China Petroleum & Chemical Corp, or Sinopec, and Japan's Mitsui Chemicals Inc on Monday officially established a joint venture in Shanghai for the production and distribution of ethylene-propylene-diene terpolymer (EPT), betting on China's rapid growth in automotive consumption and public utilities spending.

The 50-50 joint venture with a total investment of 2 billion yuan ($317 million) is expected to go into commercial operation in the first quarter of 2014, Sinopec said in a statement on Tuesday.

When completed, the state-of-the-art chemical plant is capable of producing 75,000 tons of EPT a year, making it the world's biggest. EPT is a chemical used to make synthetic rubbers that are widely used in making auto parts, electric wires and cables and other industrial products.

China, which is not self-sufficient in EPT rubbers, is heavily reliant on imports to support the strong domestic demand. The country's apparent consumption of EPT rubber reached 237,400 tons in 2011, of which about 94 percent, or 223,00 tons, was imported.

The joint venture came after the two energy giants' first cooperation in March 2006 when they formed a chemical plant to produce and distribute bisphenol A in Shanghai. The manufacturer has expanded to produce an additional 400,000 tons of phenol acetone a year. The expansion project is still under construction.