* AVIC chairman rules out listing of entire group
* AVIC may inject more assets into AviChina Industry &
* AVIC aims to produce its own high-performance jet engine
By Charlie Zhu
BEIJING, Nov 13 Aviation Industry Corporation of
China (AVIC), the country's dominant aerospace and defence
contractor, plans to raise more money in the mainland and Hong
Kong stock markets to bankroll future growth, its chairman Lin
The group is also considering injecting its holdings in some
mainland-listed units into AviChina Industry & Technology Co Ltd
as the state-owned giant makes the Hong Kong-listed
subsidiary its key fund-raising platform for its aviation
business, Lin said, without identifying the mainland firms.
The Chinese government is opening up a sector traditionally
shielded from competition and public scrutiny as it taps
private-sector funds to help speed up the development of its
aviation and defence firms to compete with global giants such as
Lockheed Martin Corp.
Lin ruled out the listing of the entire AVIC group, citing
the complexity of its structure. The sprawling Beijing-based
enterprise has more than 400,000 employees and 200 subsidiaries,
including two dozen listed units.
"We are too big and unwieldy with too many kinds of
businesses. A whole listing would be hard to be accepted by the
stock market," Lin told the media on the sidelines of the 18th
Communist Party Congress late on Monday.
AVIC, aiming to quadruple its sales to 1 trillion yuan
($157.7 billion) by 2020 from 2011, plans to inject 80 percent
of its main businesses into some of its listed companies by the
end of next year, industry officials say. The group has already
injected more than 50 percent of its businesses into the firms.
Listed subsidiaries of top Chinese military contractors now
aim to buy at least 20 billion yuan ($3.15 billion) of assets
from their state-owned parents in the second half, according to
filings with the Shanghai and Shenzhen stock exchanges.
Beijing is pressing ahead with an ambitious program to
privatise a big chunk of a defence industry employing more than
a million workers at more than 1,000 state-owned enterprises.
The long-term goal is to transform some of the country's
leading contractors such as China State Shipbuilding Corporation
(CSSC), AVIC and China Aerospace Science and Industry
Corporation into homegrown versions of Northrop Grumman Corp
and BAE Systems Plc.
AVIC, expected to generate profits of more than 10 billion
yuan on sales of over 300 billion yuan this year, is aiming to
build a high-performance jet engine by 2020, drawing on internal
resources, funds raised from the capital market and support from
the state, Lin said.
China has so far failed to build reliable, high-performance
engines for its commercial aircraft and fighter jets to end its
dependence on Russian and Western manufacturers.
The government is evaluating a 100 billion yuan proposal to
galvanize a disjointed and under-funded engine research effort,
aviation industry officials say.
AVIC has already set aside about 10 billion yuan of its own
funds for jet engine development over the next three years.
China's ability to develop engines for passenger aircraft
could have considerable potential for technology transfer to the
military, experts say.
High performance military jet engines are crucial to
Beijing's long-term plan to increase the number of frontline
fighters and strike aircraft in its air force and naval aviation
units. These aircraft are a key element of a long-term military
build-up aimed primarily at securing military dominance over
Taiwan and a vast swathe of disputed maritime territory off
China's east and southern coasts.