China has created a new airliner, the Comac C919. The state-directed program illustrates a lot about how the Chinese Communist Party runs the country's economy. The main aims of the project are typical of big Chinese economic efforts: lifting the national technological level and replacing imports, which also means improving national self-reliance. It's all part of the CCP's grand scheme of economic coordination, which is embodied in successive five-year plans, massive schemes that seek to promote industries ranging from biotechnology and artificial intelligence to high-speed rail. Western countries played with that sort of thing in the decades after World War II, to varying degrees - France a lot, Australia a bit and the USA very little. In Australia, such industry policy was largely suppressed by the wave of economic rationalism that swept government in the 1980s and 1990s, though it's making something of a comeback now. China's gargantuan industry policy is actually scaled down from the central planning that tried to manipulate almost every detail of the economy when the country was genuinely communist, before the 1980s. China is also following the examples of Japan and South Korea, where government agencies have for decades sought to pick winners. So Beijing's 10th and 11th five-year plans, approved in 2001 and 2006, called for pushing ahead with the aircraft industry, among many other things. One result was the launch of the C919 program in 2008. The aircraft was supposed to be ready for service by 2016. Eight years was a pretty generous time allowance, but it turns out that more than 14 years has been needed. At the time of writing, the very cautious Civil Aviation Administration of China looks close to giving the design an airworthiness certificate, authorising airlines to use it. Such a long development period would be disgraceful for Airbus or Boeing, but China had very little experience in this field in 2008. Anyway, almost all commercial-aircraft programs everywhere this century have run badly behind schedule. Getting into the airliner industry is in fact harder than learning to develop reasonably good military aircraft, even harder than sending people into space. That's because an airliner must be extremely safe and efficient. So how did China go about creating the C919? Because the challenge was huge, it wisely decided to copy. The design is pretty much a reproduction of the Airbus A320, one of the world's two most common airliners, the other being the Boeing 737. Usually when Chinese economic planning demands advances in some field, the government gets private enterprise heavily involved, using subsidies or promises of future profits. But that was impossible for the C919 program, which was bound to be a loss maker: Chinese engineers and managers just didn't have enough experience to beat Airbus and Boeing. So the government created its own company for the job, Comac, using public funds and capital wrung out of state enterprises. Various other parts of the government system, such as universities and research institutes, jumped to attention to work on the C919, and happily took program money for doing so. Artificial demand was also needed, but the government at first hardly needed to lift a finger to create it. Foreign airlines were uninterested, because Comac had established no market reputation, but Chinese carriers signed contracts for C919s - not because they wanted them but because they wanted to be seen to be supporting a national project. By announcing orders, they scored political brownie points. Anyway, Comac gave them very easy terms, which, with all its state funding, it could afford to do. Initially, orders were really just for show. Creating an appearance of success is so important in these grand projects. More recent contracts have been more serious - and signed at government direction. MORE AGE OF THE DRAGON: Because this had to be a state project, it had a governmental culture, which slowed it down. For example, middle managers were much more interested in covering their backsides than in taking necessary but risky decisions; they'd push problems up the line to their bosses. Nonetheless, the many disadvantages could be overcome with enough time and funding. Financial brute force could eventually present a certifiable aircraft to the civil aviation regulators. Notice that the billions of dollars spent on creating a local duplicate of the A320 could have stayed in taxpayers' pockets - for consumption or for investment in something that would actually turn a profit. But such questioning about state programs in China hardly arises. Such is the nationalist mentality that Chinese rarely even talk about "taxpayers' money"; it's "the country's money". Despite the great fiscal effort, Comac has still not produced anything like an entirely Chinese aircraft. Local industry could design and make the C919's structure, but all the intricate internal systems, such as hydraulics and flight controls, had to be supplied by Western companies. The engines, exquisite pieces of technology, absolutely had to be imported. Most of the foreign suppliers were required to set up factories in China and share technology. That has long been another feature of Beijing's economic management: "Come to China, make money, and show us how you do it." Now President Xi Jinping's aggressive international policies are raising an awkward problem for Comac. What if China takes some international action that prompts Western governments to retaliate with sanctions, including halting supply of parts for making C919s? It's a serious possibility, so the Chinese aircraft industry has more work to do, creating replacements for the foreign systems. From what I hear, it's moving as fast as possible to do so.
