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Come Together

The re-merging of China's aerospace industry.

12:00 AM, Aug 6, 2008 • By REUBEN F. JOHNSON
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Chengdu, Sichuan Province

AFTER MAO'S COMMUNIST FORCES took over China, they were heavily dependent on their Soviet comrades to help them establish the new Peoples' Republic. The blueprints for how to build a state apparatus, how to organize industry, the genius of the five-year plans for economic development, the rhythm of how often to hold Communist Party Congresses, etc.--all of this came from their Soviet brethren, who were clearly the senior partners in the Sino-Soviet alliance. The old joke in Beijing was that when the Soviet masters passed gas, the Chinese leaders of the day would say "oh, how fragrant."

This robotic mimicry of the Russian way ended decades ago, and under Deng Xiaoping economic development took on a decidedly non-Soviet "make money first and worry about communist ideology second" bent that led to China's becoming the exporting powerhouse it is today. Now there is scarcely a single consumer product not made in China, (other than military hardware). Russia, on the other hand, exports almost no manufactured products. Russia's major sales abroad are of raw materials and metals--more or less the export profile of a third-world country.

But some of the emulation of Soviet or Russian ways is still present in China--some small and unimportant (the hours for visiting Mao's mausoleum on Tiananmen Square are virtually the same as Lenin's tomb on Red Square in Moscow)--and others quite substantial. In the latter category must be counted the recent decision to re-merge the two Chinese state-owned aerospace industrial consortiums--AVIC I and AVIC II--into one super-sized amalgamation.

AVIC, which stands for the Aviation Industrial Corporation, was a single, mammoth entity until July 1999 when the Chinese central planners divided it into the AVIC I and AVIC II groups. The idea was that the separation into two large corporations would create beneficial competition between them.

The plan was for the two companies to have their own areas of specialization. AVIC I would be largely a military-aircraft oriented consortium, building medium and large bombers and transports at the X'ian plant, fighter aircraft at the Shenyang and Chengdu production centers, and a new commercial regional passenger jet, the ARJ-21. AVIC II would concentrate on small jet trainers, smaller medium-range transports, small passenger aircraft and helicopters. The Harbin plant of AVIC II also produces under license the EMB 145 designed by Embraer of Brazil.

Now, just nine years later, the two are being rejoined--the official ceremony remarrying them took place in July. The decision appears to be an effort to follow Russia's example--the first such emulation in many years.

In early 2006 Russia's Vladimir Putin ordered the formation of the United Aircraft Building Corporation (referred to as OAK because of its Russian name), which combined the entirety of Russia's aircraft design bureaus and production centers into one mammoth enterprise.

The results have been mixed thus far. All of the independent enterprises have an "OAK" label on their marketing material and their exhibition stands, but they still continue to participate at international air shows and arms expositions and generally operate as if they are still autonomous entities. The economies of scale that this super-merger was supposed to create have yet to materialize, and whether they ever will remains a big question.

The Chinese merger may play out differently for the simple reason that Beijing is looking to build a Chinese version of Boeing and capture markets that used to belong to Russia and the former USSR. Chinese industry has produced several fighter aircraft: the Shenyang J-11, which is a Chinese-produced version of the Russian-designed Sukhoi Su-27 (a program currently in dispute with Moscow over charges that the Chinese have illegally copied the Russian design), and here in Chengdu the main products are the FC-1/JF-17 and J-10 fighter aircraft. These products are now poised to become the next exports to nations that used to buy from Moscow.

Of these three, the J-10 is more or less the pride and joy of China's aerospace industry. It is a single-engined, F-16-class fighter that looks remarkably similar to the 1980's Israeli-designed Lavi. The Lavi never went into production, and in Israel the program's cancellation is generally blamed on U.S. pressure to purchase more F-16s. There are numerous unconfirmed charges that the Lavi design was then sold to the Chinese, which in turn became the J-10, but the aircraft clearly has its own, unique Chinese design characteristics.