China is determined to reduce its dependency on foreign companies like Boeing Co (>> The Boeing Company), EADS-owned Airbus (>> EADS), General Electric Co (>> General Electric Company) and Rolls Royce Plc (>> Rolls-Royce Holding PLC) for the country's soaring demand for planes and engines.
So far the domestic aerospace industry has failed to build a reliable, high-performance jet engine to end its dependence on Russian and Western makers for equipping its military and commercial aircraft.
Xinhua on Thursday quoted an unidentified professor at the Beijing University of Aeronautics and Astronautics (BUAA) with knowledge of the project as saying the investment would be used mainly for research on technology, designs and materials related to aircraft engine manufacturing.
The project was going through approval procedures in the State Council and may be approved shortly, the professor was quoted as saying.
Participants in the project include Shenyang Liming Aero-Engine Group Corp, AVIC Xi'an Aero-Engine (Group) Ltd (>> Xi'an Aero-engine Corporation Limited) and research institutes including the BUAA, Xinhua reported.
Aviation Industry Corporation of China (AVIC), the country's dominant military and commercial aviation contractor, had lobbied the government to back a multi-billion dollar plan to build a high-performance jet engine.
China's military and aerospace industries have suffered from bans on the sale of military equipment imposed by Western governments after the Tiananmen Square crackdown and foreign engine-makers are reluctant to transfer costly technology.
Some Chinese aviation industry specialists forecast Beijing will eventually spend up to 300 billion yuan (32 billion pounds) on jet-engine development over the next two decades.
(Reporting by John Ruwitch; Editing by Matt Driskill)