Quick comment this morning ahead of my later travelling to Birmingham for the annual Birmingham University Business School Advisory Board Guest Lecture and Dinner. This year, very appropriately in my view for a bank that was actually founded in Birmingham back in 1765 and that happened to be floated on the Stock Exchange one hundred years later by the same firm of stockbrokers that I had first worked for in Birmingham one hundred years later, Messrs Margetts & Addenbrooke, this years’ lecture is being given by Lloyds Bank CEO, Antonio Horta Osorio.
(Due to the following days Birmingham University Business School Advisory Board meeting plus separate meetings on Thursday in London, please note that Commentary will next appear on Friday).
UK Cyber Strategy Announcement
I very much welcome the formal announcement of the UK Cyber Strategy launch from Chancellor of the Exchequer, Philip Hammond today but I wish to point out that the £1.9 billion funding that will be used over the next four years to build the requirement has come out of the Defence Budget as opposed to the Home Office or Treasury function. While it is true that £500 million is being added to the Defence budget in each of the five years from 2016 to 2020 inclusive we must note that £1.9 billion together with whatever additional funding requirement is for the 1,900 additional security and intelligence staff intended for GCHQ and that will add to the existing 12,700 people employed by the three UK intelligence agencies, MI5, MI6 and GCHQ, will also be coming from the Defence Budget. Add in the addition of MOD pensions and the intention to fund Trident replacement from the Defence budget as opposed to how these were previously funded and the ‘lie’ that is we are spending 2% on GDP is full exposed.
As I said yesterday and without repeating the detail in regard of obvious military capacity shortages and the need to spend more rather than less on defence in light of increased threats against us, it is time for the long period of false accounting and lies to cease. It is time to end the squeeze on defence and also, to properly fund much needed cyber, intelligence and Trident replacement from central government resources as opposed to the already far too stretched defence budget. It is time for the Prime Minister to reverse the lie that continues to dog defence.
China’s New J-20 Military Combat Jet Debut at Zhuhai Air Show
I learn this morning, courtesy of a well written summary on the BBC website, that China has now shown its long awaited J-20 stealth-fighter jet to the public for the first time. Zhuhai is already a very large and important air show for China and it is growing in stature and size at a very fast pace. The J-20 fighter jet has been a very long time in the making and with China’s military aircraft industry still in its infancy, all that I can say from what I have heard on the grapevine is that what they appear to have achieved in the development looks formidable enough.
Indeed, looking to all intents and purposes as it does, very similar to the Lockheed Martin F-22 ‘Raptor’ jet, China’s J-20 combat jet has been designed for a similar purpose to the F-22 Raptor jet. Developed and built by the Chengdu Aircraft Industries Group, a subsidiary of Aviation Industry Corporation of China, this development is not just an attempt to show the rest of the world what China has been able to develop but it is also a show of future force and intention.
Make no mistake, China will succeed in developing everything that it requires in order to show itself on equal terms with the West. The US is well aware of threat that China poses but I doubt that Europe is. We have brilliant fast jet capability in build ourselves of which Eurofighter Typhoon stands out. So too are the capabilities of the Swedish Saab’s JAS 39 Gripen and France’s Dassault Rafale jet up with the best but what about the future? Whilst Britain and France together with France and Germany are engaged in joint unmanned aircraft capability developments where is the next European manned aircraft requirement going to come from?
It is no use burying our heads in the sand and whilst we can buy fast jet capability from the US it is important that Europe follows China’s example and invest in the next generation of manned fast military jet capability NOW!
Those concerned at the speed of development of China’s military and indeed, its civil aircraft manufacturing capability as well, need to be on their guard. China has already developed a heavy-lift aircraft that looks very similar to the now out of production Boeing C-17 Globemaster although from a capability perspective I doubt that the new pretender is a match for what has surely, in the form of the C-17 Globemaster, been the best ever large heavylift aircraft ever designed and built.
Other military aircraft and rotary developments are also in the making by China and earlier this year, almost a decade behind the original schedule, China flew the first commercial passenger jet aircraft that it has ever developed – the 90 seat twin engine ARJ-21 passenger jet – which for many will appear at first sight to be a cross between a BAC-1-11 and a DC9.
Leave aside that China will undoubtedly be manufacturing passenger jets for export ten or fifteen years from now while I am in little if any doubt that Boeing and Airbus are a very long way from being challenged by China’s aircraft manufacturing industry in global markets and that given the technology lead that each has they continue to be in a unique and competitive position to hold on to the lead that they have it would be futile to underestimate what China is intent on achieving 20 years out.
As Emirates President Tim Clarke noted in a CNTV interview last year when China showed its long awaited single- aisle competitor to the Boeing 737 and Airbus A320 family of jets, the COMAC C919 of which type the manufacturer has well over 500 aircraft on order from 21 mainly domestic airlines, “you can “never say never” when it comes to China, as it has the “human resource, the physical resource and the wealth to do it” adding that “the barriers for entry into the airline business are very high. If the Chinese are going to do that then it’s a big catch up that’s got to take place. I’m not saying that will not happen. But it is a very, very complex business to get into,”
Airbus CEO, Fabrice Bregier has also acknowledged that outside players were piling pressure on the two big incumbent global passenger jet producers. With an assembly operation at Airbus has been in China for very many years and in 2008 opened its first assembly line outside Europe in that country. The final assembly line producing A32Family aircraft is a joint venture between Airbus and a Chinese consortium that comprises Tianjin Free Trade Zone (TJFTZ) and China Aviation Industry Corporation (AVIC).
Meanwhile, Boeing Corp announced just last week that it intended to set up a completion facility and delivery centre for 737 jetliners in Zhoushan City, Zhejiang Province. The 737 family aircraft will be initially assembled in Renton before being shipped out to Zhoushan and where interiors will be assembled, aircraft painted completed ahead of final customer delivery. In this case my understanding is that that the official framework agreement between Zhejiang’s Provincial Government, Boeing and the Commercial Aircraft Corporation of China (COMAC) was signed at the same time as the announcement was released.
Gone is the time imagining that China might never achieve its goals to produce its own military and commercial aircraft and gone is the time for complacency on our part. What China is doing should be a wake-up call to all of us.
CHW (London – November 1st 2016)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785