China To Build Its Own Large Jetliner 332
Hugh Pickens writes "China's domestic airlines will need to buy an estimated 4,330 new aircraft valued at $480 billion over the next two decades to meet demand in commercial aviation. Now the LA Times reports that the Commercial Aircraft Corp. of China expects to begin producing its 156-seat C919 by 2016, competing with the Boeing 737 and Airbus A320. China has staked billions of dollars and national pride on the effort but what may surprise some Americans worried about slipping US competitiveness is that some well-known US companies are aiding China, putting US and European suppliers in a tough spot: Be willing to hand over advanced technology to Chinese firms that could one day be rivals or miss out on what's likely to be the biggest aviation bonanza of the next half a century. 'If they launch a commercial aviation industry, you've got to be part of it,' says Roger Seager, GE Aviation's vice president and general manager for China, whose company has garnered contracts worth about $6 billion for the C919. 'You can't take a pass and come back in 10 years.'"
What's the adage? (Score:5, Insightful)
Oh yeah, "A capitalist will sell you the rope you will hang him with if he can make profit on it" Lenin
Re:What's the adage? (Score:4, Insightful)
Gold for salt. (Score:4, Insightful)
I remember learning in school that West Africans would trade gold for salt, pound for pound, with people from Northern Africa and abroad because they didn't know how to make their own salt and they needed it to survive. It always made me wonder why they didn't just pay gold, even if it was an incredible amount, for the knowledge to secure their own salt. Producing salt wasn't all that difficult, if I remember correctly, the salt traders would just evaporate seawater in little holes in the ground and scrap up the leftovers.
Re:Quality control? (Score:1, Insightful)
Chinese Control (Score:5, Insightful)
Re:Quality control? (Score:5, Insightful)
This is marked insightful?
This is the same shit uttered about the Japanese in the 1960s and early 70s before they kicked everyone's ass in the 80s.
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BMO
Isn't it about time for a bit of protectionism? (Score:5, Insightful)
You know, over the past 6+ years I have brought my position out on multiple occasions only to have my position labelled "protectionist" and discarded. But we have a problem in the U.S. We are exporting money that doesn't return. Some call it trade deficit. Some call it exporting jobs. Others call it outsourcing. Whatever you call it, big business is sending out a lot of money that never returns to the U.S. What's more, in order to do that, the foreign workers have to be educated in our technologies in order to replicate what we have done.
So we lost manufacturing and technology. All we have remaining is "intellectual property" which is really a thing that is not universally agreed upon. The things that made the US great aren't here any longer and while many of us were complaining about it leaving, government paid off by big business persisted in letting it happen.
Now were are we?
Maybe it is time for protectionism. Maybe it's too late for it to do any good. Government needs to think about the people, not the businesses. Business is demonstrably abusive of people when allowed -- it's why we have [outdated] labor laws at all. They are unashamed of it. It's past time our government did their job instead of the will of the highest bidders.
Re:Chinese Control (Score:5, Insightful)
Yup, they stole...er, technology transferred the maglev tech that was used in Shanghai. A couple of years later, there was another identical maglev built and Chinese people cheered their nation for producing such advanced tech by themselves with no help. Now, they have bullet trains that are copies of the Japanese shinkansen. The first time I saw one pull into the station, I immediately thought, "Wow, a Japanese train! I wonder if they have those nifty box lunches!" (they didn't) But in Chinese language media, the trains are 100% Chinese and anyone who says otherwise is laughed out of the conversation. There are legal agreements in place that give the government a fig leaf of legality to say this. I saw a very carefully worded statement that vehemently denied stealing any technology and everything was hunky-dory.
Same thing will happen with these airliners. Our companies will happily sell the rope to hang themselves. Anyone who protests will be labeled a racist/nationalist/xenophobe and excluded from the conversation.
Re:Quality control? (Score:5, Insightful)
I'm not sure what your point is, but last I checked, the Chinese are doing pretty good in aerospace, are aiming for the moon, and well, are motivated to get shit right when it comes to aerospace.
I think the Chinese will pull it off. Indeed, I hope they do, to light a fire under the complacent asses currently inhabiting my country - the US.
Your post positively reeks of such complacency and whistling past the graveyard.
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BMO
Re:What's the adage? (Score:5, Insightful)
It's basic game theory. If you can make a profit out of something that will kill you, you might as well.
The game theory is indeed simple - it's better to have 20% of a billion person market than 0%. The commercial airplane industry is largely dominated by Boeing and Airbus - two Western companies that have both received substantial state support [europa.eu] The market for jet engines is dominated by Rolls-Royce. Given how interested Western nations are in having their own commercial aircraft manufacturing capability, it is no surprise that China also wants one.
This will not kill Boeing or Airbus. Unlike cheap crap that people buy off ebay, the commercial airplane market in the West is quite image sensitive and financially and managerially cautious. They are not going to switch fleets to cheaper Chinese aircraft just to save a few dollars. Consider that Rolls-Royce jet engines are the standard in commercial aviation, and they certainly aren't the cheapest, but everyone still pays up - because any airline that switched in order to save a few dollars would be crucified if the new aircraft crashed.
Re:What's the adage? (Score:4, Insightful)
That would be true, if profit were measured in some fixed terms.
Unfortunately, here in reality, the economics profession is a complete fucking failure of a joke. Banks are run by dipshit morons propped up by criminal politicians. Corporate accounting is a total fraud. Ridiculous models conflate assets and technology and labor along with fiat currencies that have no real measurable value. The entire bullshit field is based on a fantasyland premise of perpetual growth in "utility" along with magical non-zero-sum mathematics at odds with even basic physics.
And this is what "free trade" gives us: US companies offshoring jobs and real assets, chasing little pieces of paper printed up by the central banks, earning hypothetical economic "profit" while actually making us all poorer in the process.
With regard to China, the result is exactly what one would expect when trading with a country with few natural resources and a billion consumers: American labor has lost all value. Technology that America has invested heavily in, is either stolen outright or practically given away to rising competitors. Real capital is exported en masse in exchange for worthless consumerist crap. And it won't stop until either we've all been dragged down to the level of the average Chinese peasant or we wake the fuck up and start hanging traitor politicians and bankers in the streets before they give our entire fucking country away and then conscript us into some new bullshit war to try to go get it back.
Re:Quality control? (Score:3, Insightful)
It's one thing to buy cheap Chinese made consumer electronics goods, but would you really want to risk your life in an aircraft? They cant even get products specifically destined for children right without someone unscrupulous substituting something inferior or deadly (lead paint, melamine). Unfortunately as a country they have a long way to go to rebuild their reputation.
Many of the same things were said when the Japanese started exporting electronics and cars to the U.S. It is a fatal mistake by many Americans to assume that lack of quality in the past guarantees lack of quality in the future, or more to the point, that their aerospace products will be manufactured in the same factory as goods destined for Walmart. They have already successfully launched satellites and people into space, indicating attention to engineering detail when it matters. Nobody here seems to notice or care that they're quickly and quietly becoming the leaders in producing and developing renewable energy tech. This outright dismissal is going to be the eventual downfall of our lazy American asses. I hope our politicians don't dimiss this as easily as you do (and probably many other posters).
Re:Quality control? (Score:4, Insightful)
Not to mention the Koreans in the 1980s and the Taiwanese in the 1990s and the Chinese in the 2000s. Next up: we laugh at the Vietnamese and the Malaysians in the 2010s, the Thais and the Indians in the 2020s and the ...
Do you see what's happening? All these nations are steadily, determinedly industrializing and marching past us on and up the value chain, while we make monkey noises and throw feces.
Re:What's the adage? (Score:4, Insightful)
If you don't sell them the tools to put you out of business, someone else will. Bonuses are all about the next quarter, not the next decade.
Re:Isn't it about time for a bit of protectionism? (Score:5, Insightful)
You know, over the past 6+ years I have brought my position out on multiple occasions only to have my position labelled "protectionist" and discarded. But we have a problem in the U.S. We are exporting money that doesn't return. Some call it trade deficit. Some call it exporting jobs. Others call it outsourcing. Whatever you call it, big business is sending out a lot of money that never returns to the U.S. What's more, in order to do that, the foreign workers have to be educated in our technologies in order to replicate what we have done.
So we lost manufacturing and technology. All we have remaining is "intellectual property" which is really a thing that is not universally agreed upon. The things that made the US great aren't here any longer and while many of us were complaining about it leaving, government paid off by big business persisted in letting it happen.
The USA did it to the UK, now China is doing it to both of us. What comes around goes around.
Re:Isn't it about time for a bit of protectionism? (Score:3, Insightful)
WE the people don't need to lose freedom. Those "nearly human entities with nearly full human rights" need to lose freedom, however. They are merely legal constructs who are on the edge of having "free speech rights?!" It is getting beyond ridiculous. We need to protect ourselves from big business. We know what happens when we let them do what they want. We presently have laws in place and entire governing agencies in place and in operation to prevent the bad things that business will do if allowed. To name a few, the FDA, the FCC, the FAA, the EPA, the Department of Labor and more all exist because of what business would do if they were not regulated.
We KNOW the nature of business and we know what happens when it is unrestricted. It happened recently with the economic collapse when regulations were removed. Those restrictions were there for a reason. They weren't there to "take away freedom" from people. They were there to keep big business from destroying the people and the economy.
You need to wake up and fully understand the human nature of business and understand why restrictions and regulations need to be in place. We know why murder is illegal. We know why armed robbery is illegal. We even know why child labor laws exist. Let's learn to accept that big [myopic] business will do anything without a conscience for its own selfish ends. We all know it to be true even if it is sometimes unbelievable.
We won't lose freedom... not we the people. Not one bit.
Re:Well (Score:4, Insightful)
Just like South America benefited from US prosperity, right?
I agree that it is a good thing that the people of China are being lifted from poverty. But the rest of the world also needs to be vigilant that Chinese foreign policy doesn't follow the book that the US wrote in South America. An economically prosperous country that controls its media is a very dangerous entity; not as much for its people, but for other nations around the world. And China has a very large presence in Africa at the moment.
This is actually a rather urgent issue. It's hard for people to be really angry at their government if they are delivering double digit growth. And foreign nations are in an increasingly weaker position to press China on the issues of censorship and human rights.
Re:ITAR is the problem (Score:5, Insightful)
McDonnell Douglas setup an MD-90 final assembly in China during the 1990s, so basically large scale technology transfer has already happened despite ITAR limitations.
Re:What's the adage? (Score:5, Insightful)
China has few natural resources?
Yes, China is the one of world's biggest importers of iron ore, copper and crude oil, not to mention rubber and other commodities. So, althought the sentence "few natural resources" is too general (china is one of the biggest exporters of rare minerals, for instance), it certainly is applicable to a lot of core commodities for manufacturing
Re:What's the adage? (Score:3, Insightful)
the engine market is not dominated by RR this much. General Electric is bigger and Pratt & Whitney is also huge.
Fair enough, in engines GE > RR > P&W. But my point still stands - all have good reputations, and the cautious airline industry in the West is unlikely to switch away any time soon.
This does not mean one should not invest but I think a second thought should be spent on sustainability (both in terms of economics as well as environment) in this particular industry
I totally agree. Humans are generally reactive rather than proactive. It is easy to look at current growth rates of the airline industry and assume that they will continue for the next two decades, but it's just a guess - Peak Oil could easily derail it. Unfortunately, the governments of the world seem to be keeping relatively quiet on what, exactly, their contingency plans are for that...
My personal opinion is that investing early in identifying suitable technology and replacements to mitigate rising oil prices would be a wise move. Shifting the industry of the entire world away from oil is an enormous task, and one that is being ignored or underestimated by our politicians. If the task is of a magnitude comparable to that of the Manhattan Project or landing on the moon, which both cost around 1/4 U.S. GDP for several years, then it would be better to start the work sooner rather than later.
Re:What's the adage? (Score:3, Insightful)
Unless your competitor's rope is so shoddy that it will snap when they try to hang you.
How strong is cadmium-impregnated melamine rope?
Big 3 aircraft engine manufacturers (Score:4, Insightful)
The market for jet engines is dominated by Rolls-Royce.
I think General Electric [wikipedia.org] and Pratt & Whitney [wikipedia.org] will be very surprised to hear that.
This will not kill Boeing or Airbus. Unlike cheap crap that people buy off ebay, the commercial airplane market in the West is quite image sensitive and financially and managerially cautious. They are not going to switch fleets to cheaper Chinese aircraft just to save a few dollars.
The largest exporter in the US is Boeing. Most of their sales are outside the US. The commercial airline market is a global market, not regional.
Is a Chinese widebody jet an immediate threat to Boeing and Airbus? No - it will take quite some time to develop. Could it seriously hurt Boeing and Airbus in a huge future market? Absolutely. Does it introduce another potential serious competitor? You better believe it. Would airlines switch planes if there was an economic case for doing so? Hell yes - if there is enough financial advantage in doing so they will buy from anyone. Airlines are not terribly profitable businesses so any economic advantage they can realize will be taken advantage of.
Japanese products used to be regarded as cheap crap, even within my lifetime. They got better. Lots better. Chinese firms already are very capable at manufacturing and there is little reason to doubt that they can produce a competitive product if they decide to do so, especially with state support. Hell China has a very active space program now. Canada's Bombardier and Brazil's Embraer already have excellent products in the regional jet market. No reason China can't join the party too.
Re:Quality control? (Score:5, Insightful)
I didn't say, "no other country" will make it to the moon this century
Explain what, exactly, you were thinking when you wrote this sentence. Seriously. What the bloody blazes are you replying to in my message? Go re-read my message.
upcoming economic crash
Yeah, and it took US merely 40 years to get to the moon from the beginning of the Great Depression with a world war eating up a significant chunk in between. But the space race to get to the moon really started from Kennedy's announcement in 1962, so it really took us 7 years with 1960s technology to get there.
So what you've said is that it will take the Chinese 13 times longer to get to the moon than we did assuming they start immediately.
Nope, I don't buy it. I don't buy your stupid assertions. They have no basis in reality. You ignore the development rate of the Chinese. You completely ignore the starting point of the Chinese. You ignore the education level of US educated Chinese scientists and engineers. Indeed, the only reference you have is your own biases from your own head.
It's attitudes like yours which make me fear for the future of the US in science and technology. Many people think like you. Many are willing to simply write off the Chinese even as they have been kicking our ass for 10 years. This is the complacency that nearly brought down the US automotive industry *twice* in the last 40 years. This is the complacency that will cost us our future.
Fuck you.
Sincerely,
BMO
Re:What's the adage? (Score:5, Insightful)
I am amazed that any company would be stupid enough to move manufacturing to China.
That one is simple: American companies rarely think beyond the next year, and CEOs often not beyond the next quarter, because it is always the next quarter (or two) that seem to matter. A CEO who willingly lets the next few quarters suck in order to have the company in better condition three, four years down the road would be sacked long before the ROI happened. Then his successor can bring in the harvest, while cutting costs/jobs, be lauded as a genius, take a big bonus and leave before it all falls apart.
Re:Well (Score:4, Insightful)
You know, if China was a new US that was upsurping the old US, I'd agree with your sentiment. And as long as China keeps the focus internal and sticks to China's borders the rest of the world will be ok. What is scary is that China is by no means a democracy. It's a country where the government says jump and you ask "How high?" And that country is taking over most of the world's heavy production industry.
If the relation to China goes sour, it won't be like the Cold War. Then it was US industry versus Soviet industry. It'll be Chinese industry versus no industry. IP agreements depend on enforced contracts, the day China says here are the letters F and U they'll still have all the means to produce, while the US will have nothing.
I doubt China will try matching the US or Russia on nukes, they have some but that's not so essential. But what if they develop a proper rocket shield? Suddenly you're back to way more conventional warfare, with a billion soldiers and heavy industry now making ammunition and tanks. I'm not always that happy with how the US is the lone dominating military superpower, but as dominating military superpowers go I'd dread to see China in its place.
Re:Quality control? (Score:5, Insightful)
Thanks for the vote of confidence.
Many top Chinese engineers and scientists are Western educated, so calling them into question calls our own system into question. And yes, it's an unfair comparison. It's like asking Hasbro to come up with a moon rocket. Maybe, if there is a Werner Von Braun in Pawtucket, Rhode Island.
I don't get the arguments about how the Chinese will always lag in these threads, how they're slow, how they don't know how to do anything well enough, that they make crap. I'm actually old enough to remember the exact same arguments said about the Japanese. I was a kid, but I did hear it from my parents, especially when I was told about build quality. Then the 1980s happened. Then Chrysler had to be bailed out by Ronald Reagan, and suddenly Japanese cars and electronics were what everyone wanted.
And we proceeded to say the same things about the Koreans (A Hyundai is one of the most reliable cars out there, and everyone seems to have a Samsung computer monitor or big screen TV). And we've also said some not-so-nice things about the Taiwanese too.
Funny how they've been able to catch up. The Chinese can't do the same? I don't buy it.
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BMO
Don't let actual facts slow down a good rant (Score:5, Insightful)
I'm pretty sure you are a troll but eh, whatever...
Unfortunately, here in reality, the economics profession is a complete fucking failure of a joke.
It is called the dismal science for a reason. However that is mostly because it is REALLY hard to accurately model human behavior. People are unpredictable and do unpredictable things, both individually and in groups. If you can do better a Nobel prize awaits you.
Banks are run by dipshit morons propped up by criminal politicians.
Morons? No they aren't stupid. Greedy, selfish or arrogant I might go with but the guys who run banks are very very bright. I've met more than a few myself. Stupid is not a word that would come into the conversation.
Corporate accounting is a total fraud.
How so? I am a certified accountant who does corporate accounting for my day job so I'm more than passingly familiar with this capabilities and limitations of corporate accounting. It's certainly possible to have fraudulent corporate accounting (Enron, etc) but that hardly is evidence that corporate accounting as a whole is a "total fraud".
Ridiculous models conflate assets and technology and labor along with fiat currencies that have no real measurable value.
Do you have even the foggiest idea what the word asset [wikipedia.org] means? Technology, labor and currency are BY DEFINITION assets. Anything tangible or intangible that can be owned or controlled to produce an economic benefit is an asset. Fiat currency's have measurable value and that value is measured every day. So long as people believe something has value, it does. Gold only has value because people believe it does. Same for any other resource.
The entire bullshit field is based on a fantasyland premise of perpetual growth in "utility" along with magical non-zero-sum mathematics at odds with even basic physics.
Glad you could distill the entire life's work of all those Nobel laureates. I'm sure they'll be happy you cleared up that they were wasting their time on a fruitless endeavor. You will of course be providing your own ever so insightful solution to all the worlds economic problems? ... No? Oh, I get it. You're on a populist rant and don't have time to be slowed down by actual logic, facts or reason.
With regard to China, the result is exactly what one would expect when trading with a country with few natural resources and a billion consumers
"Few natural resources"? Are we talking about the same country? China has natural resources that rival the US available to it. They are rich in some and lack others, just like any other country. Their needs are immense and often outstrip their domestic production as one might expect with a country containing 1/6 of the world's population but China is hardly resource poor.
American labor has lost all value.
Really? Then how does the US still have the largest economy of any single country in the world?
Re:Trent 900's dont worry me, (Score:3, Insightful)
Unless you're Chinese, and live in China. Or you live in any of the other developing nations where airline safety is less of a priority.
Re:Quality control? (Score:5, Insightful)
Indeed, I hope they do, to light a fire under the complacent asses currently inhabiting my country - the US.
I've been hoping so too, but so far it doesn't seem to be working, so I'm growing less optimistic. I think this is the major reason: http://www.nytimes.com/2010/10/12/opinion/12brooks.html ... in the old days the US spent tax money on good old engineering to do great things like get people to the moon. Now it spends its money on massive bureaucracies that push paper around, for the sake of pushing paper around. And I'm afraid I don't think too many people in that system see or care about the bigger picture or bigger goals, just their next paychecks and the next department budget.
Re:What's the adage? (Score:5, Insightful)
You're ignoring the point for the sake deluding yourself that once the cheaper actor with no R&D outcompetes on price point, they will somehow magically conjure the R&D and become that which they crushed.
We're seeing even now as many industries in the West are running to Asia, plant themselves there, and then note that their R&D hits the ground because it wasn't just a few key people that drove the innovation, but the entire support system and its own R&D.
This is damage because the system competing against capitalism is controlled by a small centralized community. It's capitalistic for as long as this community allows - and not a millimeter more.
Unless of course you count a "hostile, pretentiously capitalist until opponent is defeated" system as something of an ally. In which case it's just plain self-delusion at work.
You may also look up "dumping", as well as "protectionism" as terms, as well as study how West in general held China down for over a century.
This isn't anything new and original. US largely fought big European powers pre-WW1 to a standstill economically by essentially doing the same thing China is doing to West now. Buy tech, pirate tech, copy tech, compete making the same products but with no need to recoup massive research investments, outcompete on price point and win. This has already been done in many goods, such as electronics, and automotive industry is waking up to similar problem now.
The end result is that the system winning is currently the one strongly regulating its own form of capitalism, while the system losing ground so fast, it can't even understand what's going on is our largely unregulated one. And one of the main reasons why they caught up so fast, is because we did exactly what I described in the previous post. We sold things that took us decades to develop for a quick buck.
To quote Lenin again: A capitalist will sell you the rope you will hang him with if he can make profit on it. Chinese are offering companies a quick profit in exchange for information they can strangulate them with later on.
Re:Peak Oil? (Score:2, Insightful)
there must still be a plan for the last drop of oil
According to peak oil theory, we aren't really worried about "the last drop of oil" ... I forget who said it, but the gist of it is captured in the saying "we will always have enough oil for our bicycle chains."
What we need to be prepared for is a world in which profligate burning of fossil fuels becomes increasingly expensive and unrealistic. GP's question of what the aviation industry will look like in 50 years is a good one, because in 50 years we will well and truly be on the other side of the peak oil curve, and we will have either figured out some kind(s) of alternative(s), or we will be living in a much smaller, more local world where people tell their incredulous grandkids stories about taking a trip to the Cayman Islands for a week just to get away.
Re:What's the adage? Prisoner's Dilemma (Score:2, Insightful)
This is a classic example of the Prisoner's Dilemma. If you don't sell your technology to China, then your competitors will, so you should too. Government export restrictions should be imposed for everybody's benefit.
Re:Isn't it about time for a bit of protectionism? (Score:3, Insightful)
That has NEVER happened and no business will leave the U.S. entirely for that reason. That is complete nonsense. That argument is used every time there is discussion of increasing the minimum wage. Instead of talking about what "might happen" let's talk about what has already happened and the remedies that worked.
Let's talk about how regulation of business practices did not put companies out of business and did create economic stability for more than 50 years since the great depression. Then we can talk about how removing those regulations helped to spike their profits in the short term and lead to economic collapse in the mid to long term.
And I will say this without hesitation: The rights and needs of the public as a whole ALWAYS outweigh the interests of business owners.
I speak of policies at a national level, not a state level. If, for example, Microsoft were forced to pay taxes, they would not leave the U.S. It would be impossible for them to survive if they did.
Business cannot run or grow without hiring people to do the work. That is a given. And before the export of labor, those same businesses did their hiring and building right here in the U.S. They did just fine. Of course cheaper labor is attractive and boosts the bottom line, but we are not talking about that. We are talking about the economic health and stability of this nation. So what if business makes "less" money -- they will remain profitable. This Fear, Uncertainty and Doubt you raise about business moving or simply closing shop is nonsense. It has NEVER happened and it never will.
Re:Don't let actual facts slow down a good rant (Score:3, Insightful)
People are unpredictable and do unpredictable things, both individually and in groups. If you can do better a Nobel prize awaits you.
In fact, a Nobel Prize in Economics may await you even if you can't do better, and your model is hopelessly unrealistic, not used, not needed, and not original [forbes.com].
Re:Chinese solution to passenger jet safety (Score:3, Insightful)
I'm not sure what it is. Part of me thinks it might be growing nationalism on the part of Chinese visiting English language web forums, part of me thinks it might be the sort of general anti-Western self-loathing common to Slashdot.
And part of me thinks that if the Chinese government wanted to, they could probably easily fill a propaganda ministry building with a few thousand English speaking Chinese who did nothing all day but cruise English language web forums and slag America(ns) and work to suppress negative opinions of China & the Chinese.