China is hoping to breathe new life into its aviation industry at this week's international airshow in Zhuhai by developing more strategic alliances with foreign partners.
China's loss-making airlines have cast a pall over the whole industry in the past few years owing to a bitter price-war and heavy discounting of tickets.
Losses of 361 million dollars in 1998 were cut by a ban on discounting and the scaling back of scheduled flights, but high fuel prices have been responsible for wracking up airline losses of 67.5 million dollars in the first seven months of this year.
The Civil Aviation Administration of China (CAAC) has tried to bring order to the chaos by demanding the 10 largest carriers merge into three super-airlines, and ordering the remaining 25 airlines to seek partners.
But while the airlines take stock, the rest of China's aviation industry has been forced to tread water and deal with a limited order book.
Despite the gloomy outlook however, industry and government officials at the airshow in southern China say they are confident the country has the labor, skills and technology that foreign aviation firms need.
"Aviation and aerospace have ushered in a new phase of development," said Li Ruihua, the governor of the southern province of Guangdong at the opening of the week-long biannial airshow on Monday.
Li said China would gradually become a greater player in the global aerospace market as it continued the 20-year process of opening up its economy, which is expected to bring membership of the World Trade Organisation in the coming months.
One alliance already bearing fruit is between Airbus Industrie/BAE Systems and the Aviation Industry of China I (AVIC I) to make 80 percent of the wings for the Airbus 320.
AVIC I also makes the tail section of the Boeing 737 and it expects export trade to grow by 12 percent per year to reach up to 70 million dollars by 2005, according to general manager Liu Gaozhuo.
BAE Systems general manager for China, Christopher Wright, said the state-run Chinese company could manufacture the whole wing if greater investment in tooling and equipment was made.
"In areas where there is high labor content, China can become an important and strategic partner for us -- but we have to pump in technology and cultivate a management process," he said, quoted by the show's official newsletter.
On the military front, China's aircraft industry is building on alliances with more traditional allies.
Ukraine's Antonov aircraft design bureau has offered a joint venture with China's Shaanxi Aircraft Manufacturing to develop an aircraft for Chinese military needs based on its A70 transport plane.
"This would lay the cornerstone of long-term technical superiority over the air forces of other South East Asian countries," Antonov officials told the show's newsletter.
China has also received a license to produce a modified format of Russia's two-seater combat fighter the Sukhoi 27, locally called the J-11.
China is currently working with Pakistan to develop a Super 7/FC-1 fighter that would suit the needs of both countries' militaries as well as the international market.
The aircraft is intended to replace MiG 21s, F-7 Mirage IIIs and F-5s within the next few years at a relatively low, according to sources at the show -- ZHUHAI (AFP)
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