how to find people with the right credit rating when there is no credit rating system," Trevor Hale, head of corporate communications for DaimlerChrysler (China) Ltd, said. 

Hale also said the automaker has been unaffected by the government's attempts to slow economic growth or by rising steel prices. 

"It's something that we are watching but so far we have seen no impact," Hale added. 

DaimlerChrysler has a joint venture with Beijing Automotive Industry Holding Company Ltd (BAIC) namely Beijing Jeep and a joint venture with Beiqi Foton Motor Corp Ltd, the listed arm of BAIC, to make heavy and medium sized trucks. 

It also has a joint venture with China Motor Corp, one of Taiwan's leading auto makers, and Fujian Motor Industry Group to make Mercedez Benz vans. 

allison.jackson@xinhuafinance.com 

amj/tr 

By Staff Reporter 

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