China is planning to manufacture airplanes again, but whether the airplanes will be competitive with western airplanes is the looming question. From Business Week:
China hasn’t had a good track record building big airplanes. The first Made-in-China big jet was the Shanghai Y-10, which had its maiden flight on Sept. 26, 1980. The 150-seat jet was as big as a Boeing 707 and bore a striking similarity to the American plane. The Y-10 flew 130 times, but the Chinese retired it in 1985 because local airlines refused to purchase it, preferring to buy the more fuel-efficient planes from Boeing (BA) and McDonnell Douglas instead.
Two decades later, the Chinese government is hoping for better luck. At a ceremony in Shanghai on May 11, China unveiled its latest attempt to build a larger jet—or literally “big airplane” in Mandarin—with the launch of the Commercial Aircraft Corp. of China (CACC). The company’s mandate: assemble jets at home to reduce the nation’s reliance on Western-made planes. There’s no shortage of demand. The aviation industry conservatively predicts the country will buy 2,800 new airplanes worth $329 billion over the next 20 years to keep up with China’s scorching air travel growth. “Obviously, China wants to be part of this perceived profitable airplane making business,” says Martin Lin, head of the American Chamber of Commerce in China’s aerospace group. “But profits will come only when China will be able successfully to capture international markets.”