Bombardier of Canada, the world’s third-largest aircraft maker, has signed one of the most far-reaching co-operative jet development deals made by a western group with China.

In a deal with China Aviation Industry Corporation (Avic 1) Bombardier has agreed to become a risk and revenue sharing partner in the development of the ARJ21-900 a new, larger variant of the Chinese regional jet, the ARJ21-700.

Bombardier is to invest $100m in the project and will be paid through royalties from the sales of the jet.

Bombardier has agreed to support the marketing of the 110-seat ARJ21-900 to regional airlines in world markets, the first move for a Chinese jet.

At the same time Avic 1 has agreed to invest $400m for research and development and the construction of production facilities and equipment to produce the fuselage for a new range of 110-130 seat jets, the CSeries planned by Bombardier, if the Canadian group reaches the decision, due to be made in 2008, to press ahead with the development of the aircraft.

The $2.1bn development of the CSeries would be the largest aircraft built by Bombardier. It is planned to enter service in 2013.

Avic 1 said that it was seeking to establish itself as a “major international tier one structural supplier” to the world aerospace industry. It is already a supplier of some fuselage sections for Bombardier’s Q400 regional turboprop aircraft.

Pierre Beaudoin, president of Bombardier Aerospace, said that if the CSeries went ahead, the aluminium lithium fuselage would be assembled by Shenyang Aircraft Corporation, part of Avic 1, while the carbon fibre composite wing and tailplane would be built at Bombardier’s plant in Belfast, in the UK. Final assembly of the CSeries would be located in Montreal.

The two groups said they has signed a memorandum of understanding to enter a strategic long term co-operation in the development of five abreast, 90-149 seat commercial aircraft.

The deal is important for China’s ambitions to join the exclusive ranks of global commercial aircraft makers, currently dominated by Boeing and Airbus in big jets and by Bombardier and Embraer in regional jets.