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Commercial Aircraft Corporation of China (COMAC)

China’s Central Government, through its 5-year plans, mandated industry reorganization aimed at both developing a domestic civil transport aircraft to Western standards and attracting investment by Western suppliers to augment and/or develop China’s domestic industry. Through a series of consolidations, reorganizations, and redirection of industry goals, China has created a civil aircraft manufacturing industry actively engaged in developing civil aircraft to be certified to U.S. Federal Aviation Administration (FAA) or the European Aviation Safety Agency (EASA) standards.

The development of large aircraft is listed as one of China’s 16 major development plans in the country’s 11th Five-Year Program (2006–2010). The goal is to produce a large transport aircraft for civil and military purposes by 2015, with entry into civilian service by 2020. In March 2007, China’s Premier Wen Jiabao approved a plan to form a joint-stock company that would be responsible for the production of this large civil aircraft and encouraged “concerned parties” to begin as soon as possible in the endeavor. Professor Guan Zhidong (Beijing University) indicated that, while the expressed timetable is possible, it must be in conjunction with foreign assistance in the areas where China is not globally competitive.

On May 11, 2008, China undertook a major reorganization of its aircraft manufacturing enterprises by establishing the Commercial Aircraft Corporation of China, Ltd. (COMAC) within AVIC-I to oversee the design and development of a domestic large civil aircraft (LCA). Headquartered in Shanghai, it was initially capitalized with 19 billion renminbi (RMB) ($2.72 billion). This new corporate entity also included AVIC-I Commercial Aircraft Co. Ltd. (ACAC).

China's first ever jumbo passenger aircraft company, named Commercial Aircraft Corporation of China Ltd. (CACC or COMAC), is responsible for researching, developing, manufacturing and marketing the homegrown large passenger aircraft. China's own large commercial aircraft will be put on the market by 2020, according to Miao Wei, vice-minister of industry and information technology. COMAC will complete the concept design and research on key technologies by 2010 and start production by 2014. The world would need 20,000 single-aisle aircrafts in this category in the next two decades, while China would require 1,400 such jets. According to China Aviation Industry Corporation (AVIC), China needs to replenish 3,815 passenger planes to its civil air fleets in the coming 20 years. The total included 2,822 large jets and 993 regional jets. By 2020, the country's civil aviation sector will have fleets of 4,250 passenger planes and 604 cargo planes in 2027.

The National People’s Congress approved the plan for formation of the company in February 2007, which was followed by a preparatory committee under the direction of the Commission of Science, Technology, and Industry for National Defense (COSTIND). This committee examined issues such as the basing of the program, subordination of COMAC to the Aviation Industry Corporation (AVIC), relative prioritization of commercial aviation over military, and the extent of foreign involvement. The end result was that Shanghai, with interests in prioritization of civil industry and foreign cooperation, won the day.

Approved by the State Council as a National Significant Science and Technology Project; in May 2008, Commercial Aircraft Corporation of China (COMAC) was set up in Shanghai, signifying the commercial aircraft project officially started. Commercial Aircraft Corporation of China, Ltd. (COMAC) is a state-owned limited liability company founded by the approval of the State Council of the People's Republic of China.

As testament to its national priority, COMAC is a state-owned enterprise that reports directly to the State Council, rather than AVIC. The largest stakeholder, with a 31.6% stake (CNY6 billion) in the venture’s original U.S. $2.7 billion (RMB 19 billion) capitalization, is the State Council’s Assets Supervision and Administration Commission (SASAC). The Shanghai municipal government via the Guo Sheng (Group) Co., Ltd. has a 25% stake, with about a US $700 million (CNY5 billion) investment in the venture. The third major stakeholder is AVIC, which is said to have just under a 25% share [CNY4 billion] in the business through the transfer of its AVIC Commercial Aircraft Co (ACAC), Shanghai Aircraft Manufacturing Factory, and the Shanghai branch of First Aircraft Institute. China Aviation Industry Corporation II (AVIC II), Aluminum Corporation of China (CHINALCO), Baosteel Group Corporation and Sinochem Corporation are also investors, with CNY1 billion each. With 19 billion yuan total registered capital (2.7 billion U.S. dollars), the headquarters is located in Shanghai.

COMAC's goals within the first few years include finishing delivery and maiden flight of ARJ21 aircraft, establishing an operating system and training talents. Shanghai Aircraft Manufacturing Factory and the First Aircraft Institute of AVIC I, which participated in producing the country's first homegrown regional jet ARJ21-700, joined the newly established CACC.

COMAC owns the First aircraft Institute AVIC-I (former Shanghai Aircraft Design & Research Institute), Shanghai Aircraft Manufacturing Factory, AVIC-I Commercial Aircraft Co., Ltd., Shanghai Aviation Industrial (Group) Corporation (SAIC) and its subsidiaries. COMAC set up its Beijing office and the representative offices in Europe and in America will also be established. Under the operation mode of main manufacturer-suppliers, COMAC commits itself to a higher aircraft development ability, higher system inegration ability, higher marketing exploration ability, higher customer service ability, and higher certification ability.

On 14 January 2021, Washington included the Commercial Aircraft Corporation of China (Comac) in a Department of Defence list of companies, which have alleged ties to the Chinese military. The US Department of Defense (DOD) classified nine Chinese companies, including phone-maker Xiaomi and aircraft manufacturer COMAC as "Communist Chinese military companies."

The move in itself was not a problem for state-run Comac at the moment as it only restricts US investment in companies. Comac has not raised funds in the US market. But there’s a risk that now the aircraft manufacturer can be added to the Entity List, which makes it harder for American suppliers to do business with Comac. The Entity List imposes restrictions on exports, absent license approval, on foreign persons involved in activities contrary to the national security or foreign policy interests of the United States. From General Electric’s CFM LEAP-1C engines and avionics to flight data recorders, many of the Comac aircraft components come from the US. One study found that 60 percent of the Chinese aircraft is based on parts manufactured in the US and EU-member states. Comac has had little success in marketing its aircraft models outside China.

Page last modified: 01-08-2021 14:07:29 ZULU