China’s first home-grown passenger plane C919 sets its economy on a new path

As another Covid-ravaged year winds down for a staggering global economy, it is timely to look at a positive event. This is the recent news from China that China Eastern Airlines has taken delivery in Shanghai of the very first indigenously developed and produced passenger jet airliner. The C919 from Commercial Aircraft Corporation of China (Comac) is expected to go into commercial operation in the spring of 2023. This news is important for several reasons. First, it marks not only the start of China’s mass production of “home-produced” aircraft, but also the advancing global competitiveness of Chinese industrial enterprises in hi-tech sectors, such as aerospace. Second, it sets down a competition marker from a new kid on the block for other airline producers. Third, it indicates the rapid development of China’s own supply chain, as well as its quality and resilience. The development of important products like passenger jet airliners should be viewed from the twin perspectives of both practice and theory. From a practical standpoint regarding business and management, there are two key observations to be made. First, such developments as this can be seen as the fruits of the government’s “Made in China 2025” 10-year-plan launched in 2015. This programme was introduced to help drive the shift from traditional low-wage manufacturing and reliance on foreign technology imports to a more hi-tech, high-productivity economy with indigenous innovation. Crossing over to the other side of the industrial divide would assist in creating companies that could catch up to and surpass those in the West and compete globally in 10 hi-tech sectors, including aerospace engineering. This transition was to be achieved via government subsidies and mobilisation of state-owned enterprises. Second, this innovation and industrial upgrading programme means China can reset its competitive advantage. Going forward, Chinese businesses will be able to move away from competing in low price and low value-added sectors, with commensurate low wage and low quality jobs that minimise the need for investment, automation and innovation in a “race to the bottom”. These sorts of products and sectors will always be undermined, either by rising wage costs or other developing economies with cheaper wage costs. China’s transition to high price and greater added value should then result in better paid and better quality jobs, investment and innovation. Most importantly, such a trend would feed nicely into President Xi Jinping’s 2021 concept of “common prosperity”. This catchphrase, of course, echoes those used by Mao Zedong during the 1950s and Deng Xiaoping in the 1980s. Integral to the notion of prosperity that is less uncommon and by implication less unequal is, among other things, the need to reduce income inequality and promote people-centred development. The sorts of jobs required are the very sort that should be produced from the incubation and birth of hi-tech sectors. At the same time, we can look at China’s development from a theoretical perspective, and in doing so make some predictions about the future. Again, there are two key takeaways. First, we can consider Andre Gunder Frank’s famous dependency theory and Immanuel Wallerstein’s world systems theory, which categorise countries as either “periphery”, “semi-periphery” or “core”, with each playing a different role in the global economy. Today, we can see China as moving from one category to another. Second, we can consider Geert Hofstede’s cultural dimensions theory which places the dimensions of national culture on a spectrum of low to high. One dimension Hofstede looks at is “uncertainty avoidance”. This refers to how comfortable a country is with ambiguity or risk. To be a global innovator, China needs to loosen the economic reins Interestingly, China is often located on the “low” scale for uncertainty avoidance, meaning it is more comfortable with uncertainty and risk-taking. This is not merely a dry theoretical point, but rather highly relevant. That is because uncertainty and risk-taking are both integral to innovation and development. In short, Comac’s C919 should not be seen as just another generic plane, but rather, its much-applauded arrival should be seen as charting a new course for China Inc. in the coming years. Professor Chris Rowley is a visiting fellow at Kellogg College, University of Oxford, and Professor Emeritus, Human Resource Management, at Bayes Business School, City, University of London

China’s first home-grown passenger plane C919 sets its economy on a new path

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}The C919 is a sign of China’s ongoing transformation into a high-value and innovation-led economy It also highlights China’s growing global competitiveness in hi-tech development

The C919 is a sign of China’s ongoing transformation into a high-value and innovation-led economy

It also highlights China’s growing global competitiveness in hi-tech development