China develops passenger jets, but 40% of parts suppliers are overseas

ZHUHAI, China – A Chinese-made airliner destined to compete with its US and European rivals counts around 40% of its component suppliers as foreign companies, exposing the risks posed by US trade friction to a developing aircraft for over a decade.

The C919 airliner, manufactured by Commercial Aircraft Corp of China, or COMAC, is expected to be delivered to the first customer by the end of the year. However, as that deadline approached, the plane was absent from the Zhuhai Airshow China on Thursday. Instead, COMAC exhibited a full-size model of the cabin.

“Boeing and Airbus alone will not be enough to meet demand,” a COMAC sales manager said at the event. “The new option we will bring will be in the best interests of the airlines.”

The narrow-body aircraft will rival the best-selling models of its size: the Boeing 737 and the Airbus A320. Although state-owned COMAC did not perform demonstration flights or unveil a real aircraft at the Zhuhai Airshow, it is widely believed that the C919 is nearing the end of its development, which began in 2008.

But potential turmoil is looming for the C919’s business prospects. Of the 39 major suppliers of the aircraft, more than 40% are from the United States or other countries outside of China, according to documents from China-based brokerage firm Avic Securities and other sources. The remaining suppliers include joint ventures backed by foreign companies.

Chinese companies supply the fuselage and wings. But a host of Western vendors supply the brain and heart of the aircraft – communication and flight control systems, among other essential components.

The share of coins from non-Chinese companies seems to increase even more when counted in terms of value. This underlines how much the airliner developed in China depends on the foreign contribution.

The engine constitutes a major challenge for national development. Currently, the C919 should be equipped with an engine manufactured by CFM International, a joint venture between General Electric and the French Safran Aircraft Engines.

COMAC plans to adopt the CJ1000 jet engine developed by Aero Engine Corporation of China, a manufacturer of military aircraft engines. But many observers believe that such an engine will not be commercially available in the short term.

“It will enter the market around 2030,” according to Zheshang Securities.

Relying on foreign-made engines comes with its own risks. News emerged in February 2020 that the administration of then President Donald Trump was considering suspending CFM jet engine shipments to China. The crisis appeared to pass after Trump expressed support for the sale to China, but fear underscored that engines, just like smartphone chips, face major geopolitical risks.

Type certification – which means an aircraft design is airworthy – poses another challenge.

Regulators in the United States and Europe set de facto standards that many other countries follow. Chinese regulators have their own approval process, but they have little global influence, and Chinese planes can generally only fly commercially in China. This limits export possibilities which would promote larger-scale production and accelerate the growth of the industry.

Aircraft manufacturers are desperate for certifications that other countries will accept. COMAC initially applied for European certification for the C919, but there has been little movement on this front.

The technical hurdles are high enough, but the Chinese aviation industry faces other headwinds, particularly the easing of years of friction between the United States and Europe over aviation. At a summit in June, Washington and Brussels reached a truce over an aircraft subsidy dispute, amid shared concerns over China’s push into aerospace and defense.

This leaves Beijing less room to exploit this loophole to obtain aircraft certifications or forge cross-border industrial partnerships. Cultivating the domestic aviation market is his only real option at the moment.

A government meeting in January in Shanghai, the headquarters of COMAC, revealed that the C919 would receive certification for pilots and ground personnel by the end of the year. China Eastern Airlines, one of the country’s top three carriers, officially signed a purchase contract in March.

The national government has advanced the goal of increasing the ratio of Chinese-made passenger aircraft in service on major air routes to over 10% by 2025. The C919 will play a major role in promoting the industry local.

China’s size in terms of land mass and population generates strong domestic demand that the country’s aviation industry can tap for growth. But if Beijing goes too far in protecting its aircraft manufacturers, it could risk a reaction from the United States and Europe that would further complicate overseas expansion efforts.

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