China’s Focus on Aerospace Raises Questions
Chinese state media reports the Civil Aviation Administration of China (CAAC) unveiled a plan that would boost civil aircraft manufacturing. This comes amid China’s attempts to build jet engines for both commercial and military aircraft. From The Global Times:
According to the plan, the nation will guide the localization of aircraft, engines and airborne equipment, and encourage research and development of domestic regional aircraft and general aviation aircraft.
The plan also calls for making the airports in Beijing, Shanghai and Guangzhou into large-size international airport hubs, as well as nurturing the gateway airports in Kunming in Southwest China’s Yunnan Province and Urumqi in Northwest China’s Xinjiang Uyghur Autonomous Region.
A more than 90-fold surge in China’s economy in the past two decades has fueled demand for flights. The State Council’s plan is based on guidelines released in July last year that were the first China has issued for the domestic aviation industry. Chinese carriers will need 5,260 new planes worth $670 billion through 2031, according to Boeing Co. (BA) forecasts.
“The government is sending a clear message that aviation is very important,” said Li Lei, a Beijing-based analyst at China Minzu Securities Co. “But the current problems such as airspace restrictions or airport slot limits won’t change overnight.”
Although the plan outlines the aims for civil aircraft, China’s recent show of military power by landing a fighter jet and unveiling a stealth fighter has prompted both welcome and worry. China’s aerospace ties to the military have raised issues for American regulators, according to The New York Times:
Washington is trying to figure out what to do about China’s deal-making broadly. “Many of these transactions raise important security issues for our country,” said Michael R. Wessel, a member of the U.S.-China Economic and Security Review Commission, which was created by Congress to monitor the bilateral relationship. “China’s interest in promoting these investments isn’t necessarily consistent with our own interests, and it’s appropriate to thoroughly examine the transactions.”
“There has always been an obvious cross-fertilization of ideas, expertise and money between the civilian and military,” said Martin Craigs, a longtime aerospace executive in Asia who is now the chairman of the Aerospace Forum Asia, a nonprofit group in Hong Kong. He added that Chinese companies had been actively hiring senior American and European aerospace engineers, so national security concerns could be quelled some by hiring the right people.
Western companies and their advisers say that they are acutely aware that technology transfers could help China strengthen its military and develop more competitive civil airplanes, and are taking precautions to protect trade secrets and national security. “You transfer the part that is most easily reverse engineered, or easily dissected,” said a lawyer with detailed knowledge of these transactions.
But many in the aerospace sector are more skeptical that the West can avoid losing control of technology. “The mentality is, they’re going to find a way to get there anyway, and we may as well get there with them,” Mr. Harbison of the CAPA-Center for Aviation said.
Read more about aviation in China, via CDT.