(Reuters)-Alfa Romeo announced on Tuesday that Zhou Guanyu has become China's first Formula One driver. He will arrive in 2022 and is hailed by the team and the sport as a historic breakthrough in a key growth market.

The 22-year-old will team up with Finnish driver Valtery Bottas, who will join the new lineup from Mercedes with seven-time world champion Lewis Hamilton after five seasons.

Formula One CEO Stefano Domenicali stated that the signing is “great for the sport and millions of enthusiastic Chinese fans who now have a home stadium. Heroes can cheer all year round."

Domenicali said: "Zhou is an incredible genius. He will be a great addition to the amazing grid we have. He will entertain and excite all our Chinese fans in 2022."

The young man succeeded Ferrari-backed Italian driver Antonio Giovinazzi, while Finnish veteran Kimi Raikkonen is about to retire.

"This decision is critical to the company's future," said Frederic Vasseur, the head of the Alfa team, whose team is ranked 9th in the 10 team standings.

"This is not only based on the fact that he is Chinese, but it is a huge boost for the company, sponsors and I think it is for F1," he told Reuters.

"He is the leader of F2. He won the championship in Bahrain and Silverstone this season and is still capable of winning the championship. This is a very good combination. I am very optimistic."

Zhou is the test driver of Renault's Alpine F1 team this season and participated in Friday practice in Austria in July last year.

He also ranked second in the Formula 2 standings and will have two weekend trips to Saudi Arabia and Abu Dhabi.

"From a very young age, I dreamed of climbing as high as possible in a sport that I love, and now my dream has come true," Zhou said in a team statement.

"Becoming the first Chinese driver to participate in Formula One is a breakthrough in the history of Chinese motorsports."

Vassar said Zhou will sever ties with Alpine.

"He is a completely free player with free management...I don't want someone to be connected to another team, if all goes well, he will leave. This is not an option for me at all," he said.

Zhou is likely to receive strong support from China, some reports claim as high as 30 million US dollars, but Wasser will not disclose the details or duration of the contract.

"We are 200% focused on team performance. We don't have to hide the fact that budget is part of performance. We are also committed to reaching the cost ceiling because this is an important step for us," he said.

Formula One has introduced a budget cap of US$145 million this season, which will drop to US$135 million in 2023.

Large fleets must cut expenses to reach the upper limit, while small fleets such as Alpha, operated by Swiss Sauber, aim to attract more funds to reach the upper limit and compete on equal terms.

"In addition to the good news in marketing and budget, we can also have a driver who can win a race in F2. This is a perfect combination," Vasseur said.

He believes that due to the COVID-19 pandemic, the third consecutive year of absence from China in Shanghai next season will help alleviate the direct pressure on rookies.

This month Formula One will extend the contract for the Chinese Grand Prix until 2025. The event was held for the first time in 2004.

(Reporting by Alan Baldwin, editing by Pritha Sarkar and Shrivathsa Sridhar)