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China OKs plan to build commercial jets

SHANGHAI, China - China's top leaders have approved a program to build
large commercial aircraft, lending crucial government support to plans
to challenge the domination of Boeing and Airbus in the country's
fast-growing aviation market.

A Cabinet meeting held last month approved "in principle" setting up a
formal program to build large commercial aircraft, according to a
statement seen Monday on the Web site of the State Council Information
Office.

It said the decision followed a report by a group set up six months
earlier to research the feasibility of the project.

No timeframe was given, but last week a top official of state-owned
China Aviation Industry Corporation I, or AVIC I, said that the
company planned to start making large aircraft by 2020.

China has set a target of completing designs for a large aircraft by
2010 and has proposed producing its own aircraft engines.

China plans test flights of its first commercial jet aircraft, the
mid-sized ARJ-21 regional jet, by next year. It also is seeking
Federal Aviation Administration approval of the jet with a mind toward
selling the ARJ-21 in overseas markets.

With China expected to buy 2,230 new planes between now and 2025, the
government has fast-tracked development plans to ensure that its own
companies grab a share.

China abandoned a project to build large aircraft in the 1970s,
although local manufacturers already make many components for both
Boeing Co. and Airbus SA. Airbus recently agreed to open a final
assembly line for its mid-size A320 aircraft in the northern city of
Tianjin.

Large aircraft generally have about 200 seats or more and a payload of
100 tons. Initial versions of the ARJ, or "Advanced Regional Jet," are
expected to carry 70-110 passengers.

The Cabinet resolved to build an "internationally competitive
product," the statement said. Among key objectives was to ensure that
domestic companies develop their own technology, while using
international cooperation.

Boeing officials said Monday they welcomed the potential competition
from China.

Scott Carson, chief executive of Boeing's commercial jet-building
division, also said China likely would produce a plane similar to
Boeing's 737, a single-aisle, twin-engine jet with short-to-medium
range.

"That would be the next logical step based on what they're doing
today," Carson said in a conference call with analysts and reporters.

Chicago-based Boeing took an early lead in Chinese aircraft market,
selling more than 700 planes here since 1972, including 60 orders for
the company's new 787 Dreamliner.

Chinese airlines also have about 100 Airbus planes in their fleets
with dozens more on order, including five of the company's troubled
A380 superjumbo.


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