Japanese trading house Itochu Corp will produce paper bags in Shanghai in partnership with a company in the New Oji Paper Co group of Japan, the Nihon Keizai Shimbun says.

A joint company to be set up by the two firms and a local concern would build a factory in the suburbs of Shanghai, the business daily said yesterday.

From October, the factory would manufacture 50 million paper bags and three million carrier bags a year for supply to Japanese food makers and retail companies operating in Shanghai and its vicinity, the daily said.