China to build $1.2 bln helicopter plant in H1 -Xinhua

BEIJING Jan 12 (Reuters) - China Aviation Industry Corp, the country's top aircraft maker, will build a $1.2 billion commercial helicopter plant in the northern port of Tianjin, the Xinhua News Agency reported on Monday.

China Aviation signed a deal with the Tianjin municipal government to begin work on the plant in the first half of 2009, Xinhua cited Feng Zhijiang, the head of the Tianjin Free Trade Zone, as saying.

A new company will be formed, China Aviation Industry Helicopters Corp, and will focus on medium-sized and heavy helicopters, to fill a void in the domestic market, according to the report. Sales are forecast to reach 30-40 billion yuan ($4.4-$5.9 billion) within 10 years, Xinhua said, but no details of ownership were disclosed.

The news comes just weeks after local media reported that Hiller (China) Aircraft Manufacturing Co and the Shanxi Xinhaisheng Trade Co would begin producing civilian helicopters by the end of 2009.

The venture with Hiller has set a goal of manufacturing 200 helicopters a year.

China needs about 3,000 helicopters over the next 20 years but currently has only about 100 such aircraft for civilian use, Xinhua said.

China Aviation Industry Corp was only formed late last year with the merger of the country's two state aircraft makers, creating a huge group that contains Jiangxi Hongdu Aviation Industry Co (600316.SS) along with 20 other listed firms.

The company also has a stake in Commercial Aircraft Corp of China -- the developer of the mainland's first regional jet -- which aims one day to compete with industry giants Boeing Co (BA.N) and Airbus (EAD.DE).

Ten Chinese banks signed an agreement last week to lend $26 billion to China Aviation Industry Corp. (US$=6.84 yuan)