- China and Japan will continue to develop their civil aviation industries to take advantage of the economic opportunities presented by the increasingly dynamic markets in the Asia-Pacific region.
- China will use civil aviation as part of a larger strategy to achieve global leadership in high-tech industries and diversify its manufacturing sector into high-end products.
- Japanese aviation companies will attempt to maintain domestic manufacturing output in the wake of rising regional competition and declining demographics.
The global economy is in the midst of a change. Market demand and consumption — once monopolized by the West — are becoming more dynamic in the Asia-Pacific region, altering demand patterns and enlarging the consumer market across a host of sectors. As China and Japan look for ways to capitalize on this trend, they are turning their attentions to the skies. Civilian aviation is taking off in the region: Boeing projects that in the next 20 years, China will overtake North America as the world's largest air-traffic market. Meanwhile, the global aviation industry is predicted to need more than 28,000 narrow-body passenger jets to meet rising global demand. This represents a significant opportunity that China and Japan are unwilling to pass up, and both have targeted the aviation industry as a key sector to move into to promote economic growth.
For China and Japan, the advantages of cultivating a civilian aviation sector are many, enabling the countries to diversify their economic activities while reducing their dependence on foreign suppliers and boosting development in other sectors. Both countries intend to manufacture their own aircraft from the ground up, meaning their domestic industries will eventually be responsible for producing avionics and engines. Although these are the most difficult aviation technologies to master, they can be used in the military aviation sector as well as the civilian. Considering Japan's push toward military normalization and China's campaign to modernize its armed forces, the technologies' dual function is of great interest to the countries.
China's Regional Jet Takes Flight
China began developing its domestic aviation sector in the early 2000s. In 2002, the state-owned Commercial Aircraft Corporation of China Ltd. (Comac) announced that it was developing a passenger jet that would reach commercial production by 2006. After 10 years, Comac's ARJ21 plane finally entered service as a regional passenger jet, flying from Chengdu to Shanghai. Since then, Comac has set its sights on expanding its fleet of commercial jets and adapting the ARJ21 for business and freight purposes. The company also plans to branch out into larger crafts, for instance the C919.
In addition to serving its growing domestic market, Comac intends to export the ARJ21 and the future C919, with the goal of becoming a contender in the international aerospace market. Currently, the ARJ21 has not been certified by the U.S. Federal Aviation Administration or the European Aviation Safety Agency and does not meet the industry standards for fuel efficiency, engine noise, safety or reliability. As a result, the plane can operate only in countries that recognize the Civil Aviation Administration of China's certification, most of which are in the developing world. Given the size of China's domestic market, this limitation is not yet a concern for the country. Nonetheless, to realize its ambitions in the global aviation market, China will have to improve its products accordingly.
Beyond meeting the rising demand — regionally and globally — for passenger air travel, Beijing hopes to accomplish a more strategic goal through its civilian aviation industry. China is striving to become a global leader in high-tech industries. To do this, though, it must first develop its own domestic sectors to break its dependence on foreign technology. China has already managed this endeavor in its automotive industry, which was domesticated after years of foreign dominance as China's technology matured. The civil aviation industry appears to be following a similar trajectory: Beijing recently created the Aero Engine Corp., a state-owned enterprise dedicated to producing jet engines. That China's aviation industry is entirely state-owned will likely prove a double-edged sword for its development. Although party politics can limit innovation, the government can provide unfettered access to inexpensive loans.
Regardless of whether China's civilian aviation sector reaches the level of prestige that it is aiming for, the fledgling industry is a much-needed economic diversification tool for the country. Low-end manufacturing exports are no longer enough to sustain China's economy. In producing and exporting the ARJ21, the C919 and their successors, the country is transitioning to higher-end manufacturing — a necessary next step for its growing economy. Developments in the industry, moreover, will be useful for China's military and will reduce its reliance on foreign-made equipment.
But China's civilian aviation industry is far from self-sufficient. Chinese pilots are required to train outside of the country to become licensed, and the industry still imports 40 percent of its civilian aviation components from countries such as the United States, Brazil and Ukraine. To reduce this figure, Beijing intends to replicate foreign technology without acquiring the necessary licensing permissions — as it has done elsewhere in its technology sector — and recently purchased U.S. general aviation firms Cirrus Aircraft and Teledyne Continental Motors. Eventually, China's reliance on foreign technology and companies will diminish, but they will likely remain for the next 20 to 30 years as the country's aviation sector tackles avionics and engine development.
Japan's Regional Jet, Re-envisioned
Compared with China, Japan is a veteran of the civilian aviation industry, with more than 40 years under its belt. Japan's Nihon Aircraft Manufacturing Corp. manufactured the country's first successful regional airplane, the YS-11, in 1962. In 2008, two years after the consortium ceased operations, Mitsubishi Heavy Industries — one of Nihon's original members — embarked on designing and producing a new regional jet for Japan, the MRJ. The newly named Mitsubishi Aircraft Corporation of Japan conducted the MRJ's first test flight in November 2015, and if production follows schedule (a rare feat in the aviation industry), delivery should take place in 2018. From there, Mitsubishi plans to expand its fleet to an estimated total of seven aircraft with varying flight ranges.
Between its years of experience and its well established technology sector, Japan's civilian aviation industry has the edge on China's. Unlike Comac, Mitsubishi is expected to service the developed world from the outset. Of all the planes in the regional jet market, the MRJ is expected to have the lowest operating costs, lowest environmental impact and highest fuel efficiency (for which Mitsubishi has Japan's imported fuel restrictions to thank). Meeting the Federal Aviation Administration's and European Aviation Safety Agency's operating and reliability requirements, then, will likely not be a problem for the aircraft.
Common Struggles, Common Goals
Still, Mitsubishi shares a challenge in common with Comac. Though Japan intends to produce its passenger planes in their entirety, Mitsubishi relies on foreign suppliers, such as the United States, for parts including engines and avionics. Japan's dependence is not driven by necessity, as China's is, but by corporate strategy. Japanese businesses have a long-standing tradition of cooperation with foreign companies and nations — particularly those in the West. Furthermore, using foreign assistance and technology in lieu of domestic is more efficient for Mitsubishi in terms of revenue, resource allocation and production limits. At the same time, however, Japanese companies want to continue leading heavy industry in Asia. If this entails expanding into new terrain, such as manufacturing civilian aviation components, Japanese companies will break with tradition — and with their foreign suppliers.
Like China, Japan is interested in civilian aviation as a means to stimulate economic growth. The industry is well-suited to Japan, which is experiencing a steep demographic decline. For one thing, it takes advantage of growing demand elsewhere, notwithstanding Japan's own aging population and shrinking workforce. For another, it could return employment opportunities to Japan's manufacturing sector. Finally, since most countries in the region lack the experience and capital to enter the aviation industry, Japanese businesses view aerospace manufacturing as an opportunity to ensure a regional monopoly over a sector of growing importance.
A Global Competition
Regional countries are not the competitors Japan has to worry about, though. In fact, China and Japan are targeting entirely different markets with their new aircraft. Comac's ARJ21 will be aimed at the developing world, while Mitsubishi will go after the Western market. Both companies will have to contend with the duopoly that Canada's Bombardier and Brazil's Embraer currently have on the regional passenger air travel market. Only once Comac has refined its technologies enough to expand beyond the developing world will it compete against Japan's Mitsubishi.
As the Asia-Pacific region's economy becomes ever more dynamic, the race to carve out market niches is on. In the midst of so much new opportunity and surging demand, countries and companies are working to ingrain themselves in upcoming industries, such as civilian aviation, in an attempt to retain their place in an increasingly diverse regional economy.