Saturday 02 Jul 2022 | 11:37 | SYDNEY
Saturday 02 Jul 2022 | 11:37 | SYDNEY

James Fallows on China take-off (2)


Sam Roggeveen


14 June 2012 14:52

Below is the second in a series of email exchanges with James Fallows, author of China Airborne. You can find part 1 here.

Q. James, my second question concerns what we might call China's 'status anxiety'.

In your book, you seem to find no economically rational explanation for China's apparent desire to join Boeing and Airbus as a large-scale manufacturer of commercial jetliners. So given the expense, the likelihood of failure and the fact that it will take decades for any plans to truly come to fruition, why are they bothering?

One explanation is that this a form of technological nationalism. Yes, it could help boost China's industrial capabilities, but the main aim is to impress foreigners and, no doubt, China's own people. It is, in effect, an enormous vanity project.

But if this is a tilt at 'national grandeur', as you put it, does it suggest that, when it comes to China's place in the world, China's leaders are overly conscious of the country's status? In turn, does this imply a certain fragility and uncertainty at the heart of China's self-image?

A. Another good question, which gives me an opportunity to clarify why I am agnostic, even sceptical, about the Chinese Government's aviation and aerospace ambitions, but not at all dismissive of them. Nor am I puzzled by what China is trying to do.

For now, China's public and private aspirations in this realm are all-encompassing in a way that can only make an American feel awe, or a nostalgic pang. In the realm of helicopters and light aircraft, Chinese firms have begun acquiring established Western companies. (I describe in my book the steps through which the Cirrus Aircraft company, of Minnesota, which over the past 15 years has been a spectacularly innovative firm in the light-airplane business, went from a dream of selling to newly prosperous Chinese customers to the reality of being acquired by the Chinese state aerospace firm.) At the other end of the technological range, the Chinese space program is humming along, and manned space flight still has a romance for the Chinese public that I recognise from my childhood in the 'Right Stuff' era but that has long been drained from it in the United States.

In between these extremes is the project whose goal is to have the name 'COMAC' take its place alongside Boeing and Airbus as a leading producer of the world's big airliners.

The inelegant-sounding term COMAC stands for Commercial Aircraft Corporation of China, and as you rightly point out, I argue in my book that it will be a very long time, if ever, before its products will be more attractive than Airbuses or Boeings to purchasers who have a choice. And on that point: everyone involved understands that the program's success will depend crucially on early purchasers who do not have free choice: some of China's state-owned domestic carriers, and the likes of Air Laos or Air Sudan who might receive COMAC planes as part of larger aid or trade deals with China. As the Chinese are quick to point out, big-airplane sales have always had a large political component. And both the Europeans and the Americans have, in their different ways, put national muscle behind the national-champion airplane companies.

In one sense the odds are against China's success in this realm, simply because the odds are so heavily against any entrant. Where the United States once had a proliferation of commercial aircraft companies — Lockheed, Curtiss, McDonnell Douglas, Hughes, Republic, many others — only Boeing remains. Europe has gone from dozens of firms to Airbus; and the rest of the world mainly supplies components or smaller planes. And hard as the business is for anyone — Japanese, Indians, Scandinavians — I argue that it will be particularly challenging for China. Which brings me to the real answer to your question.

Why are Chinese organisations and individuals trying so hard in this exceptionally tough and discouraging field? In my view, it is partly because the Chinese officials have not yet realised just how tough it is going to be — and partly because they have.

The 'not realised' aspect is, as you suggest, the sheer national glamour and ambition of extending China's reach in this field, as has happened in so many other areas. Big, ambitious, modern countries have their own airplanes, so why shouldn't China? You can dismiss this impulse as unrealistic and costly, but it's in keeping with a lot of other Chinese all-fronts efforts just now.

At the next step up the practicality ladder, Chinese technologists certainly know that Boeing is always America's largest exporter, and aerospace is the sector that accounts for the largest share of the US trade surplus. China's own expansion in its domestic aerospace market will be the big demand driver for both Boeing and Airbus. Why, Chinese officials must think, shouldn't more of this business go to their own firms?

Then, as I try to argue in the book, there is the factor that illustrates the real importance of Chinese efforts in this realm. In short, aerospace represents the type of industry in which Chinese companies will have to succeed if China is to take the next step in its economic evolution.

To telescope the argument here: in 30 years, China has moved hundreds of millions of people from rural poverty to relatively low-wage urban industrial life (plus, it has moved some people to billionaire status). But it has quite notably failed to create or foster the internationally competitive corporations that control most of the profit in international commerce and create higher-wage jobs; the likes of Apple, Mercedes, Samsung, Pfizer, GE. One big focus of China's current '12th Five-Year Plan' (a concept that in itself may seem preposterous in the Western world) is to will China's way up the industrial-value ladder by aiming for success in a number of these fields. 
I could go on (I made part of this case in the New York Times recently) but I will stop for now. Are the Chinese officials fanciful and unrealistic in pursuing their aviation dreams? Yes. But that's not the only thing that is going on.