China’s political leaders identified aerospace as one of 10 key industries in the nation’s quest to become an advanced industrialized nation. Ahead of this weekend’s annual legislative session, Western planemakers — their future competitors — are helping them toward that goal.
Airbus Group SE is to break ground today on a finishing center for its wide-body A330 jets in Tianjin, near Beijing, a decade after it opened an assembly plant there for single-aisle planes. Chicago-based Boeing Co is also seeking a location in China for a plane-completion facility.
Opening plants in China, poised to become the world’s largest aerospace and air-travel market in two decades, is as much a political as an economic decision.
One factor is proximity to customers: Chinese airlines order billions of dollars of aircraft from Airbus and Boeing every year and doing some assembly locally eases the strain on the planemakers’ existing facilities. Equally important is the goodwill such investments earn.
“It’s absolutely undeniable there’s been a communication of Chinese expectations for companies to build in China, to provide jobs in China, that they will be treated less equitably otherwise,” said Scott Harold, Washington-based associate director of Rand Corp’s Center for Asia-Pacific Policy. “If you build in China, you’re a ‘friend’ of China.”
Aerospace was one of 10 sectors highlighted in the “Made in China 2025” blueprint released at last year’s meeting of the Chinese National People’s Congress. China has encouraged foreign planemakers to expand their local footprints: Airbus and Boeing are in joint ventures with units of state-owned Aviation Industry Corp of China (AVIC, 中國航空工業集團) to supply aircraft parts.
Airbus said its collaboration and joint ventures with Chinese partners were worth nearly US$500 million last year, while chief executive officer Fabrice Bregier frequently emphasizes the importance the company places on the Chinese market.
Boeing said it contributes as much as US$1 billion annually through its activities in China, including supply procurement, joint-venture revenues, operations, training, and research and development investment.
In return, China has showered Airbus and Boeing with aircraft orders, including a deal on Monday with Air China Ltd (中國國際航空) for 12 A330-300s worth US$2.9 billion.
Last year alone, Chinese airlines and leasing companies announced orders for 780 aircraft worth about US$102 billion, according to data compiled by Bloomberg.
Over the next two decades, Chinese carriers will require about 6,330 new planes worth US$950 billion, about 17 percent of the global total, according to Boeing.
Airbus’ new center in Tianjin was announced last year along with a string of orders for the current A330. Those orders will help the company avoid deep production cuts as it transitions to a revamped model with new engines.
Speaking in Beijing yesterday, Airbus China president Eric Chen (陳菊明) said the company would continue delivering 20 A330s to Chinese clients each year, with the Tianjin plant able to put the finishing touches on two planes per month.
China accounts for 24 percent of Airbus’ total plane deliveries, he said.
Airbus has a 60 percent share of the wide-body market in China and the new facility would help maintain that lead, Chen said.
Plans to expand the existing Tianjin assembly plant for narrow-body A320s are also “under study,” Chen said.
One day, if China’s leaders have their way, Airbus might have to contend not only with Boeing, but with local competition too. Led by state-owned Commercial Aircraft Corp of China Ltd, (COMAC, 中國商用飛機), the nation is working on developing its own large planes, and the Chinese government is keen for China to develop its own jet engines as well.
For now, Chinese planes are still some way from commercial viability. COMAC delivered the initial ARJ-21 regional jet to launch customer Chengdu Airlines Co (成都航空有限公司) late last year, but no date has been set for its first commercial flight, putting the plane about 10 years behind schedule.
The first test flight for COMAC’s narrow-body C919, a project begun in 2008, has also been delayed and is expected sometime this year.
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