China's aircraft carrier to spur investment

After China's first aircraft carrier formally entered service on Tuesday, many are expecting fierce competition between companies to build China's first carrier battle groups.

Sinolink Securities conservatively estimated that the construction of a complete carrier battle group would cost 64 billion yuan ($10.09 billion).

To protect the sovereignty of both the East and South China Sea, China might need two carrier battle groups, representing an investment of about 130 billion yuan, Sinolink Securities said.

A carrier battle group comprises an aircraft carrier and its escort vessels.

Chinese stocks related to the defense industry are on the rise since early this month, after Japan attempted to illegally "purchase" the Diaoyu Islands in the East China Sea.

Analysts said that highly related industries, such as equipment manufacturing, power systems and electronic communications, would benefit a lot from the 130 billion yuan in investments.

Equipment manufacturing companies, such as China State Shipbuilding Corporation, would be direct beneficiaries of the investment, as the ship's hulls and weaponry made by the company are the fundamental units of aircraft carriers.

Also, an increase in military orders for alloy steels, titanium alloys and other composite materials might advance related technologies, which could be transferred to civilian uses, according to 21cbh.com.