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China is a step closer to its goal of building a large passenger jet by 2020 after final assembly work began on the ARJ-21, its first home-grown regional jetliner, in Shanghai on Friday.

A company will be formed "very soon" for the large passenger jet project, said Zhang Yunchuan, Minister of the Commission of Science, Technology and Industry for National Defense, who was in Shanghai on Friday for a ceremony to mark the ARJ-21's final assembly.

Also on Friday, a metals industry insider told China Daily that a feasibility study for a new 3-billion-yuan (US$384.6 million) factory is being carried out by three Chinese firms on the production of 12-centimeter-thick aluminium panels to be used in the manufacture of the large commercial aircraft.

The aluminium panels may also be exported, said the insider, who did not wish to be named.

The ARJ-21 is a passenger jet with a seating capacity of up to 110.

Beijing said it would develop large commercial aircraft on March 18 via the central government's website, after the project was called for by participants at the National People's Congress (NPC), the top legislature, and the National Committee of the Chinese People's Political Consultative Committee (CPPCC).

The planned large passenger jet would have seating capacity of over 150, according to media speculation equivalent to the Boeing 737 and the Airbus 320.

Liu Daxiang, an NPC deputy and aviation expert, told China Daily during the two national bodies' annual sessions that the home-grown large passenger jet should be ready to take off by 2020.

The project will be developed by the two national aviation industry corporations, AVIC I and AVIC II. The ARJ-21 was solely developed by AVIC I, according to industry sources.

The development of the ARJ-21 may offer useful experience for the development of future larger passenger jets, and "can be counted as a milestone", said Wu Guanghui, the ARJ-21's chief designer, at its Shanghai assembly line on Friday.

AVIC I reportedly plans to conduct the first test flight of its ARJ-21 in March 2008, with the first delivery expected for September 2009.

The Chinese jet procured 40 percent of its parts from 19 foreign manufacturers, including General Electric, which made the engine.

The company has received 71 orders for the ARJ-21 from domestic airlines and aims to sell another five to the United States, said Chen Jin, vice general manager of AVIC I's commercial aircraft subsidiary.

The developer claimed the nation's return on investment was much better than the world average. The ARJ-21 involved a total investment of 5 billion yuan (US$641 million), while similar foreign projects often require twice that figure. The jet is priced at around US$27 million per unit.

China has demand for 500 to 700 regional jets over the next two decades, said Chuck P. Nugent, general manager of GE's small commercial engines department, on Friday.

And the large commercial aircraft market could expand further. Airbus' latest forecast puts China in second place behind the United States in both the number and value of jets needed between 2006 and 2025, with a market for 2,929 large aircraft worth US$349 billion.

(China Daily March 31, 2007)