China's Jumbo Passenger Aircraft Company

China moved one step closer to manufacturing jumbo aircraft by inaugurating its national pride in commercial aircraft manufacturing, while stressing that the new company will offer no short-term challenge to Boeing or Airbus.

China's new aerospace firm Commercial Aircraft Corp. of China Ltd. (CACC) was formally launched in Shanghai on May 11 2008. The Company is charged with building jumbo-jets that will pose no threat to Airbus and Boeing for 20 years and will require the help of foreign technology. However, Beijing has indicated it could compete with some Boeing and Airbus models by 2020.

A key reason for setting up CACC is the desire to meet China's domestic demand. Vice Premier Zhang Dejiang says the new company must help serve the rapidly expanding home market. While importing technology and cooperating with foreign companies, China must also make its own innovations and have its own intellectual property rights in aircraft building, says Zhang.

The new company has a registered capital of $2.72 billion, with the state-owned Assets Supervision and Administration Commission being the largest stakeholder. Other stakeholders include Guo Sheng Group representing the local Shanghai government, AVIC 1, AVIC 2, Baosteel Group, Aluminum Corp of China and Sinochem Corp.

Chairman Zhang Qingwei said the company will be responsible for "aircraft research and development, key parts production and final assembly, marketing, customer service, airworthiness certification and financial leasing."

The launch of the CACC has the backing of the top level of government, with Premier Wen Jiabao underscoring the need for China to pursue independent innovation. The new company's capital includes 6 billion yuan from the central-government commission that manages state enterprises.

Premier Wen Jiabao hinted that the industry has no future as an engineers' playground and maintains the new business has to be run as a modern commercial enterprise as well as pursuing high technology. "Innovation cannot exist without the environment and condition of a market-oriented economy," Premier Wen says. "Aviation enterprises should actively take part in market competition and the deepening of structural reform."

CACC general manager Jin Zhuanglong indicated the company doesn't have a development strategy and can't compete with Boeing and Airbus at this time. Jin said the short-term goals of the new venture are to accelerate training of civil aviation professionals and to conclude the ARJ 21's first flight and airworthiness certification process. "As for our long-term goal, we only have one," he said. "That is to guarantee commercial success of our large commercial trunk aircraft."

Jin told the state news agency Xinhua that CACC has adopted an "opening-up" policy with the desire to purchase avionics and engines for its large aircraft from international suppliers. "We welcome our foreign counterparts to participate in the manufacturing process of our large commercial trunk aircraft so as to create a win-win situation," he said.

He conceded that it will be a "long-term process" to develop large commercial aircraft, adding that no timetable has been established for building the first model. He also downplayed the potential challenge CACC will present to established manufacturers. "Even if we make it, our large commercial trunk aircraft won't pose any challenge to Boeing and Airbus, as we [will] only have one single type [initially] while they have multiple types of aircraft."

After getting the ARJ21 into service, CACC will develop an aircraft with more than 150 seats and a take-off mass of more than 220,000 lbs., a specification for an aircraft at least as big as a Boeing 757 or Airbus A310.

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