German auto giant Volkswagen said on Thursday it had cleared the air with Chinese partner FAW over allegations it stole VW's engine designs and two sides would bring forward plans to extend their cooperation.

"Within the framework of their existing cooperation, neither of the partners infringed the rights of the other," a VW spokesman told AFP.

"On this basis, the two sides are actually looking to extending earlier than expected their joint venture contract," scheduled to expire in 2016, the spokesman said.

VW and FAW have not yet renewed the joint venture agreement, he insisted, denying a number of news agency reports to that effect.

An industry source told AFP that the contract would be "renewed for a period of 25 years some time during 2013."

In July, the business daily Handelsblatt had said that FAW was believed to have copied one of the German group's engines in what sources described as "systematic and planned" espionage.

FAW planned to sell a model equipped with the engines in Russia, in competition with VW and Skoda models, the report claimed.

China is VW's most important export market and it sold a total 2.26 million cars there last year.

Beijing does not allow foreign automakers to build their own cars there but requires them to work together with domestic companies in joint ventures where the Chinese partner holds the majority stake.

At the time, a VW spokesman had told AFP that the German giant was "examining the issue very closely. On the other hand, we've always worked together with FAW very successfully and very trustfully in the past."