Shanghai Volkswagen has gained official approval for its planned factory in China's western region of Xinjiang, chinanews.com reported today. Both the National and Xinjiang Uygur Autonomous Region Development and Reform Commissions looked at and accepted the joint venture's proposal. Shanghai VW will establish a production site in regional capital Ürümqi's Economic Technological Development Zone. The two billion yuan ($315.47m) factory will have an expected annual output of 50,000 vehicles and will specialize in compact cars. It is expected to begin manufacture in 2013. The Xinjiang Region Development and Reform Commission stated that the new site will help fill the gap in the region's automobile production capability, and will aid in the country's plans to expand exports to Central Asia and the Middle East. Xinjiang holds a distinct geographical advantage, with the western town of Khorgas neighboring Kazakhstan. 5,128 vehicles were exported from the town last year, generating $2 billion worth of revenue.