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Watch out, Boeing, Airbus: China plans to build large airliners, too

BEIJING—China told Boeing and Airbus on Monday to brace for its entry as a manufacturer of large commercial aircraft.

Some international aerospace analysts voiced skepticism, however, and a Chinese aviation insider pointed to the huge technical and commercial challenges ahead.

The decision to forge ahead with the "glorious, historical mission" of building a large aircraft capable of carrying more than 150 passengers was made Feb. 26 but announced Monday.

"Our country has been developing the aviation industry for 50 years and already has the technical and material base to develop large aircraft," a government statement said.

China's steady economic growth makes it perhaps the most sought-after market in the world. It has about 1,100 jetliners in its commercial fleets and is expected to buy about 1,600 aircraft between now and 2020, valued at up to $180 billion, as it becomes the world's second-largest airliner market.

State-run aircraft manufacturers eager to obtain a share of the market are seeking favorable tax treatment and loans, and they've called on the government to lean on domestic airlines to purchase homegrown planes.

"The government should give preference to domestically produced large civilian aircraft in its procurement," said Liu Daxiang, a vice chairman of China Aviation Industry Corp. I, one of two state aircraft makers. According to Liu, large Chinese aircraft may take to the skies by 2020.

The announcement that China is launching an assault on Chicago-based Boeing Co., the largest U.S. exporter, is likely to irk policymakers in Washington who are already irritated by a yawning trade imbalance between the two nations.

Doug McVitie, a director of Arran Aerospace, a consultancy in Dinan, France, said he doubted Chinese aircraft quality would approach that of Boeing or Airbus SA, a unit of European aerospace group EADS, by 2020.

"The airline industry is not one where you buy cheap. You go for quality," said McVitie, who has spent months in China in recent years examining its aviation industry.

Even a Chinese aviation insider said the two domestic aircraft makers would face hurdles in selling a Chinese-made aircraft overseas.

"China's large-scale civilian aircraft must be as good as the existing Boeing and Airbus aircrafts in terms of safety, reliability and comfort. Otherwise, it is impossible to find a place in the market," Cui Degang, vice chairman of science and technology for China Aviation Industry Corp. II, told the Beijing Business News newspaper.

Both Boeing and Airbus compete fiercely for sales to China and have brought manufacturing here. Airbus agreed last year to build a plant in Tianjin, east of Beijing, to assemble single-aisle A-320 aircraft. Production is to begin by 2009.

Since the 1980s, Boeing has bought more than $730 million in aviation hardware from China, including rudders, vertical fins, tail section modules and fuselage sections.

McVitie, a former salesman for Airbus, said Airbus and Boeing "definitely don't want to see China as a competitor." He said the two firms haven't brought high-end production to China, but other production is there "for political reasons, to encourage the Chinese government for orders," McVitie said.

China already is building a regional jetliner that can carry 78 to 105 passengers, in hopes of selling it in overseas markets. The ARJ will have its maiden flight in March 2008, Xinhua news agency said.


(c) 2007, McClatchy-Tribune Information Services.

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