A breakthrough first order has been made for 100 Chinese-made jetliners.
Commercial Aircraft Corp of China (Comac) has taken its first orders for the C919 passenger planes from three domestic airlines and General Electric's leasing arm.
The orders are being seen as a vote of confidence in state-owned Comac.
The move may also mark a challenge to the dominance of Boeing and Airbus who have virtual control of the trillion dollar aircraft industry.
Comac expects to sell more than 2,000 C919s over the next 20 years.
China is the world's fastest growing major economy and its domestic air travel market is set to expand rapidly over the next decade.
A billion Chinese are predicted to be flying for business and leisure in the near future and China is keen to reduce its reliance on foreign planes.
"The customer signing lays a market foundation for the C919, which has smoothly entered the engineering development phase," Comac chairman Zhang Qingwei said in a statement.
Speaking at a Comac press conference to announce the order, the company's chief accountant, Tian Min, said: "In the future we expect to see 3,000 new planes here in China and more than 30,000 new planes globally. So this is a very big market."
The model, which has 166 seats competes with Boeing's 737 and the Airbus A320.
According to estimates by Boeing, this segment of the market could be worth $1.7trillion over the next 20 years.
But neither Airbus nor Boeing showed signs of being troubled by the entry of the Chinese into their market.
Speaking at the Zhuhai Air Show in China, Laurence Barron, Airbus's top China executive, said: "We were born into competition 40 years ago and now we are number one. Frankly we are used to it. Where's the big deal?"
And Jim Simon, Boeing's vice-president for China commercial sales, said: "It makes the industry better, frankly, because it makes us sharper at our game."
Comac expects to start building the aircraft next year, followed by a maiden flight in 2014 with first delivery in 2016.