The Chinese plane isn't due to enter service for six years, and then it will face established competition from Canada's Bombardier Inc., the unlisted German-American firm Fairchild Dornier, and Embraer of Brazil, one of the few developing countries to have succeeded in this market. While many countries make aircrafts, entry into the global market for advanced models is notoriously difficult. Almost all the countries now offering world-class planes were established in aviation by the end of World War I, although developing nations increasingly supply components that others have designed.

The aero-engine industry is even more concentrated, dominated by just three firms in the US and the UK. China doesn't plan to do everything in house. Mr Liu said AVIC I might look to western companies for turbofans to power its new regional jet and the aircraft could use western electronics too. "There are many parties who have shown interest-both domestic and foreign...We welcome foreign participation in various forms, both investors and aviation types," he said. China builds aircraft and engines but exports few of them.

AVIC I is one of China's largest state-owned aviation concerns. AVIC I and AVIC II were formed from the split of the former Aviation Industries of China which had tried in the 1990s to develop a world-class regional jet together with Singapore Technologies Group and Airbus. But the plan never proceeded and Airbus is now developing its own small plane, with about 100 seats. Until recently, China hasn't been seen as a viable market for regional jets, which are traditionally regarded as rich-country aircraft, because the smaller planes used cannot offer the low cost per seat of mainline models. But Li Dali, a visiting Beijing University professor of Aeronautics and Astronautics, said that even relatively poor western and far northern China could support such planes because they would help open up their economies. However, one top industry executive raised doubts over the plan's feasibility. "All of the competition-Bombardier, Embraer, Fairchild Dornier-will be shipping product by the middle of 2003. I think AVICwill have lots of competition," said Fairchild Dornier's chairman, Charles Pieper. Even if low Chinese labour costs made the plane 10% less expensive than its competitors, it wouldn't be widely accepted, without a global maintenance and technical support base, he said.

Government officials earlier set out the. guidelines AVIC I would follow, saying the new jet would seat 50 to 10 passengers, would follow market mechanisms and seek "all kinds of investment." Mr Liu said AVIC I had set up a working committee, which would come up with a concrete timeline by the end of the year.

(The Asian Wall Street Journal)