China Establishes New State-Owned Aircraft-Engine Maker
August 28 2016 - 11:50AM
Dow Jones News
By Chun Han Wong
BEIJING -- China set up a new state-owned aircraft engine maker
to help fulfill ambitions to develop homegrown aerospace giants and
become a major player in global aviation.
In remarks published Sunday by state media, President Xi Jinping
described the creation of Aero Engine Corp. of China, or AECC, as a
"strategic move" that would accelerate the development of
indigenously made jet engines and thereby boost national prestige
and military power.
The new company, which has 50 billion yuan ($7.5 billion) in
registered capital and 96,000 employees, will focus on the design,
manufacture and testing of aircraft engines, the official Xinhua
News Agency said. Its investors include the Chinese government and
two state-owned firms: Aviation Industry Corp. of China, an
aerospace and defense conglomerate, and Commercial Aircraft Corp.
of China, which produces passenger jets.
China has struggled to produce advanced jet engines capable of
matching foreign rivals, despite significant state funding and
decades of effort. Many Chinese military jets use Russian-made
engines, while the country's two homegrown passenger-jet designs
rely on Western-made engines.
By setting up AECC, Beijing hopes to create a self-sufficient
aerospace sector that can serve commercial and military aviation
needs with homegrown technology, industry analysts say.
AECC consolidates existing aircraft-engine businesses into a
single entity. In March, three listed companies announced that they
were due to become part of the new company: AVIC Aviation Engine
Corp., Sichuan Chengfa Aero-Science & Technology Co. and AVIC
Aero-Engine Controls Co.
The move also dovetails with Beijing's efforts to revamp its
state-owned manufacturing sector, with the aim of creating
high-technology industrial champions in aerospace, robotics,
nuclear power and other fields.
China's state-owned aerospace firms date back to the 1950s, when
they started building Soviet-designed military and civilian
aircraft under license from Moscow.
Chinese engineers have since developed military jet engines, but
have yet to master the technology needed to produce powerful
turbofan engines suited for commercial use, given the tougher
requirements for safety and reliability. While China has designed
two passenger jets, both rely on foreign suppliers for their
engines and other major components.
The ARJ21 regional jet, a 78-to-90-seater that entered
commercial service in June, uses engines produced by General
Electric Co., while the single-aisle C919 jetliner -- still under
development -- will be powered by engines made by CFM
International, a joint venture between GE and the Snecma engine
unit of France's Safran SA.
Write to Chun Han Wong at chunhan.wong@wsj.com
(END) Dow Jones Newswires
August 28, 2016 11:35 ET (15:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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