Earlier this week China’s state commercial-aerospace company, known as COMAC, rolled out the new C919 airliner it has been working on for years. I noted at the time that the plane’s debut was of course a significant step in China’s aerospace ambitions, and a deserved source of pride. But I also tried to explain why concerns that this meant imminent doom for Boeing and Airbus, as with a recent Seattle Times headline that “China Targets Puget Sound With New Plane,” were over-wrought, or at least tentative and many years premature.
The long version of why that’s so is what I laid out in my book China Airborne, which was a study of the larger problems the Chinese economy may have in shifting toward “rich country” industries like aerospace. (And which, I have to say, has stood up pretty well in the 3 years since its appearance.) The shorter way to get the idea is to take a look at the illustration above.
It’s originally from the Chinese news service Sina, and it’s a couple of years old, so details may have changed. But its main message is that all the most valuable and complex components in the C919 come from somewhere else.
The engines are from the U.S.-French consortium CFM. Most of the electronics are from U.S. or European firms. I haven’t seen a detailed costing-out of the entire value of the airplane, and probably it’s confidential. But beyond doubt most of the value of the plane lies in imported components brought to China for assembly.
This is why I said in my book that the C919 could be thought of as a huge flying counterpart to the iPhone. Each of them is “made” in China; each has most of its technology and value coming from somewhere else.
You can see different corporate and national dynamics playing out here. On China’s side, the (rational) belief that the best way to get into the high-value industries is to begin by assembling them. On the U.S. and European side, the (indisputable) awareness that the Chinese government will require them to do work within China to get Chinese markets, and the (hopeful, and consequential) belief that they can keep out-innovating Chinese competitors fast enough to maintain a lead. Of course a lot of corporate and national economic welfare turns on the validity of this last belief.