October 07, 2008

China sets up company to build large passenger jets

China Daily reported that China's first ever passenger aircraft building company, with registered capital of CNY 20 billion, has been officially launched in Shanghai. China plans to fly its first large passenger airliner in 15 years. It usually takes 10 to 20 years of research and development to develop such a company.

The company, named Commercial Aircraft Corporation of China Limited, will be responsible for the research, development, manufacture and marketing of large homegrown passenger aircraft.

Major shareholders include Assets Supervision & Administration Commission, Shanghai government, aviation companies and other state owned enterprises. Each of the 3 state owned firms namely Baosteel and Chinalco, as well as Sinochem Company, will invest CNY 1 billion for a 5%. China's top two aircraft producers, China Aviation Industry Corporation I and China Aviation Industry Corporation II, will mainly invest in the form of production assets they now have.

The new project has been launched to eliminate China's dependence on Western producers. At present, around 50% of the Chinese aircraft market is controlled by Boeing. It estimates China will need at least 2,600 new aircraft worth over USD 200 billion in the next 20 years.