Beijing set up its first general aviation manufacturing company on Tuesday in order to launch research and development, manufacturing as well as sales and operation in the country's capital.

With an investment of 100 million yuan (about US$15.7 million), Beijing General Aviation (Group) Co Ltd (BGAG) is co-founded by Beijing Automotive Group (BAIC) and Beihang University (Beijing University of Aeronautics and Astronautics), in terms of capital and technologies, respectively.

The two sides signed the contract Tuesday, and set four goals, including building up research and development capabilities, industrializing general aviation engines, avionics equipment and general aircraft, synchronizing the technology to the world's most advanced levels by cooperating with foreign companies, and forming a complete industrial chain, said Zhu Suiyu, director of the industrial layout office of BAIC.

The automotive and aviation industries are two complimentary industries that have similar technologies in many aspects, especially in their power systems, and BAIC has a strong technology background in general aviation, Zhu said.

General aviation refers to flights other than military and scheduled airline and regular cargo flights, both private and commercial.

The Chinese government said in its 12th Five-year Plan for 2011-2015 period that it would promote the general aviation industry's development, reform the airspace management system as well as increase the efficiency of the allocation and utilization of airspace resources.

It is estimated by China's civil aviation authorities that by 2012 China will need 10,000 to 12,000 aircraft in the general aviation field. Related industries, led by the booming general aviation industry, would form a huge market valued at about 1 trillion yuan.