Xu Zhanbin, vice-president of AVIC II, announced the news on Saturday, two days before the opening of Airshow China 2002 in Zhuhai in South China's Guangdong Province. He refused to specify the name of the joint venture partner.

But earlier, Mauricio Botelho, president and CEO of the Brazilian aircraft manufacturer Embraer, said his company expects to seal a joint venture agreement on an aircraft manufacturing plant in China by the end of this year.

The deal and its schedule seemed to be the same as those announced by Xu, who said the joint venture will be established within this year.

China Aviation Industry Corp I, the other major aviation manufacturing enterprise, said it will begin to produce 72- to 79-seat regional jets on its own within three to five years.

Reliable sources said the new joint venture will be located in Harbin of Northeast China's Heilongjiang Province.

The new company, with an annual production capacity of 24 jets, is expected to deliver aircraft to the first group of clients within one year after establishment, Xu said.

The current reform and consolidation of the Chinese airline industry must lay a solid foundation for the rationalization of airline networks, experts said.

They believe the central government's decision to develop the western part of the country and the success of Beijing's bid to host the 2008 Olympics will create big opportunities for the regional aviation market.

The General Administration of Civil Aviation of China predicted that the country will order some 110 to 140 regional jets - an aircraft with 50 to 110 seats and a range between 600 kilometres and 1,200 kilometres - during the 10th Five-Year Plan period (2001-05).

Transport by regional jet will become a new growth area in the country's civil aviation industry, the administration said.

The State Commission of Science, Technology and Industry for National Defence, the regulator of the aircraft manufacturing industry, said China will give top priority to the research and development of regional aircraft in the coming decades.

Production of regional airliners is the nation's best bet as the aviation industry currently lacks the capability to produce larger planes competitively, the commission said.

The State has already announced plans to create preferential conditions for regional airlines, it said.

A number of airports are to be upgraded and around 36 new airports are to be built within the next five years that are suitable for smaller planes.

With the aim of encouraging the use of small aircraft, civil aviation authorities also announced a reduction of airport construction fees. Such fees can range from a 10 yuan (US$1.2) to 50 yuan (US$6) charge passed on to the average passenger.

(China Daily November 4, 2002)