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China’s Defense Industry Looks to Civilian Markets for New Customers

| Aug 28, 2015 11:04 PM EDT

The model of AVIC's new Xian Modern Ark 700 airliner is displayed at the Zhuhai Airshow, Guangdong Province, in this 2014 photo.

State-run defense firms in China are starting to shift their focus to commercial markets, taking advantage of the government’s “Made in China 2025” program meant to bolster the country’s slowing economy.

Following the military parade on Sept. 3 commemorating the 70th anniversary of China's victory against Japan in World War II, the Chinese government is expected to concentrate on reforming the defense sector, said Fong Fuzhang, analyst with China Securities Co.

One Chinese firm, Aviation Industry Corporation of China (AVIC), has already announced plans to exhibit its new Xian Modern Ark 700 multipurpose aircraft at the International Aviation and Space Salon in Moscow from Aug. 25-30, the first time the model will be displayed at an air show overseas.

Developed as a medium-capacity airliner, the Ark 700 can be used for medical, rescue, meteorological, scientific and official missions, according to a report from the Want China Times.

AVIC released the model on Aug. 18 and has signed contracts with 11 domestic and foreign buyers, who have already placed 185 orders of the aircraft on the same day, the report said.

Established during the Korean War, AVIC has developed a series of military aircraft, including the J-31 stealth fighter, the J-15 fighter, and the Xian Y-20 and KJ-2000 transport and early-warning aircraft.

The sale of the Xian Modern Ark 700 reflects the trend in the country's defense industry toward the commercial market, the Want China Times said in its report.

Earlier this month, China North Industries Group entered a joint venture agreement with Chinese e-commerce giant Alibaba to boost the development of Beidou, the country's indigenous satellite navigation system.

The aerospace company Aisino Corporation, in which China Aerospace Science & Industry Corp owns a controlling stake, has also recently partnered with the Entry-Exit Management Department of Shenyang in northeastern China's Liaoning Province with the aim of integrating Internet services with public security services.

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