Hewlett-Packard is selling a 51% stake in its Chinese business unit for $2.3 billion to local company Tsinghua Holdings.

The deal brings together HP with the investment arm of China’s Tsinghua University in a joint venture called H3C, worth $4.5 billion.

H3C is being touted as the leader in China for computer servers, storage and technology services.

It will have about 8,000 workers and $3.1bn in annual revenues, HP said.

HP CEO Meg Whitman said in a statement: “HP is making a bold move to win in today’s China.

“Partnering with Tsinghua, one of China’s most respected institutions, the new H3C will be able to drive even greater innovation for China, in China.”

H3C will become a subsidiary of Unisplendour, which is the publicly traded unit of Tsinghua Holdings.

Meanwhile, California-based HP, which is one of the world’s largest makers of personal computers, said it would still fully own its existing China-based enterprise services, PC business and other operations in China.

This latest move comes after HP announced a plan last year to split itself into two separate companies- with one focusing on PCs and printers, and the other on software and enterprise services.

It also follows reports of the Chinese government worried about US cyberspying through tech companies and encouraging Chinese businesses to use local technology services.

The sale of the Chinese unit is expected to be completed by the end of this year and is subject to shareholder vote and regulatory approvals.