State-backed aircraft manufacturer Aviation Industry Corp. of China (AVIC) will set up an independent company to focus on designing and making airplane engines, sources with knowledge of the matter say.
The company will consist of the AVIC's engine design and manufacturing companies, one of the sources said. Its name will be Aero Engine Corp. of China, and it will be formed by the end of the year.
AVIC has 23 listed companies, including three in Hong Kong, and its total market value is 200 billion yuan. It is the first military company in the country to enter Fortune magazine's list of the world's top 500 companies by revenue.
AVIC has three listed companies involved in engine design, manufacturing and control system research. They are Xi'an Aero-Engine Plc., Sichuan Chengfa Aero Science & Technology Co. Ltd. and AVIC Aero-Engine Controls Co. Ltd.
AVIC also set up unlisted AVIC Commercial Aircraft Engine Co. Ltd in 2009 to handle the designing and manufacture of turbofan engines for large passenger planes.
The move is aimed at fixing a bottleneck facing the country's development of large passenger and cargo planes, the source said.
Lin Zuoming, the president of AVIC, will stay in his post, even though his expertise is in engine manufacturing, a separate source with knowledge of the matter said.
Lin has said in the past that his company will invest 10 billion yuan in the engine industry from 2011 to 2015.
Chen Rui, the Communist Party chief of AVIC's engine sector, said in July that a unified system of design and manufacturing should be set up to replace the current model.
Only a few countries, such as the United States, Britain, Russia and France, can independently develop and manufacture airplane engines.
China's engine sector has limited its aviation industry, experts say. Both civilian planes and military planes rely on imports, although some of the military's are copies.
In 2007, the government launched a program to develop a large passenger plane with a takeoff weight of more than 100 tons. The fuselage of the jet, called the C919, was completed on September 19. Its engine is being developed by companies in the United States and France.
The prototypes of the country's large cargo plane, the Yun-20, are powered by Russian-made engines. That plane is still being developed.
Work on China's homegrown Taihang engine, a high-thrust turbofan type, was started in the 1980s and finished in 2005. The core technology came from the CFM-56 engine, developed by the United States and France.
Western countries like Britain and the United States uses independent systems to design and make engines and planes, and the development of engines is always ahead of planes.