China’s Commercial Aircraft Industry Faces Obstacles, Says Report - Global Trade Magazine
  December 25th, 2015 | Written by

China’s Commercial Aircraft Industry Faces Obstacles, Says Report

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  • The Chinese government sees designing and manufacturing jets as an important indicator of its advanced technology.
  • Until recently, almost all of China’s commercial aircraft have been imported from foreign manufacturers.
  • The Chinese government may wish to create a more-equitable business environment for commercial aviation manufacturers.

China’s investment of billions of dollars in a domestic commercial aviation industry “has yet to result in a commercially viable aircraft and is unlikely to do so for the foreseeable future,” according to a new RAND Corporation study.

Efforts by the Commercial Aviation Corporation of China (COMAC), the Chinese government’s effort to construct a new commercial aircraft to compete with aircraft manufacturers Boeing and Airbus, “have been hindered by problems in systems integration. An earlier regional aircraft has yet to obtain Chinese air certification,” the study said.

COMAC is reportedly in the process of designing a narrow-bodied commercial jet, the C919. But by the time the aircraft is ready for production, “COMAC will face stiff competition from new Boeing and Airbus models, and will face pricing competition from used Boeing and Airbus aircraft,” the study found.

“The Chinese government sees designing and manufacturing passenger jets as an important indicator of the nation’s advanced technological capabilities,” said Keith Crane, director of the RAND Environment, Energy, and Economic Development Program and co-author of the report.

“What they have found is that the commercial aviation sector is a highly competitive market, and that large passenger aircraft are difficult to build to international standards,” he said.

Until recently, the report said, “production in China’s aircraft manufacturing industry was limited almost exclusively to serving the Chinese military. Consequently, almost all of China’s commercial aircraft have been imported from foreign manufacturers.”

The Chinese government, it said, “has adopted a strategy of first engaging in domestic production and assembly using foreign designs, then developing its own designs with foreign assistance, culminating in development of a commercial aircraft without foreign assistance.”

The non-profit think tank study found that China’s indigenous commercial aviation manufacturing industry has more than doubled output between 2005 and 2010, while becoming increasingly technologically sophisticated.

The study offers several recommendations to trade policy makers in the U.S. and the European Union to address potential trade issues stemming from Chinese government support for its commercial aviation manufacturing industry.

The recommendations include the U.S. engaging in bilateral negotiations with the European Union to encourage Airbus and Boeing to reduce the purchase of components as a marketing tool, and the U.S. and the European Union advocating for more transparent tenders for purchases of aircraft by Chinese state-owned airlines.

In addition, the U.S. and the European Union monitoring the development of Chinese technology and intervene through the World Trade Organization in response to efforts by China to use subsidies to enter the U.S. or EU commercial aircraft markets.

“If the Chinese government wishes to fully integrate into the global commercial aviation manufacturing industry, it may wish to consider changing its current policies to create a more-equitable business environment for foreign and Chinese commercial aviation manufacturers,” Crane said.

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