China Airborne - By James Fallows

Date read: 
September 5, 2020
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My Thoughts

Does a fantastic job of capturing the spirit of change and innovation in China through the lens of aviation. Holds some fascinating stats on the Chinese economy, aerospace industry, and internal politics. A great way to understand China's strengths, weaknesses, challenges, and culture.

Summary Notes

Public investment in all phases of China’s aerospace future over those years would come to 1.5 trillion Chinese yuan renminbi (RMB), or about $230 billion. That was a 50 percent increase over comparable investment in the previous Five-Year Plan—and, depending on how you count, somewhere between five and ten times as much as the Federal Aviation Administration’s budget for capital improvements and airport construction in the same period in the United States. Dozens of brand-new airports were coming, and thousands of new airliners for China’s fleets, and many thousands of helicopters, business jets, and small aircraft of all varieties.

At the current stage of China’s growth it is common to hear that kind of “I will change the world / I will transform my country” declaration.

By 2010, Chinese companies produced more cars, and Chinese customers bought more—including luxury models—than their counterparts in the United States. At that point General Motors was surviving not simply because of government help in the United States but also because of its strong position in China

Among passenger airports, Atlanta’s is still the world’s busiest, with about eighty-nine million passengers in 2010. But Beijing’s Capital Airport is already second and gaining, with about seventy-four million passengers and traffic growing by well over 10 percent a year.

In the United States, there are more than two hundred twenty thousand small airplanes!

The United States already had more than eleven thousand business jets, versus two hundred to three hundred in China (only thirty of which were registered—the rest flying illegally). An aviation blogger outside China calculated that China had only 22 private jets per trillion dollars of gross domestic product (GDP), versus 535 for the United States and 138 for Europe.

Almost any activity in China involves a lot of people, and so it is with Chinese aviation. The city of Xi’an alone has more than 250,000 aerospace engineers and assembly workers, about eight times as many as in the comparable U.S. aviation center, Seattle.

The biggest difference between being a foreigner inside China and watching it as a foreigner from outside is how much more precarious and uneven the state of China’s “success” seems from within, and the different view one gets as to how China’s growth will affect the rest of the world.

Trends both good and bad in China’s development can be identified. Perhaps the strongest and most important of these general trends in China is the sense that things are possible. Many Americans and Europeans have that in their personal lives; it’s very strong for those in the scientific, technological, and pop-culture businesses, but it has all but vanished from public life in many developed countries.

But three decades into the modernization kicked off by Deng Xiaoping, most people seem to imagine that problems will be solved, or at least that life will be better five years from now than it was five years ago.

Today, some quarter million people, more than the total worldwide payroll of Boeing and Airbus combined, work in Xi’an’s aviation industries, supervised by a Chinese engineer in his fifties who has a bust of George Washington in his office.

Part of America’s “arsenal of democracy”—a surge in the building of military matériel that wore down the Axis powers—was its increase from producing four thousand airplanes in 1940 to a hundred thousand in 1944.

“We had expected cold weather in Beijing, but were unprepared for the sub-freezing temperature inside the terminal”

Simply keeping its existing bridges, freeways, and waterworks from falling apart is the infrastructure challenge for the United States. For China, the heavy investment in roads, ports, power stations, train lines, and so on has been, like many of its other growth strategies, so successful that it has bred a different kind of problem. The consequences of more than a decade’s worth of over-investment are as important in shaping China’s choices, and its outlook on new industries like aerospace, as the consequences of long-term underinvestment are for the United States.

In 2007, before the world financial crisis began, investment and capital projects of all sorts, including construction, represented 39 percent of China’s economy. By 2010, that share had risen to 46 percent—an astonishing increase, even as investment was being cut back in most of the rest of the world.

China today has a trade surplus equal to about 0.5 percent of global economic output.

China has in recent years been five times as reliant on foreign customers to create domestic jobs as America was in 1929.

The system has to keep growing fast enough that most people continue to feel that things are overall getting better rather than worse, and that the disadvantages of a one-party system are outweighed by its effectiveness.

Of an iPhone costing four hundred dollars or a computer costing a thousand, at most one tenth of the total profits stayed with anyone in China—even though every iPhone and iPad in the world, and most computers of any brand, are produced in Chinese factories.

An Asian Development Bank study released late in 2010 used the example of an iPhone, with a wholesale cost of $178.96 and a retail cost of as much as twice that. A total of $6.50 of the value of each phone went to workers in China, according to the report, even though all the phones were physically assembled in China. While every penny of the wholesale cost of an iPhone was listed as a Chinese “export” to the United States—which together made iPhones seem to account for more than 1 percent of China’s total trade surplus with America—in reality, when all the components were traced to their source, each iPhone represented a small but net export from the United States to China. The ingredients of each iPhone that came from U.S. suppliers to China were worth considerably more than the small value added from Chinese assembly.

Even the slightest exposure to China anywhere outside a high-output factory leaves foreigners (and well-traveled Chinese people) asking, Why does it take so many people to do this job?

In 2011, the Chinese health ministry announced that cancer had become the nation’s leading cause of death. This is an unfortunate distinction. In poorer countries, infectious diseases and malnutrition are the leading killers; in richer countries, heart diseases and the consequences of obesity.

As fast as the economy grows, its energy consumption grows faster still. Each percentage-point increase in economic output leads to a more than proportional increase in demand for energy.

According to the study, within a twenty-year period, from 2005 to 2025, more people will be added to China’s major cities than now live in the entire United States. In 2005, about 575 million people, or just under 40 percent of the whole Chinese population, lived in big cities rather than agricultural areas. The rural-to-urban shifts that transformed the culture and economy of Europe through the course of the nineteenth century and North America through the twentieth will be compressed in China into a span of a relatively few years. This shift is expected to give China some 221 cities with populations of over a million by 2025, versus 35 in all of Europe as of 2010 and only 9 in the United States.

What is happening in Chinese cities is two centuries’ worth of development compressed into ten or twenty years.

Objects in motion have been the secret to China’s economic boom. Materials and supplies are in motion—steel brought to factories; cement from the plants where it is created to the construction sites where it is used; above all, coal, nearly ten million tons per day, hauled from the mines to power stations where it is burned to keep everything else going. Finished products have been in motion to their customers, within China and overseas. And people have had to move, by the tens of millions, from villages all across the countryside to the few dozen major cities where most of China’s industrial growth has occurred. Each of these flows takes place in China on a scale matched nowhere else on earth, which makes the interlocking transportation networks—road, rail, boat, air—as important to China’s development as the transcontinental railroad, the interstate highways, and the airline network have been for the United States.

“Imagine if in the United States the U.S. Air Force decided to close Los Angeles’ LAX airport for an afternoon, without any explanation or apparent reason,” Christopher Jackson, an aviation analyst based in Hong Kong, wrote about the incident. “Imagine being shrugged at by airport ground staff, and told that ‘military exercises’ had caused your flight to be cancelled. This sort of thing has long been accepted as standard operating procedure in China.”

If you were going to write the script by which Chinese aerospace interests convert their current plans into eventual world dominance, the steps might be described as follows:

  1. Political pressure. The central government of China, when it does not directly approve or determine airlines’ purchasing plans, heavily influences them. It is in the government’s interest to play Boeing and Airbus against each other, so neither will be allowed a fully dominant share—and both will be affected by larger political relations between their home base and the Chinese government.
  2. Shifts of production. Among the criteria the Chinese government obviously watches very closely are foreign companies’ willingness to teach local Chinese firms and workers to do what the foreigners did.
  3. Transfer of knowledge. By legitimate learning or unauthorized copying, Chinese firms quickly learn what the foreigners know, leading to:
  4. The natural conclusion. Lower-cost production at higher volumes from Chinese factories, with bigger shares of the market inside China, which in turn becomes a platform for exports around the world. Former Western industry leaders must find another business.

In 2001, when the prospect of Chinese-made airliners was largely speculative, a Boeing engineer laid out a trenchant internal case that the company’s reliance on outsourcing would send it into a cycle of self-inflicted decline, opening the door to aspirants from China and elsewhere.

With the 787, Boeing outsourced not simply specific components but much of the design and integration of the aircraft, which had been its distinguishing advantage. A larger share of the plane’s components and subassemblies would be contracted out to suppliers, including many in Japan and some in China. Less of the work would be done start-to-finish under Boeing’s own control. This was economically rational, in that many contractors could beat Boeing’s internal price. But in a larger business sense it proved problematic, since delays from the contractors and difficulties in combining and coordinating their work caused a rippling series of postponements in the Dreamliner’s delivery date. “Boeing’s goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits,”

By definition, it would be decades before Chinese-made planes could rack up as long a safe-operating history as the established companies already have—even if those first few decades were completely accident-free.

“In some ways, the Chinese can go to the moon long before they build an airliner that global carriers will buy in large numbers. Building a certified commercial aircraft is much more difficult than going to the moon,” he said. “A moon shot is a single mission. You’re sending four or five people. If the people die they become national heroes. This is so much more complicated, because you’re making something for the public that they’re going to be using around the world, and nothing can go wrong.”

Whatever their Chinese competitors do, the American, Canadian, British, German, French, Japanese, Brazilian, and other players with established businesses will have only themselves to blame if they do not keep innovating as fast as they can.

The military’s control of nearly all the airspace between Chinese destinations means that flights within China, even by the favored national carriers, fly indirect routes that are the equivalent of going all around the city on a ring road. These inefficiencies in air-traffic control are the main reason flights are more often delayed in China than in other major aviation countries; why their scheduled travel time, per mile flown, is much slower than in North America or Europe; and why they burn up to twice as much fuel per passenger mile as their counterparts in Europe or North America.

Commercial air travel in China could double, with no increase in emissions, if the air-traffic system worked the way it does in the rest of the world.

“What country ever rode to preeminence by fighting the reigning technology of the time? Did the Brits ban steam?”

The outsized share of the world’s top research universities is one of the three American advantages hardest for any other country to match. (The others: openness to large-scale flow of immigrant talent, and an even more outsized share of world military power. Of course, the first two build greater strength in the long run; the third threatens to sap it.)

Clearly Chinese scientists are capable of world-leading work, and many Chinese-born or ethnically Chinese scientists have been recognized with Nobel Prizes for their research. But as of 2011, all such awards have been for work conducted in American, British, French, or other foreign laboratories. No one of any ethnicity has won an award for scientific work within a Chinese institution.

Japan’s decades of post–World War II development occurred in a system that was democratic yet in which the same party always won; Singapore’s system is still a paternalistic-guided democracy; South Korea developed under a military dictatorship; and the established political systems of Europe and North America have struggled to stay on a democratic keel.

China’s most precious assets, the aspiring next generation of the best-positioned families, were more and more being sent overseas. Nearly every member of the ruling State Council has a son or daughter with an Ivy League—or Oxford/Cambridge or Berkeley/MIT—degree.

The idea that anyone could—and should—“aspire” to Western standards is simultaneously the most and least admirable part of the Western tradition. Most admirable in advancing the principle that people of different origins, races, and religions should be judged and valued by the same standards. Least admirable in the gap between that principle and a discriminatory reality, and in the condescension it implied for the unfortunate non-Westerners of the world. The best and worst parts of the American model are intensified versions of this Western universalism. In theory, anyone can become an American. Most Americans innocently, or pridefully, assume that in fact most people around the world want to become Americans, and would if they only had the chance. (And many do want exactly that.) The self-satisfaction of this view can make non-Americans roll their eyes, but it is connected to the factor that is the enduring secret of American national strength.

Modern America’s power is often calculated in material terms, from the size and strength of its military to the scale of its corporate assets. But everything I have learned convinces me that these are finally reflections of the country’s success in attracting and enabling human talent.

America might consider itself exceptional or unique as the first purely invented nation, but China was unique because … it was unique: “China is not a magnified East Germany, nor is it an amplified Eastern Europe,” Zhang wrote. “Nor is it any ordinary country.” It has a five-thousand-year history, and a language whose written form had lasted more or less through that time. “It is as though ancient Rome was never dissolved, and continued to the present day … with a central government and a modern economy … and a massive population in which everyone speaks Latin.” And on through other traits, until the clinching argument that China was the civilization of the “four ultras”: ultra-populated, ultra-vast in geographical scope, ultra-ancient in historical traditions, and ultra-deep in its culture.

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