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In July 1986, Nanchang signed a contract with the Italian company Aeritalia (now Alenia) to co-develop an improved variant known as Q-5M. The aircraft was developed on the Q-5IA airframe, but upgraded with 17 items of avionics provided by Aeritalia. The upgrade package was based on the avionic suite of the Aermacchi/Alenia/EMBRAER AMX ground attack aircraft, featuring inertial navigation system (INS), head-up display, ranging radar, air data computer, and two central mission computers, all of which are connected by a MIL-STD-1553B data bus.|
For surface attack missions, the Q-5M could carry eleven types of free-fall bombs and/or four types of unguided rockets. The avionics upgrade package enables the aircraft deliver these weapons accurately over long distance flight in all weather conditions. For self-defence, the Q-5M could also carry two PL-5, PL-7 or French R550 IR-guidance short-range air-to-air missiles.
To improve the aircraft’s survivability in the battlefield against enemy air defence weaponry, the Q-5M was equipped with an electronic countermeasures (ECM) suite, including the all-aspect radar warning receiver and chaff/flare dispenser. The warning receiver and the dispenser are correlated so that the aircraft could automatically launch the chaff and flares immediately when a threat is detected. If necessary, the launch of the chaffs and flares could also be manually controlled by the pilot.
Modification of a Q-5IA began in August 1986. The first prototype flew successfully on 30 August 1987 and the aircraft was displayed in the 1987 Paris Air Show and 1988 Farnborough Air Show. Although the project was later cancelled during the aftermath of the 1989 incident, its technologies are believed to have been used on the development of the Q-5D.