General Electric Co and Aviation Industry Corp, a Chinese state-owned aircraft maker, agreed on Sunday to form an avionics joint venture that will have China's booming commercial aircraft market as one of its main targets.

The initial focus of the venture would be to develop equipment for China's planned C919 passenger jet, which will have at least 150 seats, said executives of GE, the world's biggest maker of jet engines.

Government-backed Commercial Aircraft Corporation of China (COMAC) has said it expects the C919 to have its first test flight in 2014 with deliveries to customers starting in 2016.

Our first priority will be to compete for the COMAC C919, Lorraine Bolsinger, president and chief executive of GE's Aviation Systems business, told reporters.

The partners said they aimed to set up the 50-50 venture by mid-2010, subject to regulatory approval.

Part of the JV, which will have its headquarters in China, will involve the creation of a technology center in Shanghai, where GE already carries out research and development.

Beijing merged its two state aircraft makers, AVIC I and AVIC II, in 2008 to pool resources for the jet project as it moves to wean itself from reliance on Boeing Co and Airbus.

The Chinese civil aviation industry will likely, over the coming decades, be one of the biggest, if not the biggest, in the world, Jeff Immelt, GE's chief executive officer, said at a signing ceremony in Beijing.

As well as targeting the domestic market, the GE-AVIC venture said it would aim to sell into the global market, including the United States, where it will create 200 jobs.

(Reporting by Michael Wei and Alan Wheatley; Editing by Alex Richardson)

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