BEIJING - CHINA is to create a tourist resort in a giant cave used by the former Nationalist government as a secret aircraft factory during World War Two, the official Xinhua news agency said on Tuesday.

The Haikong cave, in verdant mountains near the southwestern city and wartime capital of Chongqing, will cost about 500 million yuan (S$98.8 million) to develop, the report said.

The cave is 'an ideal place for conferences and leisure travel", it said, citing the local investment bureau's Web site.

'The enshrouded cave is 50 metres high and as spacious as a giant conference hall,' Xinhua added. 'The tourist bureau said that the manufacturing plant could be developed into a loft art workshop.'

The plant was deserted in 1949, the report said, after the Nationalists fled to Taiwan after losing a brutal civil war with the Communists. -- REUTERS