Saturday 21 Jul 2018 | 19:45 | SYDNEY
Saturday 21 Jul 2018 | 19:45 | SYDNEY

China wants a tube with a flag on it


Sam Roggeveen


29 October 2009 16:42

China's growing economy is getting admiring glances as much of the world recovers slowly from recession. But as footballers sometimes say of their opponents when getting psyched up for the contest, they're not ten feet tall. And you do have to wonder about China's industry policy, which has a whiff of the 'national champion' strategy adopted by several Asian countries in the 80s and 90s.

BJ Habibie's plan to transform Indonesia into a commercial aircraft manufacturer is one example of that strategy; Malaysia's Proton automotive brand is another. What these programs had in common was a sense of 'technological nationalism'. The idea was that, not only could a developing country leapfrog into developed status by plowing government money into high-end industries, but the whole country could get behind a prestigious national brand making highly complex products the equal of those in the developed world. 

The 1 October Beijing military parade showed that technological nationalism is pretty conspicuous in Beijing too, an impression reinforced by the space program, which seems to be devoted largely to reinventing technologies that the US and Russia perfected some decades ago.

Add to that list China's intent to enter the premium end of the aerospace industry — large commercial jets. Nothing on the scale of the Airbus A380 or Boeing 747, mind you, but Beijing still wants to play in a market that those two manufacturers dominate with their A320 and 737 — the 150-seat twin-engined jet. China will call its version the C919.

At this point, I'll hand over the aviation analyst Richard Aboulafia, who says China is a promising aerospace player, but:

...they've chosen a disastrous strategy," Aboulafia said. Rather than focusing on building aerospace components to develop a native industry, "they're going for a tube with a national flag on the back," he said, referring to the Comac C919.

"They're putting all of their eggs into a flagship product, and the problem with a flagship product is you tend to be reinventing the wheel," he said. "You also tend to be reliant upon Western components and suppliers for the brains and the power of the aircraft. ... You're just developing a chunk of metal upon which all the real value added is inserted by Western suppliers."

And, without proper intellectual-property protection, suppliers will sell the Chinese last-generation equipment, Aboulafia said. "That's what's happened with all their previous aircraft."

Further reading:

  • More from Aboulafia here on how not to build a national aerospace industry.
  • A 1996 Business Week article which, in a rather dry and non-judgmental way, exposes the monumental political favouritism and back-room dealing that went into the creation of Habibie's aerospace dream, IPTN.
  • And from last year, a piece by ANU economist Ross McLeod on why the IMF was nevertheless wrong to cut IPTN loose from government backing after the 1997 currency crisis.

Photo by Flickr user nevermindtheend, used under a Creative Commons license.