China's Huatai Insurance Group on Wednesday signed a cooperation agreement with the country's domestic aviation manufacturer to invest 15 billion yuan (2.25 billion U.S. dollars) of insurance funds into its homemade passenger jet project.
Under an agreement with the Commercial Aircraft Corporation of China (COMAC), the Shanghai-based manufacturer of China's first homegrown large passenger jet, the C919, investment will be made through a 10-year renewable debt investment plan.
This is the first such investment made by insurers to COMAC, and the aviation manufacturer can choose to renew the plan when the investment matures 10 years later.
The 15-billion-yuan insurance fund, provided by Huatai Asset Management, the investment arm of Huatai Insurance Group, will be used in R&D, investment, construction and operation of COMAC's civil aviation projects, according to the agreement.
COMAC board chairman He Dongfeng said the debt investment plan marks a significant step in the support from insurance funds to the real economy and emerging strategic industries, which fits COMAC's great need for initial investment.
R&D and production of passenger jets demand long-term and persistent input of personnel, technology and funds, and insurance funds can meet such demands as they are large in scale and stable in supply, said Chen Wenhui, vice chairman of China Insurance Regulatory Commission (CIRC).
China's insurance regulator has expected insurance funds to invest in major projects that will play a significant role in boosting the economy, rather than using leveraged money on short-term speculation.
Chen said the CIRC will further improve its policies to encourage insurance funds to support the real economy and serve national development strategies as well as major projects.
By the end of June, the combined assets of China's insurance sector totaled 16.4 trillion yuan, official data showed.
