China’s Plight for Flight

China’s record of attempting to develop a domestic aerospace industry has been long and disappointing. Yet given the country’s growing economic might, its success in conquering so many other industries, and its military ambitions, it’s hardly surprising that Beijing now seeks to enter this most technologically advanced of businesses. But can it succeed?

China has been trying to build an airliner for decades, but without success. Back in the 1970s, for example, it planned an aircraft, the Y-9, which was to be based on the Lockheed C-141 Starlifter. However, the project stalled.

In 1980, a prototype of the Shanghai Y-10, based on the Boeing 707, did take off, but the Y-10 was obsolete even before it had left the runway, and China soon abandoned the project. Since then, numerous ventures with foreign aerospace giants such as McDonnell Douglas and Airbus have also come to naught.

China’s previous failures in the aerospace arena undoubtedly reflected technological weakness in a number of areas, including engines, electronics, materials and production. The organisational structure of the industry, including a division between design and production facilities; as well as a lack of demand from domestic civil and military operators, compounded these problems. The government’s commitment to the industry has also been half-hearted.

CHALLENGING BOEING AND AIRBUS

Yet things now appear to be changing. China appears intent on developing an industry that could eventually challenge Boeing and Airbus, and which is capable of producing large military aircraft that can project the country’s military might across the globe.

The experience of the USA provides a template that Beijing has no doubt keenly studied. Since the 1950s, Washington has invested heavily in large military aircraft in pursuit of its aim of projecting large-scale conventional military forces around the planet. America’s civil aerospace industry has indeed benefited greatly from the billions invested in these giant army planes.

In the 1950s, Boeing’s investment in the B-52 bomber allowed it to develop the Boeing 707, while the large turbofan technology originally developed for the Lockheed C-5 Galaxy transport aircraft proved critical in the production of engines for the Boeing 747 and McDonnell Douglas DC-10.

MILITARY EXPANSION

Comments by military leaders now suggest that China intends to develop a military capability to match its new-found economic status. The expansion of China’s economic interests abroad in recent years and, in particular, its insatiable appetite for raw materials and energy, has also broadened the military’s mission.

According to analysts, the country’s naval and air forces have set out to impose their dominance in the South China Sea – through which vital oil supplies pass and where several islands are in dispute – and in the East China Sea, where China and Japan are in dispute over mineral rights and a number of contested islands.

Better still, China now has the wealth to invest in major military projects. In 2007, the economy, which is already the fourth largest in the world, grew at an annual rate of 11.4% – the fifth consecutive year of double-digit increases.

China has also reported double-digit rises in defence spending in recent years, although the real level of spending is much higher than officially stated, according to US intelligence estimates.

China says its annual military spending rose 17.8% last year to $45bn, but Pentagon officials believe that the country’s military budget is as high as $125bn a year and growing even faster.

In the military arena, China has begun to make some progress in producing relatively advanced transport aircraft. In September 2005, the Shaanxi Aircraft Industry Co. Ltd unveiled its design for the Y-9 multi-purpose transport aircraft, with a 20t capacity.

China is also believed to be developing a 50t-60t transport plane, albeit with help from Antonov of the Ukraine, and Beijing is possibly interested in purchasing or co-producing Antonov’s An-124 Ruslan, which has a 150t capacity. Shaanxi has almost certainly acquired machinery that will enable it to master composite technology, a development that would allow the company to produce larger aircraft than the Y-8.

JUMBO PLANS

Critically, and just as has been the case in the USA, China hopes to exploit the knowledge it is acquiring through the development of military aircraft to launch a successful civil sector.

In January 2008, the government announced that the two main state-owned aircraft makers, AVIC I and AVIC II, were to be restructured to make them capable of manufacturing and marketing a ‘jumbo’ commercial aircraft.

Furthermore, AVIC II’s engineering joint ventures with subsidiary Shan’xi Aircraft Co. and Russia’s Antonov design bureau are likely to play a role in the aircraft’s development, according to vice MD Liang Zhenhe.

There is speculation that Beijing will separate the civil aviation business from the military one within the AVIC Group, and integrate the civil business of AVIC I and AVIC II into one company to build the new jumbo. Shareholders of the joint venture (apart from the two companies) would include state-owned investment firms and Chinese airlines.

The aircraft, expected to take off by 2020, will be assembled in Shanghai, with the nose, fuselage and tail sections to be manufactured in other parts of the country by companies controlled by AVIC I and AVIC II, both of which already supply components to Airbus and Boeing.

The success or failure of China’s first advanced jetliner, the ARJ-21, is likely to be a litmus test of the country’s ability to produce a jumbo airliner. The mid-ranged ARJ-21, which has a 70 to 90-seat capacity, was unveiled in December 2007, and the plane is expected to make its first test flight in March 2008.

China took consulting advice from Boeing and Antonov for the airframe and wings of the ARJ-21, which is powered by the 18,500lb-thrust General Electric CF-34-10A turbofan engine. Other US companies involved in the ARJ-21 include Hamilton Sunstrand (power systems), Rockwell Collins (avionics) and Parker Hannifin (fly-by-wire controls and hydraulics).

A PAPER TIGER?

The ARJ-21 will be the first advanced airliner to be built in China and offered to foreign markets. But some analysts remain sceptical about the project. Richard Aboulafia, vice president of Analysis at Teal Group, a research firm, believes that ‘programmes mandated by a government five-year plan seldom produce competitive jets’, and that ‘exports, beyond irrelevant markets like Laos (the first rumored international customer), are very unlikely due to AVIC’s inadequate product support, sales and financing capabilities’.

He also points out that China could force its national airlines to take these planes. This would violate the WTO’s ATCA (agreement on trade in civil aircraft), but China only holds ‘observer’ status, so that wouldn’t be a problem. But it would damage the airlines’ competitiveness, just as they are increasingly subject to competition from foreign carriers. The government, in effect, would need to choose between a national aircraft and healthy national airlines.

Aboulafia also argues that the ARJ-21 design offers nothing new and is heavier on a per-seat basis than any of its competitors. Indeed, he gives the aircraft only a 40% chance of entering series production.

He’s far from the only sceptic regarding China’s potential in the aerospace sector. Credit Suisse analyst Peter Hilton told the Financial Times in June 2007 that he doubted whether China would emerge as a threat to Boeing and Airbus, arguing that it will be a very long time before Chinese-made aircraft disturb the balance in the market, because of the inherent conservatism of airlines when it comes to equipment and safety.

Thus it maybe a very long time indeed before China replicates its success in other industrial fields in the aerospace sector.