Why buy Sukhoi when China can buy Boeing or Airbus? It could be a conditional part of a larger deal for something else China wants.
70 to 90 seats vs 150 setas.
Why buy Sukhoi when China can buy Boeing or Airbus? It could be a conditional part of a larger deal for something else China wants.
Why buy Sukhoi when China can buy Boeing or Airbus? It could be a conditional part of a larger deal for something else China wants.
it would be nice to see healthy private competition to Comac in China
Well I wasn't talking about China getting a deal from Boeing or Airbus. I was talking about a deal with Russia on something else that China wants and a part of that deal was China buying Sukhoi airliners.
What do $7 billion and a dream buy you in China? Not a passenger aircraft that will fly, apparently.
In contrast, Commercial Aircraft Corporation of China (Comac), which is making both jets, is a politically favored, cheap-capital-enjoying monopolist—definitely an old-time SOE. Now the carriers risk being dragged back into the mire through coerced cooperation with an "unreformed" state-owned enterprise.
There are serious doubts about the fuel-efficiency of the new jets given the age of the Western technologies on which they're based. Ditto for maintenance costs and reliability. Carriers can't be sure whether passengers will want to buy tickets for flights operated by the planes—in the auto market, where consumers are given a choice, foreign-branded cars still dominate thanks to perceptions about quality and safety.
Any serious SOE reform would allow service-providing SOEs that already have made important internal improvements to try their hand at making decisions about which planes to buy on commercial grounds. To the extent the jet program's ultimate success requires that airlines be induced to play along, it will undermine reform.
This only compounds the damage inflicted on air carriers by Beijing's most successful transportation-related industrial policy: development of a high-speed rail network with supposedly indigenous technology. In that instance, state rail operators using state resources have laid thousands of kilometers of track on which run state-created high-speed trains to compete with the airlines. Carriers are unenthusiastic about an uneconomical indigenous jet in part because they'll face increased competition from high-speed rail.
Perhaps Beijing really does know what it's doing, and Comac will eventually become a viable global rival to Airbus and Boeing. Given enough time and money, Comac probably could manage to do so. But as the Rand report makes clear, such a goal is not cost-free for Beijing. Indeed, it may run counter to other important pro-growth measures Beijing has promised.