Listed subsidiaries of top Chinese military contractors aim to buy at least 20 billion yuan of assets from their state-owned parents in the second half, according to filings with the Shanghai and Shenzhen stock exchanges.
Lin ruled out the listing of the entire AVIC group, citing the complexity of its structure. The sprawling Beijing-based enterprise has more than 400,000 employees and 200 subsidiaries, including two dozen listed units.
“We are too big and unwieldy with too many kinds of businesses. A whole listing would be hard to be accepted by the stock market,” Lin said.
Beijing is pressing ahead with an ambitious program to privatise a big chunk of a defence industry employing more than a million workers at more than 1,000 state-owned enterprises.
The long-term goal is to transform some of the country’s leading contractors such as China State Shipbuilding Corporation (CSSC), AVIC and China Aerospace Science and Industry Corporation into homegrown versions of Northrop Grumman Corp and BAE Systems Plc.
AVIC, expected to generate profits of more than 10 billion yuan on sales of over 300 billion yuan this year, is aiming to build a high-performance jet engine by around 2020. It will draw on internal resources, funds raised from the capital market and support from the state, Lin said.
“We have made a good plan,” Lin said. “We hope our manufacturing of a high-performance engine, as well as its commercial potential, would reach a relatively advanced level in the world in about 10 years.”
The government is evaluating a 100 billion yuan proposal to galvanize a disjointed and under-funded engine research effort, aviation industry officials say.