SHANGHAI (Reuters) - China's Tengzhong may finalize a deal with General Motors <GM.UL> as early as next week to acquire the U.S. automaker's Hummer brand, a source familiar with the deal said on Friday.

The deal would mark the first major Chinese acquisition of a distressed U.S. auto asset amid a sharper than expected industry downturn. Chinese regulators will decide whether or not to approve the plans after the deal is finalized, the source said.

Sichuan Tengzhong Heavy Industrial Machinery has been in detailed negotiations with GM since it announced a tentative plan in June to take over the rights to the premium off-road Hummer brand from its U.S. owner.

"Tengzhong executives have been traveling between the U.S. and China in the past months and more will arrive in Detroit soon," said the source, who was not authorized to speak to the media about the deal due to its sensitive nature.

"If there are no big surprises, an agreement could be finalized next week," the source added.

Tengzhong declined to comment. A GM spokeswoman in China could not immediately be reached for comment.

Tengzhong is expected to maintain Hummer's existing senior management and operational team as it previously promised, the source said.

It will also keep the dealership network of the U.S. sport utility vehicle unchanged, added the source. Hummer is currently sold in more than 30 countries, including China.

(Reporting by Fang Yan and Edmund Klamann)