China has set up a state-owned jet engine conglomerate in a push to develop home-grown, high-tech businesses that are able to compete against international rivals in the lucrative aerospace market.
The new conglomerate called Aero Engine Corporation of China (AECC) reportedly brings together a series of state-owned aerospace companies, including Aviation Industrial Corporation of China (AVIC) and Commercial Aircraft Corp of China (COMACC).
State news agency Xinhua reported Monday that the group would have a registered capital of 50 billion yuan ($7.5 billion, 6.6 billion euros) and employ more than 96,000 people. The new firm would be headquartered in the capital, with China's State Council, or cabinet, and the Beijing city government also investing in it.
Xinhua quoted China's President Xi Jinping as saying that the founding of the company was a "strategic move" to make China an aviation power and modernize the military.
In written comments, Premier Li Keqiang also said that making "breakthroughs" in advanced aircraft engines would have "great value in strengthening the military and manufacturing ability of the country."
China's air force currently uses only engines built in Russia. And the country's homegrown commercial aircraft - the narrow-body C919 - is powered by engines from CFM International, a venture between GE of the United States and France's Safran. Earlier this summer, China's second commercial plane - the regional jet ARJ21 - made its first commercial flight after years of delays.
Xinhua cited Keqiang as urging indigenous innovation to make AECC a world leader in aero-engines, capable of competing against bigger rivals such as United Technologies from the United States and British engine maker Pratt & Whitney.
China's Communist rulers have targeted the manufacturing of high-tech products such as jet engines as a means to transform the world's second largest economy and make its firms more competitive with advanced foreign rivals.
At least with jet engines, industry officials believe that it could take years for the firm to develop the engines to power big commercial jets.
uhe/cjc (AFP, Reuters)