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China’s state-driven economic model may be limiting investment in aviation industry

06/07/2021| 12:01:21 PM|

China’s consumer market size, manufacturing capabilities, extensive supply chain linkages and relatively good infrastructure are still highly attractive to foreign firms.

China’s state-led development model is making it increasingly difficult to attract foreign investment and secure advanced technology for its commercial aviation industry, analysts have warned.

The country’s medium and long-term economic plans include ambitious targets for the global expansion of its aviation and aerospace industries, but so far, the state-directed model, which relies on subsidies for domestic firms and technology transfers, has not made a significant impact.

The C919, a single-aisle passenger jet made by the state-owned Commercial Aircraft Corporation of China that Beijing hopes will compete globally with Airbus and Boeing, relies heavily on foreign imported components, in particular those made by US companies.

But China’s success in using acquired technology has made many Western firms cautious about doing business if technology transfers are involved.

Scott W Harold, a senior political scientist at the Rand Corporation, said it was becoming more difficult for China to acquire the key technology it needed in exchange for market access after a number of state-owned firms pushed their one-time partners out of the Chinese market after acquiring their technology.

But China’s consumer market size, manufacturing capabilities, extensive supply chain linkages and relatively good infrastructure are still highly attractive to foreign firms, and this means some companies are still willing to comply with technology transfer policies, according to Daniel Prud’homme, an associate professor at Pôle Universitaire Léonard De Vinci in France.

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TAGS: commercial aviation industry | C919
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