Volkswagen , the world's second largest carmaker, will invest about 170 million euros to build a new plant in Urumqi in western China capable of making 50,000 vehicles per year, the company said on Monday.

Volkswagen's Chief Executive Martin Winterkorn had told reporters that the Chinese government had approached the carmaker, the first to enter China, with the request to consider extending its substantial manufacturing footprint to the western part of the country.

Urumqi is the capital of the province Xinjiang, a relatively poor part of the China where there are ethnic tensions between the Muslim Uighurs and the Han Chinese.

(Reporting by Christiaan Hetzner)