China and Russia Take on Airbus and Boeing With New Plane

By Trefor Moss Features Dow Jones Newswires

China and Russia have joined forces to build a large passenger airliner designed to challenge Airbus SE and Boeing Co., in the latest sign of strengthening Sino-Russian ties.

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State-owned aerospace giants Commercial Aircraft Corp. of China and Russia's United Aircraft Corp. say they are forming an alliance to build a 280-seat long-haul plane that will enter service in the mid- to late-2020s.

The deal was signed at a ceremony in Shanghai Monday, formalizing plans set out in a 2016 memorandum.

China and Russia have been developing rival jets as they both seek to pry open Airbus and Boeing's duopoly in the single-aisle jet market. China's new C919 airliner flew for the first time in early May, while Russia's MC-21 is expected to conduct its maiden flight within the next few months.

Both aircraft face uncertain commercial futures, aviation analysts say, thanks to the American and European companies' dominance and their technical advantages, including greater fuel efficiency.

Teaming up allows the two countries to pool know-how and resources in developing the larger, twin-aisle jet that China is calling the C929. Beyond the commercial potential, the tie-up also reflects a decadeslong warming in relations between Beijing and Moscow--bitter rivals until the end of the Cold War--that has accelerated under Presidents Xi Jinping and Vladimir Putin.

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"China needs Russia's military technologies and energy [resources] ... Russia needs China's financial help," said Zhang Baohui, a professor at Hong Kong's Lingnan University. "They want to refashion the global order, " he said, and "develop a genuine strategic partnership to counterbalance U.S. power."

Increasingly, Beijing and Moscow give each other mutual support on key global issues, said Mr. Zhang. Last September, the Chinese and Russian navies held joint drills in the disputed South China Sea, which is claimed almost entirely by China, and in part by several Southeast Asian countries.

China and Russia agreed to develop a new heavy-lift helicopter together during a visit to Beijing by Mr. Putin last year, and opened talks about joint space projects, including a possible mission to Mars. The Russian leader was back in Beijing this month to attend the summit on Mr. Xi's flagship One Belt One Road regional trade and infrastructure program.

The two governments are aiming to grow bilateral trade fivefold to $200 billion by 2019-23, they said during recent trade talks in St. Petersburg.

The airplane joint venture will be based in Shanghai, with a Russian chairman and a Chinese general manager, the partners said in a statement, and will be built in the Chinese city. No financial details were disclosed.

The widebody jet market is forecast to be lucrative as global demand for air travel surges: Airbus estimates roughly 7,500 twin-aisle jets valued at more than $2 trillion will be sold world-wide over the next two decades.

Write to Trefor Moss at Trefor.Moss@wsj.com

(END) Dow Jones Newswires

May 23, 2017 07:56 ET (11:56 GMT)