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China nears approval of $16 billion domestic jet-engine plan: Xinhua

A woman walks past the Aviation Industry Corporation of China (AVIC) headquarters building in Beijing October 30, 2012. REUTERS/Jason Lee
A woman walks past the Aviation Industry Corporation of China (AVIC) headquarters building in Beijing October 30, 2012. REUTERS/Jason Lee

SHANGHAI (Reuters) - China's cabinet may soon approve an aircraft engine development program that will require investment of at least 100 billion yuan ($16 billion), state-run Xinhua news agency quoted unidentified industry sources as saying.

China is determined to reduce its dependency on foreign companies like Boeing Co , EADS-owned Airbus , General Electric Co and Rolls Royce Plc for the country's soaring demand for planes and engines.

So far the domestic aerospace industry has failed to build a reliable, high-performance jet engine to end its dependence on Russian and Western makers for equipping its military and commercial aircraft.

Xinhua on Thursday quoted an unidentified professor at the Beijing University of Aeronautics and Astronautics (BUAA) with knowledge of the project as saying the investment would be used mainly for research on technology, designs and materials related to aircraft engine manufacturing.

The project was going through approval procedures in the State Council and may be approved shortly, the professor was quoted as saying.

Participants in the project include Shenyang Liming Aero-Engine Group Corp, AVIC Xi'an Aero-Engine (Group) Ltd <600893.SS> and research institutes including the BUAA, Xinhua reported.

Aviation Industry Corporation of China (AVIC), the country's dominant military and commercial aviation contractor, had lobbied the government to back a multi-billion dollar plan to build a high-performance jet engine.

China's military and aerospace industries have suffered from bans on the sale of military equipment imposed by Western governments after the Tiananmen Square crackdown and foreign engine-makers are reluctant to transfer costly technology.

Some Chinese aviation industry specialists forecast Beijing will eventually spend up to 300 billion yuan ($49 billion) on jet-engine development over the next two decades.

($1 = 6.2273 Chinese yuan)

(Reporting by John Ruwitch; Editing by Matt Driskill)

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