eneral Motors says it will set up a $250 million US alternative fuel research centre in Shanghai.

GM CEO Rick Waggoner says the company believes China has the potential to become a leader in the adoption of alternative fuels.

He says construction of the first phase of ``The General Motors Center for Advanced Science and Research'' would be finished late next year.

China, whose major cities are shrouded in pollution, has been trying to promote cleaner and more efficient fuels as part of efforts to cut pollution and rising dependence on imported oil.

China already is the world's number-two oil consumer after the United States.

It saw imports soar by 14.5 per cent in 2006, driven by economic growth that has topped 10 per cent for the past four years.

A boom in car sales has added to smog in China's major cities, which are among the world's dirtiest.