PARIS (Reuters) - A proposed joint venture that would allow world No. 4 automaker Stellantis ( STLA ) to build and sell Leapmotor's electric vehicles outside China has received approval from a Chinese regulator, according to two sources familiar with the matter.

China's National Development and Reform Commission (NDRC) has given its approval for the joint venture, said one of the sources, adding that the deal is still waiting on regulatory approval in other markets.

Stellantis ( STLA ) said last October it was buying a 21% stake in Leapmotor in a $1.6 billion deal that would give it a fresh shot at China, the world's biggest car market by sales, and announced the joint venture.

Under that deal, Setllantis would have exclusive rights to build, export and sell Leapmotor products outside china, a first for a legacy western automaker.

Stellantis ( STLA ) would own 51% of the joint venture.

Last month Stellantis ( STLA ) CEO Carlos Tavares said the automaker could build EVs based on Leapmotor technology in Europe, North America or other markets where it needs competitively-priced models to compete with Chinese EV makers.

Stellantis ( STLA ) declined to comment. Representatives of the NDRC could not be reached for comment.

The proposed joint venture comes amid rising trade tensions between China and the European Union, which is investigating whether Chinese EV makers benefit from unfair government subsidies.

The European Commission said on Wednesday it will start customs registration of Chinese EV imports, meaning they could be hit by retroactive tariffs if the EU's trade investigation does conclude they receive unfair subsidies.