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A Chinese aircraft maker has worked out a plan to manufacture modern passenger jet planes for short-haul transportation, the Beijing Youth Daily reported.

According to the newspaper, the State Council has approved the plan for the production of short-haul jets (ARJ21) with 72 to 79 seats submitted by the Aviation Industry of China One (AVIC I).

An official with the group company said that, as long as China's intellectual property rights are guaranteed, foreign investment and expertise will be allowed to participate in the project. Aircraft engines and some in-flight equipment may be purchased via a public bidding process.

A special task force will be set up to take charge of the design and manufacturing of the aircraft, and the cost of preliminary research and development is estimated at over five billion yuan (about 602 million US dollars). The plane is expected to be put into operation by the end of 2006.

Regional demand for such planes is expected to be strong in the future. Global demand for short-haul planes over the next twenty years is estimated at 4,200, and China's domestic demand for such planes is estimated to be over 600, said the newspaper.

Although China has a comprehensive aviation industry network covering scientific research, production and education, the country began to concentrate efforts on the development of military planes only in the 1950s.

Beginning the 1980s, while renovating propeller planes such as "Yun-7" and "Yun-8", China entered a joint venture with McDonald-Douglas of the United States to produce 150-seat MD-90 which was discontinued after Boeing took over the American aircraft-maker last year.