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Overview of China’s Aerospace Market

Aviation

Socio-economic changes in China have been the driving force behind the growing demand for air travel. The number of air passengers in China has increased at an average rate of more than 10% since 2011.

2018, airports handled 610 million passenger trips in China, up 10.9% compared to 2017. The overall aviation industry posted 17% revenue growth to RMB 875 billion (US$130.2 billion) in 2018.

According to Boeing, China currently accounts for 15% of world’s commercial airplane fleet; by 2037 it will be nearly 20%. By 2024, China will replace the US as the world's largest aviation market, according to the International Air Transport Association (IATA).

As of December 2018, there are 60 air transportation companies, 3,549 aircraft, 410 general aviation airlines, and 232 transport airports in China.

Forecast

In 2019, the government aims to expand its fixed-asset investment in the civil aviation sector to RMB 85 billion (US$12.64 billion), up from RMB 81 billion (US$12.05 billion) in 2018. Passenger transport volume, as well as cargo and mail transport volume, are expected to grow by 11% and 5.7% respectively.

In December 2018, the government released an action plan which aims to make the civil aviation industry one of the best in the world by 2050. Initially, the focus will be on infrastructure and airspace capacity. From 2021 to 2035, the major areas of focus will be air transportation, aviation hubs, air service system, aviation systems, and air traffic management system.

In the long-term, according to Boeing’s recent forecast (Commercial Market Outlook 2018-2037), China will need 7,690 new aircraft over the next 20 years valued at US$1.2 trillion. During this period, around 74% of the demand will be for single-aisle aircraft, while for wide-body, the demand will be 21%.

Traffic growth

In the same period, the average regional traffic growth will be 6%, according to Boeing. Below we have mentioned the regional traffic growth (domestic and international) from 2017 to 2037.

Regional Flow20152016201720272037Average annual growth (2017-2037)
China-China564.7629.8715.11,645.12357.26.1%
China-Europe121.1132.9141.7288.0421.15.6%
China-Middle East37.743.947.7143.6290.09.4%
China-North America107.5119.1132.0240.4360.75.2%
China-Northeast Asia73.081.078.6135.9173.74.0%
China-Oceania44.355.466.8120.5178.15.0%
China-Southeast Asia109.9127.0144.4258.3488.16.3%

Revenue passenger kilometers (RPKs) in billions. It is calculated as (no. of revenue passengers * total distance traveled)

Source: Boeing’s Commercial Market Outlook 2018-2037

Services growth

Fleet growth will drive the services sector to US$1.5 trillion in China in the next two decades, according to Boeing.

China’s Services Forecast (2018-2037)
Market size
Market segment(US$ billions)
Corporate & External18.45
Marketing, Planning & Customer Service66.15
Flight Operations185.10
Maintenance & Engineering385.60
Ground, Station & Cargo Operations890.65
Market growth rates
Market segment (%)
Corporate & External5.3
Marketing, Planning & Customer Service6.9
Flight Operations5.7
Maintenance & Engineering5.7
Ground, Station & Cargo Operations5.5
Market size by service type
Service type(US$ billions)
Maintenance & Engineering381.85
Training & Pilot Services26.85
Information Services47.25
Air Traffic Management14.60
Marketing & Planning48.65
Cabin Services144.85
Ground Handling881.85
New personnel demand
Position TypeNumber
Pilots120,000
Technicians121,000
Cabin Crew146,000

Source: Boeing’s Commercial Market Outlook 2018-2037

Opportunities

The rapid passenger growth in China and the transition of the country towards a service-based economy will continue to drive air travel demand in the next two decades. As automation increases and airline services sector grows relative to manufacturing and infrastructure development, opportunities in the airline's services sector will continue to grow.

Major areas of opportunities in the services sector are in:

In the manufacturing sector, investor opportunities are in:

Aerospace

In the last few years, the government has taken measures to increase its presence in space and improve their technologies. The government continues to invest in deep space exploration, lunar outposts, space stations, and planetary missions, while the private sector is focusing on the commercial potential of small launch vehicles and satellites.

Investments

As of October 2018, US$16.1 billion was invested globally in private space companies and partnerships since 2009, with China accounting for three percent. China’s share in global investments may be small, but nearly all of their investments has come only since 2016.

According to the China Commercial Space Investment Report 2018 by Future Aerospace, a Chinese space think-tank, over 70 VC firms invested RMB 2.1 billion (US$ 312 million) in more than 30 Chinese space start-ups in 2018. If we include the listed companies, the figures would be RMB 3.571 billion (US$ 531 million).

Half of the investment rounds focused on very early stage start-ups, while the other half consisted of start-ups with a certain level of maturity. Funds raised by the second group of start-ups were higher. The advanced rounds focused more on launchers, rather than satellites. In addition to launchers, investors are increasingly focusing on new sub-sectors such as satellite operations, manufacturing, and applications.

Forecast

According to Xinhuanet, the value of the global space market is estimated to reach US$485 billion in 2020 when the value of China's space market is projected to be RMB 800 billion (US$119.1 billion). About two-thirds of global satellite orders will come from commercial customers in the next decade. or more information on the aerospace market in China, please refer to Aerospace Market Opportunities - China - Doing Business Abroad - The Canadian Trade Commissioner Service.

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