German auto supplier ZF is investing 320 million yuan ($47.42 million) to expand a plant in Shanghai as demand for electric power steering systems grow in China.

The increased production capacity is expected to become operational in mid-2023, said ZF in a statement on Wednesday.

The company said the investment will increase sales of electric power steering systems by over 1 billion yuan by 2024 compared with this year.

ZF's electric power steering system has excellent steering performance and features high cost-effectiveness. It can support autonomous driving functions at Level 3 and above.

The new investment in Shanghai demonstrates that ZF is introducing the latest technology and high-performance products to China.

Holger Klein, a member of ZF's board of management, said the company is confident in the potential of China as the world's largest automotive market.

"As a multinational company, we are an integral part of China's social and economic fabric. We are doubling down on China to lead the next generation of mobility," he said.

At present, ZF has nearly 50 production facilities, four R&D centers and nearly 240 after-sales service outlets in more than 20 cities in China, with more than 20,000 employees.

Renee Wang, president of ZF China and senior vice-president of ZF Asia Pacific, said the company will continue to cultivate the Chinese market and make contributions to China's sustainable development.

In the first half this year, ZF's sales in the Asia Pacific region reached 4.05 billion euros, with the majority coming from China, accounting for 19 percent of the group's global sales in the same period.

The company saw its sales in the first half grow by 10 percent year-on-year. It expects moderate growth in its sales for the whole year, with its sales expected to exceed 40 billion euros for the first time.