April 20 (Bloomberg) -- General Motors Corp., shuttering U.S. plants in a bid to avoid bankruptcy, is “likely” to build a new factory in China on surging demand.

“Operations in China are profitable and in the future China can finance its own growth,” Nick Reilly, the company’s Asia-Pacific president, said at the Shanghai auto show today. He didn’t give a timeframe for the new plant.

GM, the biggest overseas automaker in China, boosted sales in the country 38 percent last month as government stimulus measures spurred demand for its minivans. By contrast, the company’s U.S. sales slumped 45 percent on the recession, as it battles to convince the U.S. government that it’s still viable.

The automaker has also delayed expansion of an Indian plant for as long as two years as sales growth there has slowed, Reilly said. The company will seek to turn around sales in Australia and South Korea, he added.

GM is basing its business planning in Asia on the assumption that it will have to finance projects locally, insulating it from possible problems in the U.S., Reilly said.

“We won’t get money out of the U.S. into China,” Reilly said. Still, “we don’t need to because we have a very good balance sheet.”

China Sales

The Detroit-based carmaker said April 9 it expects to double annual sales in China to more than 2 million vehicles over the next five years, with more than 30 new and upgraded models being introduced in that span.

GM makes vehicles in China through two ventures, both of which are backed by SAIC Motor Corp. Reilly said he wouldn’t comment on the possibility of Chinese automakers buying GM brands.

GM is trying to prove it’s viable in order to keep $13.4 billion in U.S. federal loans. The company is seeking to shed some brands, cut 47,000 jobs worldwide this year and close five assembly plants as it faces a June 1 deadline to avoid a U.S. government-backed bankruptcy.

GM will keep its “most profitable” Buick brand, Reilly said. The carmaker is trying to sell or close Saturn, Hummer and Saab out of its eight brands.

It’s also studying plans to drop Pontiac and GMC as part of its broader cost-cutting moves, people familiar with the discussions have said. The Chevrolet, Cadillac and Buick brands are likely safe, said the people last week, asking not to be named because decisions aren’t final.

GM is ready to cede controlling stakes in Adam Opel GmbH and Vauxhall Motors Holdings Ltd. in exchange for a promise to invest in a new venture formed from those European units, the Financial Times reported, citing two people familiar with the plans.

An investor will be asked to pay at least 500 million euros ($650 million) in equity for the units, while GM will inject the money directly into Opel, the newspaper said.

To contact the reporter on this story: Stephanie Wong in Shanghai at swong139@bloomberg.net

Last Updated: April 20, 2009 07:59 EDT