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China Business Weekly

China takes to the skies

In a recent column I wrote about China's ambitious plans for its space program. This week's column looks at China's ambitions for global leadership in the skies closer to Earth - in civil aviation.



Twice as many people are flying on China's airlines today compared to five years ago and more than two-thirds of the new airports being built globally are in China. Chinese airlines expect to triple their fleet size over the next decade and will account for the world's fastest-growing market for both Boeing and Airbus.

But the Chinese are determined to be more than aviation customers. The government's current Five-Year Plan includes a commitment to spend a quarter of a trillion US dollars to jump-start its aerospace industry. Its goal is to produce the Boeings and Airbuses of the future.

What does this mean for the rest of the world?

China's aerospace ambitions are a model for China's plans for modernization and innovation in other industries as China's success in aerospace will depend on innovation and "soft" economic power - eg. trust, honest and transparent regulations, and co-ordination between civil, commercial and military organisations. This is in contrast to past successes which have been largely built on combinations of massive investment and labour force mobilisation.

Thirty years ago, China's civil aviation industry was backwards and disconnected from the West. Its aging fleet was mostly Soviet-made or crude copies. Very few Chinese flew; those who did needed official approval before purchasing an airline ticket.

But now that civil aviation is seen as a strategic industry, heavy investment is being made in infrastructure and new planes. Today Chinese airlines, once ranked among the world's most dangerous, are among the safest and its gleaming new airports compare favourably with many around the world.

China now has around 2,600 modern aircraft, and aviation is a major industry in many parts of the country. The central city of Xi'an alone boasts more than 250,000 aerospace engineers and assembly workers.

However, there remain serious obstacles to overcome. China may have plans to produce its own passenger jets, but since it still lacks essential technologies, historical knowledge and a high-tech industrial network, it still has to import many of the crucial components of a modern passenger jet, such as engines and advanced avionics.

Another issue is that the Chinese military owns the country's airspace, with only a few narrow corridors open for commercial flights into China's major cities. Air traffic is therefore unnecessarily congested, leading to delays and wasteful fuel usage.

So yes, China will need to work hard and be smart to achieve its aviation goals. But given its track record of success in almost every industry it has targeted, it would be a brave person to bet against future Chinese leadership in global aviation.

For more columns in this series please see www.bangkokbank.com


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