China Aviation Industry Corp. Group, the result of the merger of AVIC I and AVIC II, launched formally last week, VP Tan Ruisong told reporters, with registered capital of CNY64 billion ($9.36 billion).

President and CEO Lin Zuoming said CAIC, which will be responsible for the production of China's large commercial aircraft, has established departments covering defense, transport aircraft, airborne equipment, engines, helicopter manufacturing, utility aircraft, aviation research, flight testing, trade and logistics and capital management. The separation of civil from military aviation removes barriers that would prevent the company's future acquisition by overseas interests.

CAIC signed an agreement with Shanghai's municipal government to establish a commercial aero engine company with registered capital of CNY6 billion. CAIC is the controlling stakeholder of the new venture, which is expected to launch in six months.

Tan said the engine company will include privately run companies as shareholders, and foreign engine firms may be involved if Beijing gives the "green light." He added, "It may take 15 years to develop and produce" a commercial aircraft engine.

CAIC employs about 400,000 at some 200 subsidiaries. Lin is targeting 20% annual revenue increases and wants to reach CNY1 trillion in turnover by 2017. The company currently brings in CNY300 billion.