Thursday, February 2, 2023

China's First Large Homegrown Airliner The Comac C919

An example of China's progress and increasing ability to manufacture complex machinery is apparent in its new domestic aircraft the C919. Largely ignored by many Americans is the fact China has quietly been going about building its own aircraft industry. China's C919 has taken flight and will be strong competition for Boeing and Airbus in coming years. Yes, China's first-ever large homegrown airliner made by state-owned aerospace manufacturer Commercial Aircraft Corporation of China (Comac) has now been delivered to its first customer.  

This is the first delivery of five C919 jets for China Eastern, which will be operated by its low-cost subsidiary OTT airlines starting next spring. The delivery comes just a month after the C919's public debut at China's Zhuhai Airshow where it appeared alongside Boeing and Airbus. Reuters reports the 164-seat aircraft will fly its inaugural flight from Shanghai to Beijing. It also will serve cities such as Guangzhou, Chengdu, and Xiamen.

It is now here, it is now real. Watch out Boeing. While this came after lengthy delays, China has over the years made it clear it knows how to ramp up production quickly, and it will. It is important to remember China has to turn somewhere to replace the economic punch it has lost due to its housing bust. Housing had in recent years been said to have made up close to 30% of China's GDP. It now must fill this hole it finds in its economy,

The motivation for this article came from a news piece by Bloomberg, that reports China is on its way to becoming the No. 2 exporter of passenger vehicles in the world. It has done so by passing both the U.S. and South Korea and is about to soon overtake Germany. This will leave only Japan ahead of it in passenger car exports. Bloomberg claims Chinese brands have become "market leaders" in the Middle East and Latin America. This reflects that cars from Chinese companies are getting better at the same time manufacturing overcapacity in China requires them to push exports.

Shipments of vehicles manufactured in China to other countries is up threefold since 2020

While the chart above tells the story it fails to highlight the ramifications of what is happening. This event highlights China's effort to exit low-end manufacturing and work its way up the food chain. In doing so it brings together several trends. This all ties into its master plan covered in the two-part series titled; China's Future Remains Cloudy And Uncertain. It lays out many of the challenges China faces in carrying out its plans for world dominance. These are the links to those articles.

 https://Chinas Future Remains Cloudy And Uncertain (part-1)html

 https://China's Future Remains Cloudy And Uncertain (part-2)html

Expect China To Rapidly Ramp Up Production

As usual, when it comes to China, politics plays a big role in its desire to play the "plane game" and the country has no qualms admitting its big role in developing the country’s aviation industry. Miao Wei, the former vice-minister of industry and information technology, has been quoted as saying the government encourages the development of export-oriented aviation products. The C919 has been a long-term project. Technical difficulties and supply issues delayed the development of the C919 for years. Comac was greatly impacted by restrictions imposed by the Trump Administration in 2020. It blacklisted shipments of things like fight controls and jet engines to China. 

Still, it is difficult for anyone to claim this would not come to pass. The arrogance of western countries to think they were guaranteed a lock on passenger airplane production may be about to come back to haunt them. The worldwide market for these planes is huge and the duopoly of Boeing and Airbus is about to fall by the wayside. The sales of jetliners are very important because they play into the bigger picture of world trade and trade imbalances and China has been a massive battleground for Boeing and Airbus because of the sheer size of its market. 

China's air travel market is expected to surpass the United States by 2024, according to the International Air Transport Association. Translate that into orders for planes and you’re looking at something on the order of 2,800 new planes with a book value of $329 billion. In the past, Boeing has projected it could sell China 6,330 planes worth $950 billion during the next 20 years.

Export sales of passenger aircraft and what is needed to keep them in the skies have in the past been considered an important part of trade deficits. We can expect a lot of these sales to melt away in coming years. Building commercial aircraft has never been a consistently profitable business, manufacturers risk several billions of dollars every time they try to develop a new type of aircraft. The Communist government, however, plays by a different set of rules.  

With China ramping up its fledgling aviation industry when it hits its stride expect cutthroat competition. This article from March 2021 is an AdvancingTime update on the C919 and contains more information and specifications on the C919. Price isn't the sole factor for airlines in buying a plane, overall quality, reliability, maintenance, and readily available replacement parts, as well as the pilot and mechanic training that manufacturers provide, are also important.

It is important to remember the Chinese also see this as another way to expand their influence across the world. When you factor in China's predatory style of conducting business, the C919 opens a lot of doors. It dovetails very nicely into China's One Belt One Road (OBOR) initiative and China will not be shy about using this tool to gain market share.


Republishing this article is permitted with reference to Bruce Wilds/AdvancingTime Blog

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