China Aviation Industry Corporation's Avicopter unit is to establish a factory in the Tianjin free trade zone to make civil helicopters. A production start date will be set after a final agreement is signed.
Avicopter's main helicopter factory, Harbin Aircraft in the north-eastern Chinese city of Harbin, makes military and civil helicopters, including some civil models in co-operation with Eurocopter.
According to Avicopter, the company hopes to co-operate with other companies to improve its civil helicopter research and development capabilities.
The Tianjin Free Trade Zone will be a shareholder in the business. Avicopter is seeking other shareholders, possibly including a foreign company.
Tianjin is also becoming a major aerospace centre in China, adds the source, citing the fact Airbus has opened an Airbus A320 assembly plant at the free trade zone. The trade zone is a shareholder in the A320 plant.