China continues to make remarkable strides in various sectors, despite facing significant financial and demographic challenges. Notably, the country has emerged as a technological powerhouse, dominating solar-energy and electric-vehicle supply chains. In addition, China has made a notable entry into the electronics market with the latest Huawei phone, powered by domestic 7-nanometer semiconductors.

Beijing's Ambitious Plan for Civil Aviation

Now, Beijing sets its sights on civil aviation. The C919, developed by the state-owned Commercial Aircraft Corporation of China (Comac), aims to compete with Boeing's 737 and Airbus' A-320 by offering a midrange solution. Recently, China Eastern Airlines placed the C919's first significant order, consisting of 100 planes. Beijing believes that the C919 will eventually break the market duopoly currently held by Boeing and Airbus.

Is the C919 a Worthy Competitor?

However, many experts are skeptical about the C919's ability to rival its well-established competitors. Scott Kennedy, a senior adviser in Chinese economics at the Center for Strategic and International Studies, states that the C919 cannot match the design quality of the 737 or A-320. Its functionality and capabilities fall short compared to the existing workhorses of the sky.

Production Challenges

Even if the C919 were to improve its design, Comac would still require substantial time to ramp up production. Scott Hamilton, founder of aerospace consultant Leeham, points out that Airbus or Boeing can produce around 100 airplanes per month, while the C919 struggles to produce more than two. This logistical limitation showcases the immense gap between China's aircraft manufacturing capabilities and those of its competitors.

Safety Certifications and International Reach

Implications for Boeing

Despite its limitations, the emergence of the C919 poses challenges for Boeing. In the past, Boeing relied heavily on China for a quarter of its sales. However, due to the ongoing trade war between the United States and China, Boeing's sales have significantly dwindled. Thus, the C919 represents a potential threat to Boeing's market dominance in China.

In summary, while China may have made remarkable technological advancements in various industries, its foray into civil aviation with the C919 faces numerous hurdles. Overcoming design limitations, ramping up production capabilities, obtaining international safety certifications, and competing with well-established airline manufacturers will take time. Nonetheless, the emergence of the C919 signifies that China is determined to break through and make its mark in the global aerospace industry.

Airbus' Diplomacy Pays Off

Airbus (AIR.France) has proven its expertise in effective diplomacy by taking part in French President Emmanuel Macron's visit to Beijing in April. During this visit, CEO Guillaume Faury announced the establishment of a new assembly line at the company's Tianjin factory. This strategic move has played a significant role in Airbus' stock price nearly reaching pre-pandemic levels, while Boeing's stock has declined by 40%.

The Chinese Market Dynamics

When it comes to an open market comparison between the C919 and the 737, it is clear that the C919 has yet to match up to its competitor. However, China's aviation market is far from being an open market. With the likelihood of China ordering thousands of new planes throughout this decade, the top three airlines, which are state-owned, will undoubtedly purchase what the government instructs them to buy. Additionally, Beijing may exert influence on regional tourist destinations such as Indonesia or Thailand to secure early certification and orders for the C919, as noted by Shukor, an industry expert.

Global Collaborations in Aircraft Manufacturing

The significance of the C919 goes beyond politics. Approximately 70% of its components are obtained from Western suppliers, including renowned American companies such as General Electric (GE) and Honeywell International (HON). These suppliers play a crucial role in providing the engines, wheels, brakes, and navigation systems for the aircraft. Owing to the intricate interdependence within the supply chain, the U.S. Defense Department pondered imposing sanctions on Comac during the final days of the Trump administration. However, President Joe Biden has decided to preserve the C919 supply chain, as it is widely recognized that civilian technology utilized in the C919 poses minimal risks to China's military aviation capabilities.

The Opportunities Ahead

The accommodating stance adopted by Washington not only maintains stability but also presents an opportunity for potential reconciliation between the Chinese market and Boeing. Building airplanes is a long-term industrial endeavor, and China has set its sights on mastering this field. As aviation analyst Hamilton explains, it took Airbus 40 years to achieve parity with Boeing. Similarly, he foresees that China will become a formidable competitor in another generation or two.

Until then, the journey remains intricate and challenging.

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