IDA Ireland will open its first office in China in September in an effort to attract investment by Chinese firms into the Republic. The office will be based in Shanghai, China's commercial capital and one of the fastest-growing cities in the world.

The State investment agency will target some of the biggest Chinese firms such as the computer giant Lenovo, which are beginning to expand globally.

It will also target a new breed of young, entrepreneurial Chinese firms that are now looking overseas for growth.

The decision to open an office follows a trade mission to China led by the Taoiseach in January, during which the possibility of attracting Chinese firms to the Republic was discussed with Chinese government officials.

The Government also highlighted the potential of attracting investment from China in its recent policy document on Asia, A decade of the Asia Strategy 1999 to 2009.

Gus Jones, the former manager of IDA Ireland's ICT division, will staff the Shanghai office. He said the agency would network with the Chinese business community and begin discussions with firms that may be interested in setting up Irish operations.

Just one Chinese company, the telecoms firm Huawei, has so far set up an office in Dublin. The firm was attracted to Dublin after it signed a telecoms equipment deal with the Irish telephone operator Smart Telecom.

In an interview yesterday, Mr Jones said that the IDA would use a similar strategy to the one that the IDA has employed successfully in the US for the past 20 years.

"We think Chinese firms will be attracted to Ireland as the gateway to Europe. We will be looking to attract EU headquarter functions and the type of shared services centres that companies use to service European operations," he added.

Meanwhile, the head of the Chinese embassy's commercial section, Councillor Zou, said that the Republic's low corporation tax and educated workforce would be attractive to Chinese firms seeking to expand into Europe. He welcomed the decision to open the new IDA office in Shanghai.

China is one of the fastest-growing developing economies with economic growth rates of almost 10 per cent.