China establishes regional jumbo jet company

The Financial Times (5/12, Dickie) reports, "China has unveiled a state-owned aircraft manufacturer intended to eventually challenge Boeing and Airbus's control of the global market in large airliners." The Times characterizes the Commercial Aircraft Corporation of China (CACC) as "a significant step in Beijing's drive to create an advanced civil aviation manufacturing sector able to help meet the country's rapidly growing demand for regional and larger jets."

Reuters (5/11, Chien) noted that, according to China's state-run media, the CACC "is capitalized at 19 billion yuan ($2.72 billion), with 6 billion yuan coming from the state-owned Assets Supervision and Administration Commission, giving it the single largest stake at 30 percent." Also involved, with a 25 percent stake, is "a consortium made up of the municipal government of Shanghai -- where the ARJ21 regional jet is being developed -- and China's two state aircraft makers, AVIC I and AVIC II." However, "many analysts have expressed skepticism about the commercial prospects of a large jet designed and manufactured entirely in China, given the country's limited experience in big aircraft."

According to Bloomberg (5/11, Shen), "China aims to build a 150-seat aircraft by 2020 to support the expansion of its domestic travel market and to compete with Boeing and Airbus overseas." In terms of expansion, the country plans "to triple its fleet of passenger and cargo planes to 4,000 by 2020 as economic growth lifts travel demand in the world's second-largest aviation market, according to the General Administration of Civil Aviation."

The AP (5/11) quoted CACC general manager Jin Zhuanglong, who said in an "interview that it was too early to say when a Chinese-developed jumbo jet would be taking off, as it would take a long time to develop homegrown talent and do research." Jin explained, "According to the development history of Airbus and Boeing, the development and success of civil planes cannot be realized by relying on one or two generations."

The BBC (5/12) quotes analysts who suggest that "it could take China up to 20 years to become a credible force in commercial aviation and that it would only succeed if it attracted sufficient private investment." Richard Aboulafia of the Teal Group said that the CACC "might be able to establish a presence in the business over the next 10 to 20 years if they nurture it with government cash and gradually offer shares to the private sector." The AFP (5/12) and the UPI (5/12) also report the story.