The agreement is expected to be signed on Thursday during the EU-China summit to be held in Beijing, said Klaus Ebermann, head of the European Commission delegation in China.

"Now it has been decided, China will be making a significant financial contribution and we have good reason to believe it will be good cooperation with the focus mainly on applications," he said.

"I was told it was 200 (million euros), my guess is it is 200 million."

The Galileo Joint Undertaking is a venture between the EU and the European Space Agency.

China, which launched its first-ever manned space flight earlier this month, is also expected to cooperate with the EU on satellite navigation through joint work on research and development, manufacturing and technical aspects of the Galileo project such as radio frequencies.

Attending the upcoming summit will be Italian Prime Minister and current EU President Silvio Berlusconi, European Commission President Romano Prodi and EU foreign policy chief Javier Solana.

The Chinese side will be led by Prime Minister Wen Jiabao. The European leaders will also meet Chinese President Hu Jintao.

The two sides will also sign an "authorised destination status" agreement which will simplify visa procedures for Chinese tour groups to Europe, while setting up a mechanism for repatriating illegal immigrants, Ebermann said.

Galileo, scheduled to be operational by 2008, is designed to encircle the globe with 30 satellites in medium Earth orbit, comprising 27 operational satellites and three reserves, plus two control centres on the ground.

It should provide users, ranging from aircraft and shipping to cars and trekkers, with a navigational fix accurate to within just one metrefeet), more accurate than the US GPS system.

SPACE.WIRE