Fiat and Chery have officially announced plans today for the formation of a new joint-venture to produce both Alfa Romeo and Fiat branded cars for the Chinese market. Just yesterday, Fiat announced a deal to source even more engines manufactured by Chery for use in its own cars as a way to further reduce costs.

Under the deal, Fiat and Chery hope to build up to 175,000 units per year for sale in China by 2009. That’s on top of the 100,000 1.6 and 1.8L engines that Chery will supply to Fiat for use in cars built oversees and in China.

In an interview with Associated Press, Fiat Chief Sergio Marchionne that the latest move was part of a great strategy to turn Alfa into a truly global brand. He also revealed that previous partner Nanjing was dropped because of its lack of suitable investment. The latest partnership is the sixth joint-venture Fiat has with China’s carmakers.