China plans to merge more than 40 entities working on plane engines into a group with 145 billion yuan ($22 billion) in assets as part of a broader push into advanced industries to propel its economy, people familiar with the proposal said.
The entities have combined assets of about 110 billion yuan, the people said, asking not to be identified because the discussions are private. The Chinese government and companies including Aviation Industry Corp. of China, known as AVIC, will invest an additional 35 billion yuan under the plan, which could be announced as soon as this month, they said.
China is eager to develop its own engine to power its planes, and also is keen to push its economy from labor-intensive work into more sophisticated sectors. The Made in China 2025 blueprint, released last March, cited aerospace as a sector that leaders hope will help make China into an advanced economy along the lines of Japan and Germany.
Shanghai-based Commercial Aircraft Corp. of China, known as Comac, is developing the C919 single-aisle jet, which is expected to make its first test flight this year. CFM International, a joint venture between GE Aviation and a division of France’s Safran SA, will supply a version of its LEAP engine for the initial C919s.
Shares Jump
Shares of Avic Aero-Engine Controls Co. closed up 7.7 percent Tuesday in Shenzhen, while Avic Aviation Engine Corp. ended up 6.7 percent in Shanghai. AviChina Industry & Technology Co. finished up 8.6 percent at HK$5.55 in Hong Kong in its biggest single-day gain since Oct. 2.
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