Scott Hamilton's story about US questions to the WTO about Chinese aerospace subsidies, published first on our CAO subscription service, and then on his own Leeham site, deserves much more attention than it's been getting. It hints at one of the most powerful reasons why China's aerospace industry is not going to match the major Western airframers for many, many years to come.
Putting aside the detail (and I realise many of you won't want to do
that) despite all the dust-ups at the WTO, Boeing and Airbus have
managed to live with each other, as have Bombardier and Embraer for a
long time now and everybody is still doing pretty nicely thank you. And
in all the WTO shenanigans, there has never been any sign of the
full-on sanctions that are the theoretical end-point of that process.
One reason being that everybody has subsidised skeletons in their
cupboards.
But with China it's different. First, their skeletons are not in cupboards but aggressively dancing around like a voodoo B-movie, and second the threat posed by the emergence of China as a serious new player is simply too awful for the incumbents to allow without a titanic struggle.
Compare with Russia, where at least the government genuinely wants to get the aerospace industry off its burdened national balance sheet. China has unashamedly built its industry courtesy of the state, and now we're seeing the industry buying or creating airlines to buy its products - initially the ARJ21 and C919.
I don't know if China has any intention of defending this at the WTO, or even of addressing the question anytime soon. I suspect their view is that, rather like Europe in the early days of Airbus, it's decided that it's going to have this industry one way or another and the world is going to have to live with it. That's difficult to stop, but it will be a brave company in Europe, USA, Canada or Brazil for starters who will launch these Chinese products. Which does leave an awfully small market.
I started saying this a good while ago when I challenged Steve Hazy's views on the matter, and I've not seen anything to change my mind. Plus he's now got just as many problems as me!
But with China it's different. First, their skeletons are not in cupboards but aggressively dancing around like a voodoo B-movie, and second the threat posed by the emergence of China as a serious new player is simply too awful for the incumbents to allow without a titanic struggle.
Compare with Russia, where at least the government genuinely wants to get the aerospace industry off its burdened national balance sheet. China has unashamedly built its industry courtesy of the state, and now we're seeing the industry buying or creating airlines to buy its products - initially the ARJ21 and C919.
I don't know if China has any intention of defending this at the WTO, or even of addressing the question anytime soon. I suspect their view is that, rather like Europe in the early days of Airbus, it's decided that it's going to have this industry one way or another and the world is going to have to live with it. That's difficult to stop, but it will be a brave company in Europe, USA, Canada or Brazil for starters who will launch these Chinese products. Which does leave an awfully small market.
I started saying this a good while ago when I challenged Steve Hazy's views on the matter, and I've not seen anything to change my mind. Plus he's now got just as many problems as me!
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