Aviation Industry Corp of China has set up the country's first aviation fund with China Construction Bank to boost the domestic aviation industry.

The AVIC Fund of China aims to raise 5 billion yuan (US$737 million) in the first phase and a total of 20 billion yuan eventually, the bank said on its website yesterday.

The fund, managed by a company comprising subsidiaries of AVIC and CCB, has already raised 1 billion yuan and the Tianjin government has pledged to invest 500 million yuan to 1 billion yuan into the fund, according to the statement.

The fund will channel the money to aircraft makers and related companies which have plans to launch initial public offerings, as well as listed firms under AVIC via private placements.

It will also invest in innovative aviation technologies, pilot training schools, jet fuel transport projects and a comprehensive aviation industrial park.

Setting up the fund provides a direct financing channel for the aviation industry and can help AVIC achieve its target of generating 1 trillion yuan in revenue, statement said.