Russia cannot fund this expensive project on its own....it needs others who can share the expenses!!
The news IS real: http://news.yahoo.com/news?tmpl=story&u=/afp/20050614/pl_afp/mideast_050614160846
But it has been going on for a long time already. Israel's Lavi project which was cancelled was based on F-16 technology in the late 1980's and early 1990s. The project was then transferred to China and became their current J-10 fighter.
Most people don't know the historical ties between the two countries. Let me explain:
In WWII, as Japanese took over Shanghai after a bitter battle, they rounded up the Jews and put them, essentially, in a slum not unlike what happened in Poland because of their ties to Nazi Germany. About 20,000 Jews were cordoned off. The local Chinese people there, even though they were starving themselves, assisted the Jews and they survived. You have to keep in mind the historical context: while the Chinese helped them, the Chinese died by the hundreds of thousands from war crimes committed by the Japanese troops in Nanjing and Shanghai. The Israelis have never forgotten it. That's where the bilateral ties come from. People in this country has a tendency to forget previous friends and foes very quickly but in other cultures, this is simply not the case. For Israel/Jews or China/Chinese, what happened 40 years ago is like yesterday.
Every Israeli official that visits China will pay a visit to Shanghai and its remaining synagoguge for precisely this reason.
Anyway, that's why they're helping China.