Earning its Wings: a political economy analysis of China's journey toward development of the C-919 commercial airliner

Abstract

This article examines China's development of its C-919 large passenger aircraft through the lens of Porter's Determinant Model. The model serves as a blueprint for analyzing what China must do to increase its probability of developing a competitive, large passenger aircraft. Success in the industry can be achieved best by developing technologically advanced aircraft and selling a sufficient number to develop economies of scale. To explore underlying questions of what China is doing right and what areas need improvement, the author interviewed key aviation professionals and sampled the limited publications on the topic in both English and Chinese.

Notes

^1. Guojia Tongjiju Guomin jingji Zonghe Tongjisi [Department of Comprehensive Statistics of National Bureau of Statistics], Xinzhongguo liushinian Tongji Ziliao Huibian [China Compendium of Statistics 1949–2008] (Zhongguo: Tongji Chubanshe, January 2010), p. 51. See World Bank, ‘Air transport, passenger carried’, worldbank.org, available at: http://data.worldbank.org/indicator/IS.AIR.PSGR (accessed 12 August 2013).

^2. ‘Embraer sees China buying 15 pct of world regional jets by 2031’, Reuters, (13 November 2012), available at: http://www.reuters.com/article/2012/11/13/uk-embraer-china-forecast-idUSLNE8AC02020121113 (accessed 20 November 2013); ‘China “needs 4,960 planes by 2031”’, PHYS.ORG, (12 November 2012), available at: http://phys.org/news/2012-11-china-planes-media.html (accessed 13 November 2012).

^3. Author's interview with Professor Chengzhi Li (expert on technology transfer policy and management) of Beihang University, School of Aeronautics and Astronautics, on 18 August 2009.

^4. ‘10 million sit two day exam’, China Daily, (7 June 2007), available at: http://www.chinadaily.com.cn/china/2007-06/07/content_889597.htm.

^5. ‘2012 college entrance examination enrollment 9.15 million a decrease of 1.4 million’, sina.com, (30 August 2013), available at: http://edu.sina.com.cn/gaokao/2012-06-07/0627341310.shtml.

^6. Dun Zhang, ‘China faces on-going brain drain’, Epoch Time, (21 August 2013), available at: http://www.theepochtimes.com/n3/103521-china-faces-ongoing-brain-drain/ (accessed 24 August 2013).

^7. Jun Fu, Guo Fu Zhi Dao [The Dao Wealth of Nations] (Beijing: Daxue Xinwen Chuban She, 2009), p. 11.

^8.Ibid., p. 30.

^9.Ibid., p. 15.

^10.Ibid., pp. 284–293.

^11. Guoliang Li, ‘Rujia Wenhua Dui Chuangxin de Fumian Yingxiang’ [‘The negative influence of Confucianism on innovation’], Dangdai Jiaoyu Luntan [Contemporary Education Forum] no. 1, (2003), pp. 53–54.

^12. ‘Zhongguo Xinwen WeiYuan, IBM Renqi Jianshuai, Daxue Xuesheng Xuan Guzhu Guoqi Shouchao Waiqi’ [‘ChinaNews: Microsoft, IBM no longer best options, university graduates tend to choose SOEs’], chinanews.com, (15 January 2010), available at: http://www.chinanews.com.cn/edu/edu-qzjy/news/2009/08-05/1805564.shtml.

^13.Ibid.

^14. ‘Guojia GongwuYuan Kaoshi Baoming Renshu Qinianjian Zengzhang Jin Shiliubei’ [‘The number of applicants for National Civil Exam has increased by 16 times in 7 years’], Shenzhen Xinwenwang [Shenzhen Xinwen net], (March 2011), available at: http://www.sznews.com/education/content/2009-11/03/content_4156405.htm.

^15. ‘China spying biggest US threat’, BBC News, (15 November 2007), available at: http://news.bbc.co.uk/2/hi/americas/7097296.stm.

^16. ‘US worried about China industrial espionage activities during World's Expo’, Homeland Security Newswire, (3 May 2010), available at: http://homelandsecuritynewswire.com/us-worried-about-china-industrial-espionage-activities-during-worlds-expo.

^17. John R. Wilke, ‘Two silicon valley cases raise fear of Chinese Espionage’, BBC News, (15 January 2003), available at: http://www.economicespionage.com/WSJ.htm.

^18. The United States House of Representatives Select Committee, US National Security/Commercial Concerns with the People's Republic of China, (May 1999), p. 2, available at: http://www.house.gov/coxreport/.

^19. William Glaberson, ‘Spy, citing fears, fights return to China’, New York Times, (3 December 2001), available at: http://query.nytimes.com/gst/fullpage.html?res = 9903E4D6113DF930A35751C1A9679C8B63.

^20. The United States House of Representatives Select Committee, US National Security/Commercial Concerns with the People's Republic of China, p. 36.

^21. United States District Court Central District of California Southern Division, ‘United States of America Plantiff vs. Dongfan “Greg” Chung Defendant’, Case No. SACR o8-00024-CJC, (16 November 2009), p. 2, available at: http://www.fas.org/irp/ops/ci/chung071609.pdf.

^22. For more information see Carrie Johnson and Jody Warwick, ‘Chinese spy slept in US for two decades’, Washington Post, (2 April 2008), available at: http://www.washingtonpost.com/wp-dyn/content/article/2008/04/02/AR2008040203952.html.

^23. Gillian Flaccus, ‘Chinese spy gets more than 15 years in prison’, ABC News, (15 August 2010), p. 1, available at: http://abcnews.go.com/Business/wireStory?id = 9774665&page = 1.

^24. David Axe, ‘Satellites spot China's mysterious new warplane’, wired.com, (4 January 2013), available at: http://www.wired.com/dangerroom/2013/01/chinas-new-transport/.

^25. Hans Heyman Jr, China's Approach to Technology Acquisition: Part 1—The Aircraft Industry (R-1573-ARPA: Rand Corporation, February 1975), p. 52.

^26.Ibid., p. 52.

^27.Ibid., p. 52.

^28. Zuodi Zheng and Guoqiang Zhao, ‘Bei Qing Yun 10—Yun 10 Yan Zhi Shi Mo’ [‘Tragic Y-10—the whole story of the development of Y-10’], Hang Kong Dang [AnAviation Archives] 69(44), (2005), p. 44.

^29. Xitao Hu, Zhongguo Hangkong Shiye De Jianshe Yu Fazhan: Neibu Ziliao [The Construction and Development of China Aviation Industry: Classified: Insider Information (Book consists of collection of reports for government officials and Party leaders, 1997] (Benshu Baokuo Le Gei Zhengfu Guanyuan He Zhengdang Lingdaoren Baogao De Heji, 1997), p. 295.

^30. Xiongxin Lou, Yunshi de Gushi [The Story of the Y-10] (Shanghai: Shanghai Kexue Jishu Chubanshe, 2009), p. 17.

^31.Ibid., p. 15.

^32. ‘Chinese dream of a big airplane’, CCTV, available at: http://www.cctv.com (accessed 12 November 2012).

^33. Lou, Yunshi de Gushi [The Story of the Y-10], p. 10.

^34. Author's interview with Professor Chengzi Li (expert on technology policy and management) of Beihang University, School of Aeronautics and Astronautics, on 18 August 2009.

^35.Ibid.

^36. Tai Ming Cheung, China's Emergence as a Defense Technological Power (New York: Routledge, 2013), p. 35.

^37. Author's interview with Professor Chengzi Li (expert on technology policy and management) of Beihang University, School of Aeronautics and Astronautics, on 18 August 2009.

^38. Zheng Fan, ‘Zhongwai Hezi Qiye de Kuawenhua Guanli—Jianxi Maidao Gongsi zai Shanghai de Wenhua Ronghe Shijian’ [‘Cross-cultural management in the joint ventures—the MD practice of culture integration in Shanghai’], Guoji Jingji Hezuo [International Economic Cooperation], (October 2002), p. 47.

^39.Ibid., pp. 45–46.

^40. Zhang Xiangsheng, ‘Yu Maidao Gongsi Hezuo Shengchanzhong de Guanbiao Shijian’ [‘The practice of standard program in joint production with MD’], Shanghai Biaozhunhua [Shanghai Standardization] 3, (1997), p. 11.

^41.Ibid., p. 12.

^42. Fan, ‘Zhongwai Hezi Qiye de Kuawenhua Guanli’ [‘Cross-cultural management in the joint ventures’], pp. 46–47.

^43. ‘Dafeiji Zhi Meng’ [‘The large aircraft dream’], CCTV, (3 March 2008), available at: http://news.sina.com.cn/s/2008-03-03/182515066250.shtml.

^44. Jihe Bian, Liangyu and Jineng Shi, Shanghai hangKong Gong Yezhi [The Chronicles of the Shanghai Aviation Industry] (Shanghai: Shehui Kexue Yuan Chubanshe, 1996), available at: www.shtong.gov.cn/node2/node2245/node64983/node64990/node65041/uderobjectai59511.html.

^45. Mark Dougan, A Political Economy Analysis of China's Civil Aviation Industry (New York: Routledge, 2002), p. 128.

^46. Liang Gao, ‘Zhongguo Minhang Gongye de Xianzhuang Jiqi Wenti—yi MD90 Ganxian Feiji Xiangmu Weil’ [‘The Chinese trunk airliner program being carried out China and McDonnell Douglas co-produce MD-90 airplane’], Hangkongshi Yanjiu [Air Research] 1, (2001), p. 33.

^47. Dougan, A Political Economy Analysis of China's Civil Aviation Industry, p. 108.

^48. Andrea Goldstein, The Political Economy of Industrial Policy in China: The Case of Aircraft Manufacturing, Working Paper 779 (Michigan: The William Davidson Institute, July 2005), p. 21, available at: http://ideas.repec.org/p/wdi/papers/2005-779.html.

^49.Ibid., p. 22.

^50. Harbin Embraer Aircraft Industry Co., ‘First China-assembled Legacy 650 successfully completes maiden flight’, AviationPros.com, (26 August 2013), available at: http://www.aviationpros.com/press_release/11127788/first-china-assembled-legacy-650-successfully-completes-maiden-flight.

^51. Goldstein, The Political Economy of Industrial Policy in China, pp. 22–23.

^52. ‘West Air becomes a new Airbus operator’, Airbus, available at: http://www.airbus.com/presscentre/pressreleases/press-release/detail/west-air-becomes-a-new-airbus-operator/news-browse/4/.

^53. Wang Yu, ‘Airbus jets out the tenth A320 from China’, China Daily, (27 May 2010), available at: http://www.chinadaily.com.cn/regional/2010-05/27/content_9901336.htm.

^54. Ambrose Evans-Pritchard, ‘Airbus rides the Chinese dragon’, Telegraph, (30 June 2009), available at: http://www.telegraph.co.uk/finance/economics/5700337/Airbus-rides-the-Chinese-dragon.html.

^55. Yu, ‘Airbus jets out the tenth A320 from China’.

^56. Tom Zaitsev, ‘Russia and China discuss II-86’ successor’, Flight International, (1 June 2012), available at: http://www.flightglobal.com/news/articles/russia-and-china-discuss-il-96-successor-372569/.

^57. One possible strategy the Russians can employ to protect its intellectual property is to manufacture key technology outside of China and then ship the components to the joint venture for final assembly. Another strategy is to create encryption software in order to protect their sensitive technology from being accessed by Chinese engineers within the venture.

^58. ‘China copies SU-27 fighter, may compete with Russia—paper’, Rianvosti, (21 February 2008), available at: http://en.ria.ru/russia/20080221/99765686.html.

^59.Ibid.

^60. Author's interview with aero-engineer Zhi Gang Jiang of Air China, on 15 May 2010.

^61. Chengdu Aerotech Manufacturing Co., Ltd, Easy China Supply.com, (27 January 2011), available at: http://www.easychinasupply.com/producttrade/last_pt_com/163847.html.

^62.Ibid.

^63. ‘Yingguo Daxue Wei Zhongguo Peiyang Dafeiji He Fadongji Sheji Rencai’ [‘UK university cultivate design talents for Chinese big aircraft and engine’], Business Week of UK, (4 August 2011), available at: http://news.163.com/08/0411/10/4989V0K500011MTO.html.

^64. ‘Airbus Harbin JV plant delivers 1st work package’, China Daily, (4 July 2010), available at: http://www.neworiental.org/publish/portal0/tab1127/info535122.htm.

^65. Du Shanyi and Guan Zhidong, ‘Woguo Daxing Keji Xianjin Fuhe Cailiao Jishu Yingyong Celue Sikao’ [‘Strategic considerations for development of advanced composite technology for large commercial aircraft in China’], Fuhe Cailiao Xuebao [Acta Materiae Compositae Sinica] 25(1), (2008), pp. 1–10.

^66. Irene Shen, ‘Hafei rises to six-month high on Airbus parts venture’, Bloomberg, (2 February 2009), available at: http://www.bloomberg.com/apps/news?pid = newsarchive&sid = aB2JDEgQKoYY&refer = china.

^67. ‘Boeing expands its China venture’, China Daily, (19 November 2008), available at: http://www.chinadaily.com.cn/china/2008-11/19/content_7221208.htm.

^68. AMCham Export Compliance Working Group, ‘Composite materials in the aerospace industry in China’, AmChamChina.org, (23 May 2006), pp. 126–127, available at: http://web.resource.amchamchina.org/news/ECWGCrossSectorReportAttachmentA.pdf.

^69. Author's interview with President James Liu of Grand-Pacific Enterprises, specializing in the production of composite materials, on 12 January 2010.

^70. AMCham Export Compliance Working Group, ‘Composite materials in the aerospace industry in China’, pp. 127–130.

^71. Zhang Xingjin and Deng Zhonglin, ‘Qiantan Xianwei Fuhe Cailiao yu Zhongguo Dafeiji’ [‘The discussion on carbon fiber composite and passenger-carrying aircraft of China’], Xianwei Fuhe Cailiao [Fiber Composites] no. 2, (June 2009), pp. 24–26.

^72. Wang Wen, ‘New airline orders increase total to 430’, ChinaDaily.com, (12 November 2014), available at: http://www.chinadaily.com.cn/china/2014-11/12/content_18900260.htm.

^73. Mark Stokes, ‘China's commercial aviation sector looks to the future’, Project 2049 Institute, (8 May 2009), p. 2.

^74. Yali Zhang, ‘Zhongguo Dafeiji Zongtouru Jiang Da 2000 Yi, Yu Sanxia Gongcheng Xiangdang’ [‘Total investment on the C-919 project is expected to be more than 200 billion Yuan, comparable with the Three Gorges Dam project’], QQ.com, (8 May 2009), available at: http://news.qq.com/a/20090508/001026.htm.

^75. Author's interview with Professor Chengzi Li (expert on technology policy and management) of Beihang University, School of Aeronautics and Astronautics, on 18 August 2009.

^76.Ibid.

^77. ‘Zhongguo Zao Dafeiji Mingnian Qidong Dingdan, Shoupi Mubiao Shi 90 Jia’ [‘China's large aircraft will launch customer next year, initial order can number as many as 90 aircraft’], Beijing Chenbao [Beijing Morning Post], (23 September 2009), p. 1, available at: http://news.xinhuanet.com/tech/2009-09/23/content_12099669.htm.

^78. Siva Govindasamy and Fang Yan, ‘Delayed take-off: China cautious on large aircraft program’, Reuters, (2 October 2013), available at: http://www.flightglobal.com/news/articles/comac-reduces-c919-composite-use-to-speed-up-progress-386300/.

^79.Ibid.

^80. Stokes, ‘China's commercial aviation sector looks to the future’, pp. 4–5.

^81. Qianming Shang, ‘Zhonguo Dafeiji Haomai Qicheng’ [‘Chinese big airplane started with being proud’], Liao Wang Xinwen Zhou Kan [Outlook Weekly] 20, (2008), available at: http://lw.xinhuanet.com/htm/content_3245.htm.

^82. Author's interview with Richard Jones, consultant for the C-919 Project and former General Manager of the Marketing Department Airbus, China, on 15 April 2010.

^83. The Central Committee consists of over 300 of the country's most prominent party members.

^84. ‘Zhang Qingwei Jianli’ [‘Resume of Zhang Qingwei’], Xinhua.net, (31 August 2007), available at: http://news.xinhuanet.com/ziliao/2007-08/31/content_6636882.htm.

^85. Stokes, ‘China's commercial aviation sector looks to the future’, p. 3.

^86. ‘Kehu Fuwu Zhongxin’ [‘The consumer service center’], Zhongguo Shangfei Gongsi [COMAC], (29 December 2009), available at: http://www.comac.cc/main/sdzx/200912/29/t20091229_315657.shtml.

^87.Ibid.

^88. Author's interview with Professor Chengzi Li (expert on technology policy and management) of Beihang University, School of Aeronautics and Astronautics, on 18 August 2009.

^89.Ibid.