Beijing is to give foreign investors unprecedented access to its aviation industry under new rules that will come into force on August 1, according to state media. Under the rules, foreign companies would be allowed to jointly take stakes in domestic airlines, each holding no more than 25 per cent, as long as the mainland side retained majority control, Xinhua reported. The move, hinted at last month by Civil Aviation Administration of China (CAAC) vice-chairman Bao Peide, implies a foreign ownership ceiling of about 49.9 per cent, compared with the present limit of 35 per cent and a maximum limit on voting rights of 25 per cent. Foreign investors also will be permitted to buy equity stakes in airports so long as the Chinese side maintains what Xinhua termed 'relative control'. This implies foreign investors could have a combined equity stake of more than 50 per cent. At present, the upper limit on foreign ownership is 49 per cent. The move is expected to give greater leeway to mainland aviation companies seeking strategic partners and overseas stock-market listings. Flagship carrier Air China and Hainan Island's Meilan Airport are understood to have hired investment banks to arrange possible international share offerings and listings. The CAAC, Ministry of Foreign Trade and Economic Co-operation and State Development Planning Commission had jointly compiled a set of rules on foreign investment in the civil aviation industry, Xinhua said. The rules are expected to be implemented on August 1, subject to approval by the State Council. Under the new rules, the pilot system on foreign investment, which limits the number of foreign investment applications, will be abolished. Foreign investors will be allowed to invest in any aviation companies, except for projects involving state secrets. They will be allowed to buy into mainland aviation companies by acquiring their shares or through other approved investment methods. The new rules eliminate restrictions on the appointment of senior management positions such as chairman and managing director in jointly invested companies. Beijing's investment concessions are expected to trigger a strong interest in mainland airlines from foreign firms, which are attracted by the growth potential of the world's fastest-growing passenger market. Aircraft-making giants Airbus Industrie and Boeing forecast China to be the world's second-largest aviation market in terms of new aircraft demand. The country is estimated to require 1,600 aircraft, worth US$150 billion, over the next two decades. Chinese airlines reacted positively to the new rules. 'We welcome the new rules and further foreign investment,' said Zhong Shu, executive vice-president of Hainan Airlines, which has issued publicly traded shares to both domestic and foreign investors. China Eastern Airlines chairman Ye Yigan last month said the company would consider building on its existing operating partnerships with Air France and American Airlines by introducing them as strategic shareholders.