German carmaker Volkswagen has received approval from China's National Development and Reform Commission (NDRC) to add two more factories in the country, two people close to the matter said on Sunday.

The new plants are to be set up in the eastern Chinese cities of Tianjin and Qingdao, one of the people said on the sidelines of German Chancellor Angela Merkel's state visit to China.

VW also plans to expand production capacity at its plant in Chengdu in western China to 600,000 vehicles per year.

VW had no immediate comment on the matter.

VW has been investing in China as it battles rivals such as U.S.-based General Motors and domestic player SAIC Motor Corp in the world's largest auto market.

It has assembly plants among others in Changchun, in Chengdu under a venture with state-owned automotive enterprise FAW Group Corp, as well as in Shanghai, Yizheng, Nanjing and Urumqi with SAIC. It is due to open a plant in Hunan provincial capital of Changsha in 2015, which it will operate with SAIC.

Between 2014 and 2018, it plans to invest a total of 18.2 billion euros ($24.83 billion) in new plants and products together with its Chinese joint venture partners.