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Chinese civil aviation set to take off

China`s civil aviation is showing huge development potential, despite the sluggish global aviation market…

China`s civil aviation is showing huge development potential, despite the sluggish global aviation market, a senior official said recently.

Yan Mingchi, director of the Policy Division of the General Administration of Civil Aviation of China<.> (CAAC<.>), told the seminar on Opening Up of the Service Industry to Foreign Investors that between 1980 and the end of 2001, the industry had used foreign investment of about 30.3 billion US dollars.

Of that, 1.879 billion US dollars came from foreign government loans and other preferential loans; 606 million US dollars from foreign direct investment; and 1.77 billion US dollars raised in overseas listings and domestic B-share listings. Under a 26-billion-US-dollar lease, the country has introduced 437 aircraft .

To date, five aviation enterprises — China Eastern Airlines, China Southern Airlines, Hainan Airlines, Shandong Airlines and Beijing Capital International Airport — have been listed on overseas markets or domestic B-share markets, raising funds of over 10 billion yuan.

Yan said the sector`s opening-up to the outside world had resulted in dramatic achievements.

In terms of aircraft maintenance, Beijing Aircraft Maintenance and Engineering Corporation, a joint venture set up by Lufthansa AG and Air China, has become one of the major aircraft equipment providers in Asia.

The reservation system of the CAAC Computer Information Center has a direct mainframe connection with eight leading international computer reservation systems (CRS), through which China`s agents can sell tickets for over 400 airlines. Worldwide agents of the eight CRSs can also indirectly sell tickets of airlines on the Chinese reservation system.

China Aeronautical Information Network Company was successfully listed on the overseas markets, while Beijing Capital International Airport and Guangzhou Baiyun International Airport have each jointly set up ground service companies with Singaporean investment.

Shanghai Airport (Group) Corporation and Lufthansa AG teamed up to operate freight warehousing. To date, China Aviation Oil Corporation has established multiple joint ventures with foreign partners for supplying aviation oil.

However, Yan also pointed out that there was still room for improvement in using foreign investment in the country`s civil aviation industry.

For instance, the structure of the sector`s utilization of foreign investment is still irrational as debt financing, especially foreign government loans and finance leasing, accounts for a major proportion whereas investment such as foreign direct investment and financing via overseas listing only accounted for a minority, he said.

To improve the situation, the CAAC and the Ministry of Foreign Trade and Economic Cooperation jointly issued the Regulations on Foreign Investment in Civil Aviation on June 21, effective August 1.

Promulgated in response to China`s entry to the World Trade Organization and the country`s intensified civil aviation restructuring, the regulations aim to further open the civil aviation sector and encourage foreign investors to purchase shares issued by Chinese aviation enterprises.

Theodore Koumelis
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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.