Research to build a seaplane capable of replacing Beriev Be-6s in service is initiated by PLANAF in 1968, with designers overhauled from "Objective 3/17", a supersonic canard-wing fighter project. The first prototype is flown in 1976; further units are delivered between 1986 and 1990.
SH-5 is an important milestone in Chinese aviation history in that it is the first Chinese aircraft to be equipped with a passive phased array radar (PPAR), designated as Type 698 side-looking ranging radar. This domestically built side-looking PPAR is completely indigenously developed with contributions from numerous Chinese industrial and scientific establishments. Developmental research for an airborne side-looking PPAR feasibility study first begun in 1964, and in 1970, the work on radar itself finally begun. However, due to the political turmoil in China at the time, namely, the Cultural Revolution, the first flight test of the PPAR was not completed until 1978, and it would take almost an additional half a decade after that to perfect the system until its final state certification to accept the system into service. Due to the limitation of Chinese industrial and scientific capability at the time, this first domestic Chinese airborne PAR/PPAR is a ranging only radar. During its service, the PPAR installed on SH-5 has been continuously upgraded, with original magnetron replaced by a klystron, which in turn, was finally replaced by a traveling wave tube, which helped to improve reliability and reduced operational cost. Despite the upgrades, this airborne side-looking PPAR remained a ranging only radar capable of providing info on target as small as the periscope, but according to the Chinese, the experience gained from this project had helped China in developing other more advanced airborne PPAR later on. The range of Type 698 side-looking PPAR is greater than 20 km for submarine periscope, over 50 km for small boats, and further for larger ships.