China announced yesterday a huge loan package for its main aircraft maker and tax breaks for its airlines, as further evidence emerged of the industry’s troubles amid the global economic crisis.
China Aviation Industry Corp (中國航空工業), the main state-owned aircraft maker, said it had secured a pledge of up to 176 billion yuan (US$25.7 billion) in domestic bank loans.
“The credit quota shows the financial sector has confidence in the high-tech strategic aviation industry despite the current economic crisis,” Lin Zuoming (林左鳴), the company’s general manager, was quoted as saying in the Chinese press.
The company will use the loan to finance the development of helicopters, engines, cargo planes and the building of a passenger aircraft with up to 149 seats with Canada’s Bombardier, the report said.
In a statement on its Web site announcing the deal that was signed on Thursday, the company said the credit line may eventually rise to 250 billion yuan.
Ten lenders, including the Industrial and Commercial Bank of China (ICBC, 中國工商銀行), are involved.
However, analysts said that the loan pledge, which was an uncommitted credit facility, was more a symbolic show of goodwill to back the government in its efforts to stimulate the economy and boost domestic demand amid slowing economic growth.
“It is in line with the strategy to expand domestic demand ... showing the aerospace industry is ready to do its own part to contribute to economic growth,” said Zhang Xin, an analyst with Guotai Jun’an Securities (國泰君安證券) in Shanghai.