Top Chinese automaker SAIC Motor Corp said on Monday it and Baosteel will jointly build a lab to research and develop new steel products to make cars lighter.

Chinese cars are 8 to 10 percent heavier than competing models of global rivals while commercial vehicles are more than 10 percent heavier.

Chinese cars should weigh 30 to 35 percent less by 2020 compared with 2005 and fuel consumption drop 20 to 25 percent on average per car, Yang Shuyi, SAIC engineer, said in a statement ahead of a signing ceremony between the two companies.

Baosteel, also known as Baoshan Iron & Steel, is the country's biggest listed steelmaker, and supplies almost half of auto sheets to domestic automakers.

SAIC runs vehicle manufacturing ventures with General Motors

and Volkswagen.

Asked about the Chinese automaker's interest in General Motors' initial public offering, SAIC reiterated it was monitoring developments.

We will keep a close eye on GM's IPO as they are our important partner, SAIC Chairman Hu Maoyuan told reporters in response to questions on the sidelines of the ceremony.

As long as this is favorable to both parties, we will consider it, but so far we haven't got any details of GM's IPO development.

SAIC has reached out to GM to explore the prospect of taking a stake in the U.S. automaker when it goes public this year, four people with knowledge of the matter told Reuters earlier.

China surpassed the United States as the world's largest auto market last year.

Car sales started to show signs of a slowdown beginning from the second quarter on economic worries, but bounced back strongly in August due largely to government subsidies on fuel-efficient cars.

(Reporting by Ruby Lian and Jacqueline Wong; Editing by Michael Shields)