A MILESTONE yet to be fully achieved by China is establishing a dominant position throughout the value chain of the world’s aviation industry.
As a sign of its lack of development, the majority of aircraft owned by Chinese airline carriers have to be repaired and maintained overseas. But more significantly, the Chinese have yet to build a large commercial jet, let alone an engine that can power it.
As a sign of its lack of development, the majority of aircraft owned by Chinese airline carriers have to be repaired and maintained overseas. But more significantly, the Chinese have yet to build a large commercial jet, let alone an engine that can power it.
But all of that is about to change.
A few days ago, state-run Xinhua news agency quoted unidentified industry sources saying the Chinese cabinet may soon approve an aircraft engine development programme that will require an initial investment of at least $16bn. Some Chinese aviation industry specialists forecast that the government will eventually spend up to $49bn on aircraft engine development over a few decades.
This is a major step towards self-reliance in such a key sector; its own jet engine will end all dependence on western and Russian manufacturers for equipping its commercial aircraft and, specifically, its military.
Quite metaphorically, China’s progression along the value chain in the aviation industry is similar to its development as a country. It has moved from leveraging its huge labour pool and low manufacturing costs to heavily investing in research and development in order to produce high-value products and services.
Furthermore, when one looks at some of the numbers, it is easy to see why China is focused on the aviation industry. In 2012, China was the host of more than two-thirds of the world’s airports under construction; it would have added 55 by the start of 2015.
One of China’s state-owned entities, Commercial Aircraft Corporation of China (Comac), predicts that the Chinese market will need 5,000 large passenger aircraft worth about $600bn by 2031.
The Chinese government, through Comac, so far, has been making significant strides in being able to put a large commercial plane on one of its hundreds of runways.
In late 2012, after the Zhuhai air show, it announced that it had received an additional 50 orders for its new C919 passenger jet. It brings total orders to 380, for which the scheduled delivery date is 2016. The C919 is a 168-seat, medium-range aircraft that will compete with Boeing’s 737 and Airbus’s A320 — the largest segment of the $100bn-a-year global market.
Almost every part of the jet, bar the engine and avionics bought from General Electric, will be made in China.
Being able to provide all the links along the supply chain of the aviation industry would be a formidable feat for China and would break the duopoly that Boeing and Airbus have over the world, as well as provide China with an important sector to complement its sustained growth.
Aviation is, after all, one of the most rewarding industries for a country. By rewarding, I mean that for every $1 spent on aviation, $6 is spent on supporting sectors, which leads to the overall development of the industry.
But these impressive developments need to be kept in perspective.
The aviation industry is one of the toughest industries to succeed in and is usually plagued by cost overruns and delays. The record of Comac’s ARJ21 might be an example of what may lie ahead for the C919.
The ARJ21’s introduction will have to be delayed by "one or two years", with the reasons given by Comac’s vice-president being the company’s "inexperience in certification in terms of methods and infrastructure" and the "inability of some key parts to pass flight tests".
The ARJ21 was due for delivery in 2007. Comac would do well to learn from these mistakes and ensure that they do not impede the production of the C919.
China still has a long way to go to being able to provide all the skills and expertise involved in the highly technical aviation industry. Nonetheless, the early signs are positive and this could be another test case for China’s technical and economic development as a whole.
Source: BDLive
