Construction of Boeing's first overseas facility as part of its 737 production system started Thursday in the east China port city of Zhoushan.
The construction will consist of two parts -- a Boeing 737 completion center and the delivery center. It is scheduled to be completed in 2018.
Boeing and Chinese aviation manufacturer Commercial Aircraft Corporation of China Ltd.(COMAC) will jointly run the completion center, in which flight entertainment systems and seats will be installed in Boeing's 737 aircraft.
"Today we all see a vibrant, win-win partnership that supports the growth and development of China's aviation industry and the economy, as well as the U.S. economy," said Ray Conner, president and CEO of Boeing Commercial Airplanes.
The completion center also provides services such as coating, repairs and maintenance of Boeing aircraft.
The 737 delivery center is solely owned by Boeing.
Boeing and COMAC signed an agreement in October 2016 to set up the plant in Zhoushan, Zhejiang Province, 287 km southeast of Shanghai. The plant is designed to deliver 100 Boeing 737 planes per year.
Conner said Boeing supplies 150-200 of "the world's most innovative and fuel-efficient airplanes" to Chinese customers a year, accounting for a quarter of Boeing's global delivery. One third of the jets are Boeing 737s.
"The completion and delivery centers will bring 737 MAX closer to Chinese customers, who will take delivery right here in China," he said.
He added that Chinese companies play a manufacturing role in "every Boeing airplane produced today and on more than 9,000 airplanes flying around the world."
The 40-hectare plant is designed to include hangars, office buildings, warehouses, tarmac and runways.
Lin Nianxiu, deputy director of the National Development and Reform Commission, attended the ground-breaking ceremony calling the Zhoushan plant "a model for Sino-America high-tech cooperation."
Zhoushan is an archipelago and island city which has the largest fisheries in China and boasts strong shipbuilding, tourism and service industries.
To accommodate aircraft manufacturing, the city's Putuoshan Airport is undergoing a 750 million yuan (108 million U.S. dollars) expansion to become an international airport.
In addition to supporting Boeing, the Zhujiajian aviation industry park in Zhoushan will also develop an entire industrial chain for aircraft manufacturing, with the capacity to assemble, deliver and modify 600 aircraft per year by 2025.
On Thursday, Conner also congratulated COMAC for the successful first flight of its C919, calling it "an important moment in aviation history." Boeing began partnering with COMAC on projects in 2012.