By making use of its comparative advantage, China has achieved remarkable economic growth. Meanwhile, the principle of comparative advantage seems to have become the guideline for the development of all industries.

In the aviation industry, China's comparative advantages and disadvantages are obvious. The country is rich in labour and short of capital. But as a developing country, it is thought China could avoid "reinventing the wheel" and independently develop its own aircraft by studying and simulating planes bought from other countries. However, it was exactly such a judgement that has led China's aviation industry into a development predicament in the past two decades.

On the one hand, the aviation industry had abandoned independent R&D to rely on international co-operation. As early as the mid-1980s, the aviation industry had given up the self-developed Y-10 aircraft, instead pursuing a three-step development strategy based on international co-operation: First, assemble and partially manufacture big trunk and feeder planes; second, jointly design and manufacture feeder planes with 100 seats; finally, be able to independently develop trunk planes with 180 seats.

Yet, the three-step plan soon ran aground. Wanting to keep its technology secret, Boeing announced it would cease co-operation with China in producing the MD-90 aircraft from 1999 after it merged with McDonnell Douglas. Later, Airbus ended its co-operation with China in developing the AE-100 aircraft.

On the other hand, during the shift from focusing on military production to emphasizing civilian products, China's aviation industry has chosen to produce non-aviation civilian products instead of civilian aircraft. As the Cold War approached its end in the 1980s, it was a global trend to shift the R&D and manufacturing focus of the aviation industry from military aircraft to civilian planes. Yet, in line with their comparative advantage, many domestic aviation companies rushed to produce motorcycles and cars. They found themselves less competitive in the aviation industry, which featured huge R&D expenditure, high risks and a long period to reclaim investments.

Lack of a firm grasp of both the specialized nature of the aviation industry and its international development trend is the main reason aviation in China has been going through a difficult time.

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