BEIJING, CHINA — State-Backed CACC's 164-seat jetliner takes flight, set to reduce China's dependence o western aircraft manufacturers.


The state-run Commercial Aviation Corp of China (CACC) took 15 years to bring its 164-seat jet to service, with China Eastern Airlines becoming the first customer. The jet is currently operating on routes between Beijing and Shanghai.

China's need for an alternative to Boeing, the US manufacturer with strong ties to the US government, has been intensifying. In fact, no Chinese airline has acquired a Boeing commercial passenger plane in the last six years, a direct result of the mounting geopolitical strain between Beijing and Washington.

Despite this development, the narrow-bodied jets, like the C919, are not completely self-sufficient. These aircraft heavily depend on components manufactured in Europe and the US, including engines and electronic equipment. Key suppliers to the CACC include the French aviation group Safran and US-based General Electric.

Nevertheless, Airbus should remain cautious. China's informal embargo on Boeing has led Chinese airlines to place record orders with Airbus. As China's aviation industry continues to evolve, it's likely that they will gradually replace these orders with purchases from CACC.

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China Eastern Airlines, backed by the state, anticipates multiple deliveries of the C919 this year. Moreover, CACC boasts an impressive pipeline of orders from local customers, exceeding 1,200 jets. While the company isn't publicly traded, investors can engage with it through its corporate bonds.

For the time being, the domestic market is more than sufficient for the C919. A surge in local travel demand has prompted Chinese carriers to boost international capacity by over a fifth this month.

Air traffic in China is predicted to expand by over 5% annually in the next two decades, which is 50% faster than the global average. According to Airbus projections, Chinese airlines will represent over a fifth of global demand. As the production capacity of the C919 increases, Airbus, the Franco-German aviation behemoth, is expected to see a decline in its Chinese sales.