PrintNovember 30, 2008
Here come Chinese jetliners
The first domestic Chinese jet airliner had its first flight last Friday. A potentially serious new competitor is growing its capability in the most sophisticated and complex civilian manufacturing sector. Boeing and Airbus, both reeling from development delays of their next generation products and the threat of massive order cancellations with the world economy heading down, do not exactly need more competition right now. Fortunately for them, the new Chinese product line is aimed more at markets dominated by Embraer of Brazil and Bombardier of Canada -- so-called regional jets, a bit smaller than the smallest Boeing and Airbus models, but both expanding their line-ups to get into the lower end of the A320, B737 range.
An iron law of globalism is that technology diffuses internationally. This is not just a matter of GATT, free trade, or conspiracies led by Freemasons, Jews, or anyone else. The Venetians tried protecting their glassmaking technologies the better part of a millennium ago, and failed. By hook or by crook, nations with great ambition and energy want to make sophisticated products on their own. It has always been so at least since the first bronze swords were fashioned, and probably since the first sharpened flintstone.
So it was almost inevitable that China, accustomed throughout most of human history to being the largest and most sophisticated country in the world, would enter the market for jetliners. When Richard Nixon normalized relations with China in the early 1970s, the first flowering of America exports was a small fleet of soon-to-be obsolescent Boeing 707-320b airliners, long craved by China as a means of expanding its own foreign air routes without requiring passengers to fly on Soviet planes.
In the 1980s, McDonnell-Douglas signed a licensing deal with China to produce MD-80 airliners under license in Shanghai, amid great protest. In 2007, Airbus signed an agreement to manufacture A320 airliners in Tianjin, China. No doubt considerable technology transfer occurred with both deals.
Many observers have commented that the new Chinese ACAC AR 21J (can't they get along with fewer initials?) looks a lot like the MD-80, and speculation is rife that jigs used to manufacture the Shanghai jets were borrowed for the new plane. We may never know if this is true.
Right now, the new Chinese craft is credited with enough orders from Chinese airlines to make it commercially viable. It may have even won some export business.I do not expect this to be the last Chinese jetliner. Just as I expect Chinese-manufactured automobiles to become a factor in world markets. When President Nixon opened trade with China and helped integrate it into the world economy, he unleashed a giant.
American manufacturers like General Electric, Rockwell, and Honeywell are selling engines, avionics and flight control systems to the Chinese for the new jet. All makers of commercial jets buy from foreign companies, as the markets are truly global.
Japan tried for decades to launch a civilian airliner business, and produced a fine aircraft, the YS-11 turboprop. But selling and servicing these birds globally proved a lot harder than just making them. Ultimately, most of the members of the YS-11 consortium threw in with Boeing as partners on its airliners, manufacturing wings and fuselage components, among other parts of these incredibly complex products. But the Japanese are close allies of America, and benefit from considerable collaboration in military aircraft.
For reasons of pride and politics, I expect the Chinese to stick with their own industry and try to eventually meet Airbus and Boeing head-on.
The race is on.
