CHINA'S state-asset regulator and aircraft makers are expected to join a consortium to create a company which will be the country's first manufacturer of large commercial jets by March, a media report said yesterday.

Local governments and two big state-owned metal producers would also invest in the planned venture before the National People's Congress convenes in March, Shanghai Securities News cited an unidentified official as saying.

The State-owned Assets Supervision and Administration Commission will inject cash into the company and become the largest shareholder.

China's two large aviation companies, AVIC I and AVIC II, will invest assets and cash in exchange for stakes to become the second-largest shareholder of the planned company with equal shares, the source said.

Local governments, including Shanghai, are expected to invest five billion yuan (US$694 million) in the company but the official refused to disclose the size of their stakes.

Shanghai Party Secretary Yu Zhengsheng said last week that the city will play a leading role in research and development, design, parts manufacturing and final assembly of the big jets.

The project is expected to have a total investment budget of between 50 billion yuan and 60 billion yuan, and Shanghai will be one of the big investors, Yu said.

Shanghai Securities News also quoted the source as saying that Baoshan Iron and Steel Co, the nation's largest steel company, and Aluminum Corp of China, the nation's biggest maker of the lightweight metal, are set to hold minority shares in the company. The source said the name list is not the final version.

AVIC I already builds the country's first regional jet ARJ21. The jet will make its maiden flight in March and the project, costing six billion yuan, is seen as a precursor to China building its own jumbo jets.