The future of the largest aviation joint venture between China and Russia looks bleak as disagreements between the two deepen over profit sharing and possible involvement by Western companies.
The Russians are unhappy because China wants to invite Western companies to participate in the $50 billion project to develop a new passenger plane called the CR-929, according to two independent sources.
“One of the main reasons is that Beijing hopes the CR-929 passenger jet will meet Western airworthiness standards. The widebody jet is designed to fly to the United States and Europe, so it would be better to choose some key components by sharing some orders from European and American manufacturers,” said a source familiar with the matter.
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For example, Beijing wants to use an American or German landing gear, while Russia insists on using its own despite its poor safety record, the source continued.
“The Russian side views Beijing’s decision to deploy Western components as showing a white flag to the West amid global sanctions following Russia’s invasion of Ukraine,” the source said.
The CR929-600 is a planned 280-seat long-haul passenger airliner being developed by Shanghai-based Commercial Aircraft Corporation of China and Russia’s United Aircraft Corporation.
The project started in 2017 with the aim of challenging international manufacturers such as Boeing in the USA and Airbus in Europe.
Another source said China wants to exclude Russia from a share of the profits from the Chinese market and instead split the profits from the rest of the world, with Russia getting a 70 percent share.
But the Chinese market is likely far more profitable than elsewhere, meaning Russia could potentially benefit far less from the company.
The story goes on
A model of the business class cabin of the airplane. Photo: Bloomberg alt=A model of the aircraft’s business class cabin. Photo: Bloomberg>
“The Chinese market alone is predicted to require more than 3,000 widebody aircraft in the future, ensuring current market shares held by Boeing and Airbus remain unchanged,” said the second source.
“Moscow has recognized that outside of China, it is very difficult for the CR929 to attract potential customers from competitors such as Boeing and Airbus.”
Russian media reports suggest that the country is considering withdrawing from the project altogether.
Last month, the state-run Tass news agency reported that Deputy Prime Minister Yuri Borisov told the country’s Engineers of the Future forum: “We are working with China on this project which, in principle, is not going in the direction that suits us; it is becoming an industrial giant, is less and less interested in our services.
“Our involvement ebbs and flows. I don’t want to predict the future of this project, whether we leave it or not, but for now, this is really the way forward.”
The plane is scheduled to make its maiden flight next year, but the second source said Russia is falling behind on making the wings due to a lack of capital.
The engine is still under development, and China is considering bringing in Western firms like Rolls-Royce and General Electric to work on the component, despite Russia’s hopes of contributing to that aspect of the project.
Eagle Yin, a research fellow at the China Foundation for International and Strategic Studies in Beijing, said China is trying to improve ties with the West amid the aftermath of Russia’s invasion of Ukraine, despite ongoing disagreements with the United States.
“Compared to US hostility towards China, European countries might be easier to deal with because all of Europe is facing a common political crisis after the Ukraine war,” Yin said.
“Nevertheless, there are still many challenges ahead, particularly the China-US bilateral relationship. All efforts can only be advanced if Xi [Jinping] and his U.S. counterpart Joe Biden reach new agreement in their upcoming phone call.”
This article originally appeared in the South China Morning Post (SCMP), the most authoritative language coverage of China and Asia in more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Facebook page Twitter Pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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