A document from the General Administration of Civil Aviation of China (CAAC) showed that foreign companies will be allowed to invest in all domestic airlines and that their share-holding limitations will be lifted to 49 per cent from the current 35 per cent.

The new regulation is being enacted to enable Chinese companies to hold relatively major shares in such co-operations.

Investment methods have also been varied under the new plan. Besides the previous mode of joint ventures, foreign companies can now get their shares by buying stocks and through other authorized means of investment.

Business, agricultural and industrial flights will now be open to foreign investors, though defence-related flights will still be restricted for safety and strategy purposes.

Chinese investors can hold major shares in air services involving business and tourism, while foreign companies can hold major shares in agriculture and forestry so long as their Chinese partners agree.

The investment percentage of ground services is redefined in the new regulation. The 49 percentage share-holding limitation of aviation oil supply and aircraft maintenance remains, while the limitations for cargo storage, aviation food supply and ground services are being opened up to co-operation on both sides.

The CAAC said in the document that this modification, part of China's opening-up process, was needed to meet expanding market demands now that China has joined the World Trade Organization (WTO).

The new regulation was co-drafted by the CAAC, the State Development Planning Commission and the Ministry of Foreign Trade and Economic Co-operation. It had previously been authorized by the State Council.

It will replace the former regulation in effect since 1994.

(China Daily July 2, 2002)