People’s Republic of China’s aggressive Trade Strategy
One Focus : Western Aerospace
CRAIC , joint venture, faltering on CR 929?
The news has frequently reported on the People’s Republic of China trade and espionage initiatives against the United States. According to the below article, the PRC government is focused on US aerospace industry. Further, the Chinese have joined with Russia to develop a commercial airliner in competition with the Boeing widebody aircraft. It was thought initially that Western equipment, especially powerplants, would be included in the CRAIC CR929 final package. The selection of sub-contractors has become a point of contention between the state-owned “companies”—COMAC and UAC.
The Chinese have a governmental policy that foreign intellectual property is subject to silent acquisition. Each of us in the Western aerospace and airline industries need to be vigilant about the PRC’s efforts.
“After becoming chairman of the Chinese Communist Party in 2012, Xi Jinping unsheathed China’s multifarious, aggressive strategy toward the United States and our allies.
China has exploited the COVID-19 pandemic to target democracy activists in Hong Kong, coerce nations to support their aggressive policy towards Taiwan, and lockdown U.S. airline carriers seeking to re-open their routes to China in favor of China’s state-run airline carriers.
China’s willful effort to conceal the outbreak and severity of the coronavirus drove more animosity into the U.S.-China bilateral relationship. And now China is seeking to take advantage of the economic recession resulting from the pandemic for which China itself is responsible, to target U.S. commercial aviation.
COVID-19 has ravaged U.S. commercial aircraft leasing industry. Reeling from the steep decline in travel resulting from the pandemic, most of the U.S. major carriers have asked their lessors for financial assistance usually in the form of a “rent holiday”, a year or two years of deferment.
Recognizing the opportunity to exploit the financial distress, which could result in the loss of tens of thousands of U.S. jobs, Bank of China (BOC) Aviation, a Chinese commercial aircraft-leasing firm with $2 billion line of credit from the Bank of China, is targeting the critically important U.S. aviation sector.
Since the onset of the coronavirus pandemic, BOC Aviation has reportedly allocated more than $5 billion in sale-leaseback transactions with U.S. airlines.
In April 2020 BOC Aviation purchased 22 airplanes each from United Airlines and American Airlines and leased them back.
In May 2020, BOC Aviation purchased 10 planes from Southwest Airlines and similarly leased them back.
China is exploiting the aircraft industry’s dire financial situation to buy our aircraft because China wants both access to aviation industry high technology and leverage in a key sector of the U.S. economy.
The U.S. needs to take at least three steps to defend our national security from China’s attacks. First, Congress should allow aircraft lessors access to national security financial assistance from the Coronavirus Air, Relief, and Economic Security (CARES) Act. Commercial aircraft companies need immediate access to liquidity in the form of loans, which would bridge the gap during near-term deferrals of payments by lessees.
Second, Congress should pass legislation designed to protect key sectors of our economy on which our national security relies, from foreign adversaries.
Special attention should be paid to blocking China from using its wholly-owned U.S. subsidiary front companies to do Xi’s bidding.
Third, the House and Senate Intelligence Oversight Committees, at odds more often than not during the past three years, should take this opportunity to build some bipartisan consensus and hold subject matter expert open hearings exposing China’s commercial and espionage attacks.”
PBS has presented an hour long special on Xi Jinping’ aggressive strategy toward the US on a global scope. Impressive documentation, particularly given the PBS imprimatur.
“MOSCOW (UrduPoint News / Sputnik – 08th July, 2020) Deliveries of the Russian-Chinese CR929 long-range twinjet aircraft may start in 2028 or 2029, Ravil Khakimov, the head of Russian manufacturer Irkut Corporation (part of United Aircraft Corporation), said on Wednesday.
“A joint Chinese and Russian project, the CR929 widebody aircraft is undergoing new difficulties. According to statement by the general director of Irkut, Ravil Khakimov, deliveries of the model, developed in partnership with COMAC, should occur only in 2028 or 2029. Until then, the forecast by CRAIC, the joint venture of the two companies, was for a twin-aisle twin-engine to debut in 2027 after a two-year flight test campaign.
“At the moment, we are at the stage of collecting and analyzing proposals from all suppliers to determine the final configuration of the aircraft. It was planned to complete this work in 2020 and, in 2021, move on to the contracting phase with all co-contractors. and suppliers,”
Khakimov explained to the Russian government’s economic policy committee on Wednesday. “But, unfortunately, there are difficulties in working together with Chinese partners, so this phase could be changed to 2021”, added the general director of Irkut.
The joint venture between COMAC and Irkut, part of the UAC group, was launched in May 2017 with optimistic perspectives as it brought together two old partners from the times of communism in a joint work that seemed perfect. The Chinese wanted the Russians’ experience with complex aircraft designs while they saw the Chinese government’s injection of resources as the solution to make the program viable.
However, society is beginning to show signs of fraying. According to the Russian press, COMAC intends to have the exclusive sale of CR929 on the Chinese domestic market, leaving Irkut to exploit customers from other countries. As is known, competing with giants like Airbus and Boeing is an almost impossible task.
Irkut’s estimate indicates that the Russian market should absorb 50 aircraft like the CR929 in the next 20 years while in China there is a much greater potential, from 450 to 500 units…
The selection of suppliers for the CR929 programme slips to 2021, because of “difficulties in cooperation with the Chinese partners,” Ravil Khakimov, head of Irkut Corporation revealed at July 8 meeting with Russian government. Irkut is the Russian partner in the joint Sino-Russian venture created for bringing to market the advanced wide-body airliner.
The requests for proposals for the aircraft’s major systems, including engine, were originally offered at the end of 2017. Supplier line-up was expected to be completed by the autumn of 2019, but later slipped to 2020.
Khakimov confirmed that the CR929 program is still at the Gate 3 development stage, where proposals from all suppliers are analyzed prior to defining the aircraft’s final configuration. “We planned to complete this work in 2020 and move to contracting with all the subcontractors and suppliers,” he explained. “Unfortunately, we have some difficulties in cooperation with the Chinese partners, so this stage is likely to move for 2021”.
The hurdles will lead to further delays in the programme’s timeline. According to Khakimov, market entry is now shifted to 2028 or 2029, three years behind the initial schedule.
Formally announced in 2014, the baseline CR929-600 is intended to carry 280 passengers in a three-class configuration and will have a range of 12,000 km.
Communication issues, particularly over distribution of responsibilities and therefore ownership of the project’s intellectual assets, have plagued the programme before, hindering negotiations between partners Russia’s United Aircraft Corporation and China’s COMAC. In 2017, they finally set a joint venture called China-Russia Commercial Aircraft International Corporation (CRAIC) that manages the CR929 programme. It is headquartered in COMAC’s home city Shanghai, where the aircraft’s final assembly is planned. The Russian side received a right to host the programme’s engineering center in Moscow, but the Chinese will have its branch in Shanghai.
Share this article: