China launches jet engine conglomerate in aerospace push

China's first domestically produced regional jet, the ARJ21, arriving at Shanghai Hongqiao Airport after making its first flight from Chengdu to Shanghai on June 28. It is made by the Commercial Aircraft Corporation of China, one of the investors in the n
China's first domestically produced regional jet, the ARJ21, arriving at Shanghai Hongqiao Airport after making its first flight from Chengdu to Shanghai on June 28. It is made by the Commercial Aircraft Corporation of China, one of the investors in the new state-owned aircraft engine company. PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China officially launched a new multibillion-dollar jet engine conglomerate with almost 100,000 employees at the weekend, as Beijing seeks to become an aerospace power and compete with the likes of Rolls-Royce and General Electric (GE).

The Aero Engine Corporation of China (AECC) has a registered capital of 50 billion yuan (S$10.2 billion), and previous reports said it would incorporate subsidiaries of a series of state-owned companies, including the Aviation Industry Corporation of China.

President Xi Jinping said founding the company was a "strategic move" to make China an aviation power and modernise the military, the official Xinhua news agency reported.

China does not make large commercial jet engines of its own and the country's narrow-body airliner, the C919, is powered by engines from CFM International, a venture between GE of the United States and France's Safran. The best aircraft in China's air force use engines built in Russia, Xinhua said.

Beijing is looking to change that with the creation of a new national champion in the field as it seeks the prestige of having its own aviation sector. Leaders have targeted the manufacture of high-tech products such as jet engines as a means to transform the world's second-largest economy and make its companies more competitive with advanced foreign rivals in aerospace, biotechnology, alternative energy and other sectors.

Premier Li Keqiang said in written comments that making "breakthroughs" in advanced aircraft engines would have great value in strengthening the military and manufacturing ability of the country.

Xinhua cited him urging indigenous innovation to make AECC a world leader in aero-engines.

The new company will employ 96,000 employees and be headquartered in the capital, reports said, with China's State Council or Cabinet and the Beijing city government also investing in it.

But industry executives say it could take years for the company to develop the engines to power big commercial jets.

Earlier this summer, China's home-grown regional jet the ARJ21, made by AECC investor the Commercial Aircraft Corporation of China, made its first commercial flight after years of delays, though its quality and reliability still have to be established to win over customer and passenger confidence.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on August 30, 2016, with the headline 'China launches jet engine conglomerate in aerospace push'. Print Edition | Subscribe