China’s state-owned Asset Supervision and Administration Commission is to set up a US$2.7 billion company in Shanghai to develop and build a large passenger jet.

The 21st Century Business Herald in China has reported the commission will become the largest shareholder of China Commercial Aircraft Co.

The Shanghai city government will also invest in the business to take the second-biggest stake.

The company will be responsible for developing, manufacturing and marketing of the first made-in-China jumbo passenger jet.

The establishment of the jumbo passenger plane company was approved in February 2007 by China's cabinet.

This was to make the country capable of building aircraft with a take-off weight of more than 100 tons, or planes with more than 150 seats.