Has it actually happened? Both Ford and Volvo have made no official statements that would confirm what's being reported in the Chinese media. Official confirmations usually come after a deal has been widely reported in the media, though. However, the only outlets reporting this rumor are from China. We haven't heard a peep from any Swedish-based news organizations, which is surprising considering they were on the ball last week reporting that Koenigsegg had struck a deal with General Motors to buy Sweden's other big auto brand, Saab.
Swedespeed.com actually asked Volvo if the reports of a sale to Geely were true. James Hope, Volvo's US Product Communications Manager, had this to say.
"An announcement related to the sale of Volvo Car Corp. would only come from Ford Motor Company. As of today [Wednesday, June 17, 2009], neither Ford Motor Company nor Volvo Car Corporation in Sweden has made any announcement regarding the sale of Volvo. Reports of such a sale by any media outlet are speculative and, therefore, are not accurate."
There you have it. If an agreement has been struck by Geely and Volvo's parent company Ford, nobody's except the Chinese are talking about it.
[Source: Autocar.uk, Swedespeed]