'This will be a big structural adjustment in the history of the Chinese aviation industry,' the report quoted the unnamed official as saying.

Commission chief Zhang Qingwei confirmed the restructuring by highlighting it as one of the commission's major tasks this year.

'Reorganisation of the aviation industry will be our first and leading attempt to deepen the reform and adjustment of the national defence industry,' Mr Zhang told a work meeting. But neither the commission nor state media released more details about the planned changes.

Sun Jiwen , a senior researcher at the Chinese Academy of Military Science, said rumours about a merger between large plane maker China Aviation Industry Corporation I (Avic I) and helicopter and propeller plane builder Avic II, the only aircraft manufacturers on the mainland, had circulated for months.

'The information from the commission, as well as Xinhua's report, is very likely to pave the way for the merger, which will create a gigantic, competitive and resourceful company to make big passenger planes and compete with global players in this field, like Boeing and Airbus,' Professor Sun said.

'Not everyone likes the merger, though, especially some stakeholders, mostly in the more powerful, richer Avic I.'

The government split Avic into two companies in 1999 in an effort to make the business more flexible and competitive by allowing the two companies to each develop specialised fields and technology. 'It worked well in the beginning. But in recent years some deep, at times unsurpassable technological, financial and trade barriers have emerged,' Professor Sun said.

'The division no longer matches up with the government's growing ambitions for the aviation industry, the market demand for bigger aircraft and the technological need today for more collaboration and synthesis than specialisation.'

He said the problems would have persisted for another decade if the government had not decided to develop China's own big passenger planes last year.

Meanwhile, China has accelerated its march into space, with some ambitious goals set for this year.

The science commission's spokesman, Huang Qiang, told China News Service yesterday that China would launch 15 rockets, 17 satellites and one manned spaceship this year. The spaceship - Shenzhou VII - will feature the first space walk performed by taikonauts. Plans for landing a spacecraft on the moon are also advanced.

Flying high

China is emerging as one of the world's biggest aviation markets

The number of passengers carried by mainland airlines in the first nine months of 2007 rose 16.2 per cent on the previous year to 138.6m