China approved U.S. automaker General Motors Co.'s plan to buy part of Delphi Corp. (DPHIQ), but set conditions to prevent GM from obtaining trade secrets of Delphi's Chinese clients, in conclusions issued Monday following an antitrust review by the country's Ministry of Commerce.

The review said the deal would negatively impact competition in China's auto and auto parts industries.

Under the conditions issued by China, the two companies won't be allowed to exchange any trade secrets Delphi might have on other auto facilities in China, to prevent GM from obtaining competitive information such as research and development and car models of local auto makers.

It also stipulated that GM couldn't set unreasonable procurement conditions that would benefit Delphi and hurt other suppliers.

The ministry said that it had discussed its concerns with GM and Delphi, and that the companies had come up with some solutions to address the regulator's concerns.

"(The solutions) basically eliminated the Commerce Ministry's competition concerns. Therefore, we decided to accept the solutions," the ministry said, though it set conditions on the deal.

The statement issued by the ministry's antimonopoly bureau said that GM and Delphi should report to the ministry their acquiescence to the restrictions, and that the ministry would penalize the companies for any violations.

Authorities in the U.S. and E.U. had earlier given their approval for the deal after Delphi, GM's former parts division, received approval from a U.S. court to sell assets to its lenders and General Motors, clearing the way for the auto-parts supplier to end its four-year stay in bankruptcy.

Delphi operates 17 wholly owned entities and joint ventures in China and 21 manufacturing sites. It employs about 12,000 full-time staff in China.

China's antimonopoly law took effect in August 2008. Under the law, major merger and acquisition deals on a global scale that could impact the domestic Chinese market need to receive approval from Chinese authorities before they can proceed.

GM makes passenger vehicles in China with SAIC Motor Corp. (600104.SH) and minivans with SAIC and Wuling Automobile Co. It recently formed a light commercial vehicle joint venture with China FAW Group Corp. in August to make FAW-branded light-duty trucks and vans.

-By J.R. Wu and Juan Chen, Dow Jones Newswires; 8610 6588-5848; jr.wu@dowjones.com