BOMBARDIER, the world's third-largest aircraft maker, has signed an agreement with China's biggest plane producer to cooperate in developing mid-sized regional jets, the two companies said in Paris.

Under the deal, the Canadian-based manufacturer will invest US$100 million in the development of China Aviation Industry Corp I's ARJ21-900 planes. AVIC I, in return, agreed to pump US$400 million into Bombardier's C-Series planes, should the Canadian firm decide to continue developing them.

The sharing of common parts will bring about mutually beneficial cost reductions and increased production efficiencies for the aircraft programs, officials said at a joint press conference at the Paris Air Show on Monday.

"With the implementation of this long-term strategic cooperation, we will be able to move forward more effectively with our vision to develop the most competitive commercial airplanes," said Lin Zuoming, president of AVIC I.

The ARJ21-900, which the state-owned AVIC I plans to begin developing this year, is a larger variant of the ARJ21-700. It will seat five passengers in a row and carry 98 to 105 passengers over a distance of 2,225 kilometers. It is expected to be in service by 2011.

The C-Series program was put on hold by Bombardier last year after a poor response from airlines. The plane manufacturer now says it will decide by 2008 whether to proceed with the program.

Pierre Beaudoin, president of Bombardier, said the agreement allows the "exchange of technical expertise and the expansion of our market potential, both in the higher end of the regional aircraft market and lower end of the mainline market."