Behind the armistice between Airbus and Boeing stands a common rival: China

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Paris (AFP)

While the US and Europe fought a 17-year trade dispute over subsidies for Boeing and Airbus, China poured money into its own commercial aircraft to take on the western aviation duopoly.

It took a joint threat from the US and Europe to finally end their dispute last week when the two sides signed a five-year truce to suspend tariffs.

During his visit to Brussels on Tuesday, US President Joe Biden made it clear that Washington and Brussels must “work together to challenge and counteract China’s non-market practices in this sector that give China companies an unfair advantage.”

For the past four years, the state-owned manufacturer Commercial Aircraft Corporation of China (COMAC) has conducted test flights on its 168-seat C919 narrow-body aircraft, a potential competitor of the Airbus A320 and Boeing’s B737.

COMAC expects to receive the airworthiness certificate from the Chinese air traffic authorities this year, coinciding with the 100th anniversary of the Chinese Communist Party.

According to Scott Kennedy, Senior Advisor at the Center for Strategic and International Studies in Washington, the plane received between $ 49 billion and $ 72 billion in government subsidies, much more than the subsidies Airbus and Boeing received from their governments.

“The real problem is that China is manipulating the market by pitting Airbus and Boeing against each other and demanding technology transfers as a condition for orders,” said Richard Aboulafia, aviation expert at Teal Group, a market research firm based in Virginia.

China’s air traffic has recovered much faster than anywhere else in the world, as the country brought the coronavirus outbreak under relative control well before others last year.

Boeing estimates that the Chinese market will require 9,360 aircraft over the next 20 years, a fifth of the global total.

It could be a huge godsend for the A320 and 737 MAX, despite the fact that China has not yet approved the return of the Boeing aircraft that was stationed in the US for 20 months after two fatal crashes.

– ‘Diplomatic and commercial tool’ –

While China remains dependent on Airbus and Boeing aircraft for the time being, the country’s ambitions to have its own fleet are clear.

“The aviation industry is both a growth tool and a diplomatic and commercial tool that enables them to have very comprehensive foreign policy in foreign markets,” said Michel Merluzeau, an analyst at AIR, an industry consultancy.

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“The Chinese have the technological and industrial skills to build an airplane, there is no doubt about that,” he told AFP.

“The Chinese are ambitious. They are very sensible. They know it takes time,” he said. “They don’t want to take on Airbus and Boeing in 2025.”

The C919 was built with US and European help. Only 14 of the aircraft’s 82 suppliers are Chinese, according to Kennedy.

The wings and fuselage are Chinese, but manufacturers in the country have yet to master the skills to build engines or aircraft electronics.

“They are preparing their industry to meet domestic demand, it would be inferior products, but at least nationally,” Aboulafia said.

The aircraft is heavier than the US and European aircraft, making it less fuel efficient and therefore more expensive to operate.

– From duopoly to triopoly –

But COMAC collects customers.

The company says it has 815 orders from 28 customers, most of them from Chinese airlines – though few are confirmed orders.

China Eastern Airlines was the first company to place firm orders for five aircraft in March.

Huang Jun, professor at Beihang University’s School of Aeronautic Science and Engineering, said the C919 will not be a game changer.

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But it can be cheaper than its competitors and produce an “ABC pattern” in China, with Airbus, Boeing and COMAC in the country.

“We just hope that we can enter this market and take some market share,” said Huang.

For Airbus boss Guillaume Faury, COMAC will “gradually become a decent player”.

“So by the end of the decade we will likely grow from a duopoly to a ‘triopoly’ for single-aisle aircraft,” he said.



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