Volkswagen is building a new 300,000 car capacity plant at Foshan, in the Southern Chinese region of Guangdong.
It will be VW and its Chinese partner FAW's tenth plant in China when it opens in 2013.
"China has become the Volkswagen Group's largest and most important sales market," said Martin Winterkorn, chairman of the Management Board of Volkswagen, who confirmed the company will invest six billion euros (£5bn) in China by 2012.
"We intend to continue above-average growth side by side with our partners. With our unprecedented investment program, we intend to double our capacities in China to three million vehicles per year by 2013/14."
This year the Volkswagen Group will launch seven new or modified locally produced models in the Chinese market. By 2012, it plans to introduce over 20 new models in total.
The production of electric cars is also set to start in China in 2013/2014.