Fact of the Week: China Has Provided Its State-Owned National Champion in Commercial Aviation as Much as $72 Billion in Development Subsidies

Kevin Gawora February 8, 2021
February 8, 2021

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Source: Scott Kennedy, “China’s COMAC: An Aerospace Minor Leaguer” (Center for Strategic and International Studies, December 7, 2020).

Commentary: As part of China’s “Made in China, 2025” economic policy to move China’s economic development away from cheap, low-value-added exports, China is putting a greater focus on global market dominance in high-value-added sectors like commercial aircraft, pharmaceuticals, and semiconductors. To accomplish this, it is employing unprecedented mercantilist policies to increase global market share, included forced tech transfer, low-interest loans, and direct grants. Center for Strategic and International Studies analyst Scott Kennedy finds China’s national champion, COMAC (the Commercial Aviation Corporation of China), received between $49 and $72 billion in state-related support through 2020. This has enabled COMAC to build and sell 148 planes. And, as expected, this started to have negative effects on the two more innovative market leaders, Boeing and Airbus, as the top three Chinese airlines (all state-owned) have put off delivery of more than 100 planes from the two companies in favor of COMAC planes. While it will likely be a while before airlines in developed nations buy COMAC planes, we can expect COMAC sales in China and Belt-and-Road nations that China subsidizes to buy COMAC planes, which will lead to reduced sales and jobs at Boeing and Airbus.