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Aerospace & Defense

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

COMAC's narrow-body aircraft faces steep hurdles in export market

China's C919 passenger jet will take on rival narrow-body planes from Boeing and Airbus.   © Reuters

ZHUHAI, China -- A Chinese-made passenger jet set to compete with American and European rivals counts roughly 40% of its core component suppliers as overseas companies, exposing the risks posed by U.S. trade frictions to a plane that has been under development for more than a decade.

The C919 jetliner, being manufactured by the Commercial Aircraft Corp of China, or COMAC, is due to be delivered to the first customer by the end of the year. However, with that deadline looming, the plane was a no-show at the Airshow China in Zhuhai on Thursday. COMAC instead exhibited a life-size model of the cabin.

"Boeing and Airbus alone will not be enough to meet demand," a COMAC sales executive said at the event. "The new option we'll provide will be in the interest of the airlines."

The narrow-body jet will compete with bestselling models of its size: the Boeing 737 and the Airbus A320. Although state-owned COMAC has not performed demonstration flights or unveiled an actual plane at the Zhuhai air show, it is widely believed that the C919 is approaching the conclusion of its development, which began in 2008.

But potential turbulence lays ahead for the C919's business prospects. Out of the 39 lead suppliers for the plane, more than 40% hail from the U.S. or other countries outside China, according to documents from China-based brokerage Avic Securities and other sources. The remaining suppliers include joint venture firms backed by foreign companies.

Chinese companies are supplying the fuselage and the wings. But a host of Western suppliers are providing the brains and heart of the plane -- the communication and flight control systems, among other core components.

The share of parts sourced from non-Chinese companies appears to rise even higher when tallied in terms of value. This underscores the extent that China's domestically developed passenger jet is dependent on foreign contribution.

The engine poses a major challenge for domestic development. Currently, the C919 is due to be equipped with an engine manufactured by CFM International, a joint venture between General Electric and France's Safran Aircraft Engines.

COMAC is considering adopting the CJ1000 jet engine being developed by Aero Engine Corporation of China, a maker of military aircraft engines. But many observers believe that such an engine will not be commercially available in the near term.

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

Relying on the foreign-built engines presents its own risks. News emerged in February 2020 that then-President Donald Trump's administration was considering halting shipments of CFM jet engines to China. The crisis seemed to pass after Trump expressed support for selling to China, but the scare underscored that engines, much like smartphone chips, face major geopolitical risks.

Type certification -- which signifies that an aircraft design is airworthy -- poses another challenge.

Regulators in the U.S. 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 are usually able to fly commercially only within China. That limits opportunities for exports that would promote larger-scale production and accelerate the industry's growth.

Aircraft makers are desperate to secure certifications other countries will accept. COMAC at first sought European certification for the C919, but there has been little movement on that front.

The technical hurdles are high enough, but China's aviation industry faces other headwinds -- particularly the easing of years of friction between the U.S. and Europe over aviation. During a June summit, Washington and Brussels reached a truce on a dispute over aircraft subsidies, amid shared concern over China's push into aerospace and defense.

This leaves Beijing with less room to exploit that rift to win aircraft certifications or forge cross-border industry partnerships. Cultivating the domestic aviation market is its only real option for now.

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

The national government has put forward the goal of lifting the ratio of Chinese-manufactured passenger planes in service on major air routes to over 10% by 2025. The C919 will play a major role in promoting the homegrown industry.

China's size in terms of both land mass and population make for strong domestic demand that the country's aviation industry can leverage for growth. But if Beijing goes too far in protecting its aircraft makers, it could risk a backlash from the U.S. and Europe that would further complicate efforts to expand abroad.

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