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Aerospace & Defense

China's homegrown jet hits turbulence from US trade war

State-run COMAC relies on American engine and aerospace tech

COMAC's C919 regional jet under development seats about 160 passengers, making it a potential alternative to the Airbus A320 or the Boeing 737. (Photo courtesy of COMAC)

GUANGZHOU -- On the reddish plains of Turpan in northwestern China, COMAC has conducted test flights of its C919 passenger jet since late June.

Temperatures in the city can exceed 40 C in the height of summer, and the state-owned Commercial Aircraft Corporation of China seeks to ensure that the aircraft  withstands the blistering heat.

COMAC and its passenger jet are key components of Beijing's drive to become a global leader in high-tech industries. Though the latest tests bring the country one step closer to becoming a major airplane producer, the U.S. trade war has highlighted how China's aerospace industry remains dependent on foreign technology and parts.

Development of the C919 began in 2008. The roughly 160-seat plane is comparable in size to the Airbus A320 or the Boeing 737, which are used widely by major carriers and budget airlines alike. COMAC has received orders for over 800 jets, largely from Chinese airlines.

China currently relies on U.S. and European makers for the majority of its aircraft. But with aerospace technology a crucial area of promotion under President Xi Jinping's "Made in China 2025" manufacturing initiative launched in 2015, Beijing wants more than 10% of passenger jets on major routes to be made at home within five years.

As part of this effort, China has been absorbing foreign know-how. COMAC parent Aviation Industry Corp. of China formed a joint venture with U.S.-based Parker Hannifin for fuel control systems, and with United Technologies, now Raytheon Technologies, for power systems.

But the trade war threw a wrench into its plans. Of 39 core suppliers for the C919, fewer than 60% have full or partial Chinese ownership. Engines, in particular, come entirely from the U.S. China began developing a homegrown jet engine in 2011, though it is nowhere near ready for commercial use.

The risks were thrown into sharp relief in mid-February, when news broke that the U.S. was considering halting deliveries of C919 engines by CFM International -- a joint venture between General Electric and France's Safran.

"There are no short-term alternatives" if engine shipments from the U.S. cease, said Hua Chuang Securities, warning of major setbacks to Chinese jet production.

This concern was resolved when President Donald Trump tweeted that he wanted "China to buy our jet engines, the best in the World." But the crisis demonstrated China's reliance on the U.S. in the aerospace industry.

Washington also potentially stands in the way of China eventually exporting its jets. Aircraft and their components need to obtain type certification before they can be sold worldwide -- the standards for which are essentially set by the U.S. Federal Aviation Administration and its European counterpart.

The coronavirus hurts China's plans as well. Beijing aims to support homegrown jets for the foreseeable future through purchases by state-run airlines, such as the more than 100 ARJ21 jets that China Southern Airlines and two other carriers ordered from COMAC in August 2019.

But airlines are under strain from the pandemic. China's three major carriers suffered a 50% to 60% plunge in passengers on the year in the January-May period. Despite a reopening of China's economy, ridership remained down 50% on the year in May, and it may take a long time before returning to pre-coronavirus levels.

Fewer passengers mean less demand for the jets themselves. Boeing and Airbus already have decided to cut production.

COMAC insists its development is on the right track, but the company has not disclosed its latest timeline for deliveries of the jet or other milestones. The possibility of cancellations or delays hangs heavy over the project.

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