The Finnish paper producer has received approval from the Chinese authorities to expand operations at its Changshu Paper Industry Company subsidiary, where it plans to build the paper machine.

Senior vice president of investor relations, Olavi Kauppila, said the company viewed the Asian market as the one most likely to grow.

"From our perspective it is a growing market and we intend to be able to meet demand when it is needed," he said.

Kauppila said the group aimed to complete the feasibility study within the next two months, after which a final investment proposal will be presented to the board of directors for approval during the autumn.

Once approved, the new machine at Changshu is scheduled for start-up by the end of 2004.

The Changshu mill has a production capacity of 350,000 tonnes per annum and produces coated and uncoated fine paper.

The mill is located by the Yangtze river in Jiangsu Province, 60 miles from Shanghai, and has been in operation since 1999.

It became a wholly owned subsidiary of UPM-Kymmene in 2000 after the company bought Aprils 51% shareholding for 97m ($150m).

The UPM-Kymmene group has around 36,000 employees and a total group papermaking capacity of 1.8m tonnes a year.

Story by Andy Scott