CAAC--EXPANDING WITH WESTERN EQUIPMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R001000730001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 22, 2016
• Document Release Date: May 20, 2010
• Sequence Number: 1
• Publication Date: July 16, 1984
• Content Type: MEMO

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Central Intelligence Agency
Washington. D. C. 20505
DIRECTORATE OF INTELLIGENCE
16 July 1984
CAAC--Expanding with Western Equipment
Summary
The General Aviation Administration of China
(CAAC) operates the national airlines. It also
performs functions similar to that of the Federal
Aviation Administration (FAA) in the United States
in that CAAC is responsible for navigational aids
and airports facilities. CAAC has greatly expanded
both domestic and international operations since the
late 1970s, largely through the purchase of US
passenger jets. We believe China will continue to
look to the West for support in its expanding air
sector. This process is hampered, however, by
overlap in organizational responsibilities and
continuing struggle among Chinese organs for the
final say in aircraft purchases.
CAAC apparently is well satisfied with the
performance of US aircraft and we believe the US
will remain the major supplier for large to medium
passenger aircraft. There also are business
opportunities for ground support equipment firms as
Chinese airports and air traffic control facilities
are upgraded to handle more modern jets. US
companies continue to supply both airport and
navigational equipment but the Chinese also are
approaching other foreign firms for assistance.
Secretary for Aerospace, Department of Commerce.
This memorandum was prepared byl the Development
Issues Branch of the China Division, Office of East Asian
Analysis at the request of Crawford Brubaker, Deputy Assistant
Questions and comments are welcome and may be
to the author
EA M 84-10144
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Principal Organizations in China's Civil Aviation Industry
Among the important organizations engaged in international
trade and commerce involved in China's civil aviation industry,
there is considerable overlap in organizational responsibilities
and high potential for bureaucratic conflict. Foreign aerospace
companies dealing with China have found organizations struggling
among themselves and lines of responsibility unclear. For
example, one company's most recent sales contract was negotiated
with China Aviation Supply Corporation (CASC) where previous
sales had been signed with China National Machine Import and
Export Corporation (MACHIMPEX).
Figure 1
Ministry Level Organizations and their Subsidiaries having
interests in Acquisition of Civil Aviation Equipment
MINISTRY OF
AERONAUTIC INDUSTRY
(MAI)
CHINA AERO-TECHNOLOGY
IMPORT AND EXPORT
CORPORATION (CATIC)
MINISTRY "OF FOREIGN
ECONOMIC RELATIONS
AND TRADE (MFERT)
CHINA NATIONAL
MACHINE IMPORT
AND EXPORT CORPORATION
(MACHIMPEX)
GENERAL ADMINISTRATION
OF CIVIL AVIATION OF
CHINA (CAAC)
CHINA AVIATION
SUPPLY CORPORATION
(CASC)
MACHIMPEX is under the Ministry of Foreign Economic
Relations and Trade (MFERT) and is now the chief negotiator for
purchase of civil aircraft and associated equipment. The
Ministry of Aeronautic Industry (MAI) controls most processes
associated with the civil aircraft industry from basic research
through the manufacturing stage. The China Aero-Technology
Import and Export Corporation (CATIC) operating under the MIA is
involved with joint ventures and offset agreements with foreign
companies for production of aircraft parts and components. It
also plays a role in aircraft purchases. The China Aviation
Supply Corporation (CASC) acts as the purchasing agent for civil
aircraft parts and equipment, navigational aids, and at times for
aircraft for the General Administration of Civil Aviation of
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Most recently, there have been unconfirmed reports that a
group to coordinate China's civil aviation development has been
established under the State Council. The new group--initially
identified as the "Civil Aviation Production Leading Group"--is
to reconcile the interests of MACHIMPEX, CATIC, and CASC while
attempting to match and develop domestic production capabilities
with end-user needs.
The Chinese press reports CAAC will soon face competition
from several provincial-level airlines. New airline service is
planned for Fujian Guangdong, Guangxi, Shanghai, and Xinjiang
provinces.
Press reports
indicate local officials in Fujian Province already have
organized a joint venture with Hawaii-based Aloha Airlines and
signed an agreement with Philippine Air Lines for flights between
Manila and Xiamen where a new international class airport was
completed recently. This type of decentralization could greatly
increase the number of Chinese, organizations negotiating for
aircraft sales and services.
organization and Structure of the General Administration
of Civil Aviation of China (CAAC)
Civil aviation in China is administered by the General
Administration of Civil Aviation of China (CAAC). Formerly known
as the Civil Aviation Administration of China (CAAC), the
organization was renamed in 1962, but CAAC was retained as the
official acronym for the Chinese aircarrier. CAAC had operated
as a special agency of the State Council and was charged with
maintaining and operating China's civil air transport system.
However, in 1980 CAAC was designated as an independent
enterprise--ostensibly free from military control--with no change
in its duties and responsibilities. Unlike most other world
airlines, CAAC operates navigation and airport facilities in
addition to its passenger freight, and industry support
flights.
The central authority for CAAC administration and operation
is the Main Bureau, located in Beijing. The Main Bureau
constitutes the decisionmaking and staff body for2CAAC Director
2 The specific assignments of the Deputy Director Generals are
unknown but Hu Yizhou, Guo Hao, Yan Shixiang, and Wang Yamin were
identified as Deputy Director Generals as early as July 1983.
The Deputy Director title also is used in some subelements.
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Figure 2
Organization of the General Administration of Civil
Aviation of China (CAAC)
Director I General
MAIN BUREAUS
INTERNATIONAL
COMMAND OPERATIONS
Deputy Director- Deputy Director-
General Gen ral
SUB-ELEMENTS SUB-ELEMENTS
POLITICAL SERVICES
Deputy Director- Deputy Director-
Gen ral General
SUB-ELEMENTS SUB-ELEMENTS
6 Regional Administration Bureaus (RAB)
I
RAB Flight
Dir ctor Units
RAB COMMAND RAB POLITICAL RAB SERVICES
DEPARTMENT DEPARTMENT DEPA TMENT
SUB-ELEMENTS
I
SUB-ELEMENTS SUB-ELEMENTS
26 Provincial Administrative Bureaus (PAB)
I- EMENTS
I
PAB COMMAND
DEPARTMENT
PAB Flight
Chief Units
AIR STATION
CHIEF
STAF F
PAB POLITICAL PAB SERVICES
DEPARTMENT DEPARTMENT
I I
SUB-ELEMENTS SUB-ELEMENTS
SUB-ELEMENTS
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The Main Bureau is the top administrative level of CAAC.
Four Bureaus are charged with overseeing the major functions of
CAAC--titled "Command," "International Operations," "Political,"
and "Services"--each, in turn, has subordinate offices. The
offices in charge of air traffic control, aviation, commerce,
communications and navigational aids, finance and accounting,
personnel, POL, supply, etc., are aligned under the four Main
Bureaus and oversee the main functions of CAAC. Additionally,
the China Aviation Supply Corporation (CASC) also operates at the
national level and has been established as the CAAC purchasing
agent in the international field for the acquisition of aircraft,
spare parts, ancillary equipment and technology.
The second level of administrative control are the Regional
Administration Bureaus (RAB). There are six RABs, each
encompassing three to six provinces, headquartered at Beijing,
Lanzhou, Guangzhou, Chengdu, Shanghai and Shenyang. Each RAB is
responsible to the Main Bureau for all CAAC activity within its
jurisdiction. The RAB organizations have departments and
subelements that correspond to the Main Bureau elements except
for the International Operations Bureau.
The third level is the Provincial Administration Bureau
(PAB). The headquarters for the 26 PABs are usually located at
the provincial or autonomous regional capital cities. The PAB's
are subordinate to their respective RABs and structurally are
carbon copies of the RABs but on a more limited scale. At those
sites where the RAB and PAB are colocated, the PAB is usually
only a shadow organization; that is, the PAB exists on paper but
its functions are carried out by the RAB.
The fourth lowest level of administrative control is the Air
Station. This is headed by the Air Station Chief who, with his
staff, is responsible to the PAB. The Air Station is the first-
line working level of the CAAC where day-to-day CAAC operations
ae carried out. Pilots, crews, dispatchers, air traffic
controllers, mechanics, load masters, and other personnel are
assigned at the Air Station level. The administrative and
support elements that exist at the Main Bureau, RAB, and PAB
levels are nonexistent at the Air Station. In their place, the
Air Station Chief and a small staff handle the administrative and
support functions.
Civil Aviation Network
During the early 1970s, China began to expand and reequip
its domestic and international civil air services. Since then,
CAAC has been expanding rapidly, apace with China's increased
political and economic contacts with foreign countries. Until
1973, CAAC's international routes were confined to the USSR,
North Korea, North Vietnam, and Burma. Since 1974, when China
joined the International Civil Aviation Organization (ICAO),
foreign service has been steadily increasing. China now has
aviation agreements with nearly 40 countries and CAAC has
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established business connections with more than 180 airlines
throughout the world. Only 15 foreign airlines, however, are'
serving China and most of them are being funneled into Beijing
(see figure 3). CAAC, on the other hand, provides regular3
service to 22 cities in 18 countries, including Hong Kong. Its
service stretches from Japan across the Pacific to the United
States, and from South Asia to Eastern and Western Europe and to
Africa. And this September, CAAC is scheduled to begin a weekly
B-747 service to Sydney, Australia that will significantly
increase the length of CAAC's international routes. The total
length of international and domestic routes now totals around
230,000 kilometers. Within China, approximately 170 domestic
routes--up from 75 routes in 1971--cover some 100,000 km and
connect around 80 cities. CAAC operates more than 670 scheduled
flights a week, including flights established to accommodate the
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rapidly expanding number of foreign visitors.
Figure 3
Foreign Airlines Serving Chinese Airports
Beijing Airport Shanghai Airport
Guangzhou airport
Aeroflot Cathay Pacific Airways none--serves as
Air France Japan Air Lines Company an alternate
British Airways Northwest Orient Airlines for some Hong
Ethiopian Airlines Pan Am Kong bound flights
Iran National Airlines
Japan Air Lines Company
Lufthansa
Pakistan International
Pan Am
Philippines Airlines
Qantas (Sep 1984)
Thai Airways International
Tarom-Romanian Air Transport
Swissair
Airport Expansion
To support its expansion, CAAC gradually is improving
airport facilities and associated services. China has about 100
airfields, most of which are small sod runways. About 35 can
handle medium to large transports. The Chinese talk about a
number of international class airports but Beijing and Shanghai
3 CAAC serves Los Angeles, New York, and San Francisco in the US
and Nagasakai, Osaka, and Tokyo in Japan. CAAC service to other
countries is limited to a single city.
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are the only two now used by international carriers. Northwest
Orient has approval to provide service to Guangzhou but has not
yet begun service. Beijing, the largest of the international
airports and the hub of the aviation network, rebuilt its
terminal, enlarged one runway, and added another to support a
rise in wide-body jet traffic. Beijing now handles most of the
international flights--some 70 a week. Shanghai and Guangzhou
airports--primarily used by foreign businessmen and tourists--
although slated for expansion, have been slow in responding to
growing needs. Guangzhou serves mainly as a feeder and alternate
airport for Hong Kong. In the far west, Urumqi--an international
class airport in Xinjiang Province that currently handles no
foreign carriers--has been expanded to. handle large jet
aircraft.
Additional airports for handling wide-body jets are
scheduled for expansion, are under construction, or have been
completed recently. The airports at Tianjin and Hefei have been
upgraded to serve as alternate airports for Beijing and Shanghai,
respectively. Upgrading of runways for jet traffic has been
completed at Chengdu and Guilin, and new jet airports have been
built at Harbin and Xiamen. Airports at Changsha, Dalian,
Hohhot, Kunming. Shantou, and Wuhan are to be upgraded for larger
jetliners.
Air Traffic Control
Air traffic control facilities still are generally adequate
for the amount of daily traffic now handled, which is less than 1
percent of the volume handled daily in the United States.
However, modernized traffic control facilities are being
installed at key airports to raise the utilization rate of CAAC's
current inventory and to provide more sophisticated control of
the larger volume of modern jets using China's airspace. At its
most modern airports--Beijing, Shanghai, Guangzhou--China has
installed conventional avionics and flight control equipment
capable of handling current traffic volume. These airports have
low-frequency, nondirectional beacons (NDB); very-high frequency
omnidirectional range stations (VOR); instrument landing systems
(ILS); distance measuring equipment (DME); and precision approach
radars.
Most of the large airports have a precision approach radar,
but only the largest have an instrument landing system. At the
smaller airports, rudimentary en route navigational aids and
airport control facilities now generally limit operations during
periods of darkness and bad weather. Those airports having no
electronic glide slope provide VOR and NDB signals for use in
standard instrument approach procedures.
CAAC is modernizing and expanding its air traffic control
system with air surveillance and computer-automated radars
purchased from Western sources. French made Thomson-CSF LP-23
and TA-10 radars have been installed along the Beijing-Shanghai
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air corridor,
Terminal and en route automated systems along the
corridor provide tracking data such as altitude, ground speed,
and identity of transponder-equipped aircraft. An automated TPX-
42 supplied by the AIL Division of Eaton Corporation provides
automated radar service at the Guangzhou airport. According to
trade journals, the Chinese are negotiating for four more AIL
systems for installation at interior airports.
CAAC just is beginning to upgrade and expand its limited air
navigation network. Some 70 NDBs and about 18 VORs are the
backbone of the basic air navigation system. The sparse network
of VORs--some 95 percent less than the number available in the
United States network--partly explains the Chinese use of five-
man flight crews that include a navigator and radio operator. In
many cases, VOR signals only are receivable in aircraft operating
above 20,000 feet, even along major airways. Aircraft operating
at lower altitudes, especially in the interior, depend on NDB
equipment.
Civil Aircraft Fleet
The Chinese penchant for multiple suppliers and earlier
reliance on the USSR have given CAAC one of the world's most
varied air fleets (see Table 1). CAAC had 155 aircraft in its
passenger fleet in April 1984 and over 400 smaller aircraft
employed in specialized aviation services. The fleet employs
some 20 different types of aircraft, many of them obsolete in
term of today's technology. CAAC service began with Soviet
aircraft; AN-12s, AN-24s, IL-14s, IL-18s, and IL-62s still
constitute a large portion of its passenger fleet. In 1970,
China began looking to Western suppliers to broaden sources of
equipment and to enhance the prestige of CAAC with firstline
Western equipment. Up until this point, the fleet consisted
mostly of piston-driven, propeller aircraft. In the early 1970s,
at the same time that they purchased the Soviet IL-62s, CAAC's
first long-range jet aircraft, the Chinese purchased their first
medium-range British built Trident jets. By the late 1970s, the
Chinese had acquired more than.30 Tridents mainly for domestic.
flights, and 1.0 long-range Boeing 707s, mainly for use on the
international routes.
CAAC expansion during the 1980s has been largely with US-
built passenger jets. In 1980, the Chinese acquired three long-
range wide-body Boeing 747SPs. in an attempt to compete with
foreign airlines on a more even footing. Since then, CAAC has
acquired another 747SP and a 747-200 Combi. In 1983, CAAC began
purchasing shorter-range aircraft--five Boeing 737s and two
McDonnell-Douglas MD-82s. Another five Boeing 737s are to be
delivered by March 1986.
CAAC apparently is well satisfied with the performance of US
aircraft and we believe it will continue to look to the United
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Table 1
CAAC's Civil Aviation Fleet*
Aircraft Type Inventory
On Order
Jet
American
B-747SP 4
B-747-200 Combi 1
B-737-200 5
5
B-707-320B 4
B-707-320C 6
MD-82 2
Cessna Citation II 3
Gates Learjet 36A 1
British
Trident 2E 18
Canadian
CL-601/Challenger
Soviet
IL-62/Classic 5
25
Subtotal 49
Propeller
30
American
Beechcraft Super King 200 3
Canadian
DHC-6/Twin Otter 4
Chinese
Y-5 **
Y-7 1
Y-8 2
Soviet
AN-2/Colt 320
AN-12/Cub 2
AN-24/Coke 25
LI-2/Cab 25
IL-12/Coach 4
IL-14/Crate 45
IL-18V/Coot 11
Subtotal 442
Helicopter
American
Bell-212 9
Sikorsky-76 2
French
Alouette-3 unk
German
BO-105
Soviet
Mi -4/Hound
Subtotal
16
29
Total Inventory 520 On Order 40
* Trainer aircraft are not included in inventory.
** The Chinese reported producing some 700 Yun-5s that are being
used for agricultural support, cargo, passengers and aerial
ambulances. We do not know how many of these 70b are actually
flying under CAAC control.
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States as a major supplier for large to medium passenger
aircraft. Since the last British Trident was delivered in the
mid 1970s, the United States has been the sole supplier for the
larger passenger jets. CAAC has told the Chinese press that
about 100 long to medium-haul aircraft and another 100 smaller
aircraft are needed for expanding domestic service between 1983
and 1990. According to a CASC official, CAAC shortly needs to
acquire two more B-747s for the new Australian service:
In addition to passenger-cargo aircraft, the Chinese employ
over 400 aircraft in specialized aviation services. Only a few
US-built aircraft have been purchased for this sector. Cessna
and Beechcraft aircraft are being used for flight check of
navigational aids and for aerial and geological survey work. The
Soviet An-2, and its Chinese copy, the Y-5--a single-engined
general purpose aircraft--are used for both agricultural support
and as aerial ambulances in addition to their use as small field
passenger-cargo aircraft. The two newly acquired four-engine
turboprop Y-8s are being used as multipurpose cargo carriers on
the Lhasa-Chengdu run.
Traffic and Operations
Although it provides-a number of specialized services, civil
aviation's contribution to the total transport sector is minor
when compared with rail, water, and road services. The volume of
cargo is small and passengers are mostly government officials and
foreign visitors. China has, nevertheless, expanded cargo and
passenger volume on both domestic and international flights.
Since 1975, air freight turnover has developed at an annual rate
of 18.2 percent. Between 1980 and 1983, freight turnover
increased at a near steady rate, averaging 17.8 percent a year--
from 140 million ton-kilometers to 229 million ton-kilometers in
1983. During 1981 and 1982, passenger turnover had grown at a
slightly faster rate of 22.5 percent until leveling off last
year. Passenger turnover in 1983 was down around a million
passenger kilometers largely as a result of domestic travel
restrictions imposed after a CAAC aircraft was hijacked to South
Korea. With the lifting of restrictions, passenger traffic in
1984 is expected to continue its more rapid increase. At least
part of this growth in passenger transport can be attributed to
the increasing number of tourists converging on China since the
country was opened to tourism in 1977. Some of the freight
increase is a result of China's recent entry into the field of
containerized air shipments.
The present CAAC fleet is underutilized. Chinese aircraft
average about two hours a day in the air; in most industrial
CAAC is beginning to make
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better use of US-built aircraft.3 Management practices, as well
as the small number of qualified civil aircrews, probably account
for the underutilization rate rather than a poor maintenance
program.
Table 2
China: Civil Air Performance
Freight turnover Passenger turnover
Year (million ton-kilometers) (billion passenger kilometers)
1975
60 1.5
1976
70 1.6
1977
80 1.8
.1978
100 2.8
1979
120 2.5
1980
140 4.0
1981
170 5.0
1982
200 6.0
1983
229 5.9
Complaints of difficulty in making reservations and sudden
flight cancellations are the most frequent criticisms aimed at
CAAC. Foreign travelers frequently encounter crowded flights
with passengers occupying makeshift seats or, at the other
extreme, flights that are cancelled because of too few
passengers. Darkness and bad weather also produce unscheduled
stopovers because CAAC plays it safe with its relatively sparse
network of navigational aids. CAAC is attempting to correct both
problems with modern equipment. The most recent is the
introduction of computerized reservations for the busy Shanghai-
Beijing route. The Shanghai-Beijing air corridor also is the
only corridor with computerized radar tracking. CAAC plans to
computerize reservations on other major domestic routes within
the next year and, eventually, the whole system.
Although the Chinese pool of trained manpower is small,
current capabilities to perform routine maintenance could support
additional flight time. Scheduled overhauls on jet-powered
aircraft present no problem as they are generally contracted out
to foreign-based firms. For instance, scheduled overhauls for
Boeing 707 aircraft have been done under contract by a Hong Kong
based firm since 1973. China, however, is attempting to upgrade
its engine maintenance capabilities and is actively seeking the
necessary equipment and test stands.
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Maintenance on the older piston-engine aircraft and
turboprop aircraft is done by the Chinese in China. Chinese
maintenance crews for B-747 and 737 aircraft have had some
training in the United States.
CAAC has three maintenance bases for its fleet of more than
500 aircraft. Beijing, its largest base, is responsible for
maintaining the larger jets--mainly B-707, B-747, Trident, and
the Soviet IL-62 aircraft. Chengdu takes care of medium-sized
aircraft while Shanghai does the maintenance on the smaller
aircraft. It is not clear where the new B-737s are to be
maintained. They are flying routes in southeast China and there
are some 737 maintenance personnel in Guangzhou.
The Role of Foreign Assistance
We believe that China will depend heavily on foreign
aircraft suppliers for continued expansion of commercial aviation
during the 1980s because its aircraft industry does not now have
a jet passenger plane in serial production. However, China's
aircraft industry is attempting to advance its capabilities
through agreements with foreign firms, especially with US
aircraft manufacturers for whom some Chinese aircraft plants are
producing parts. The Chinese continue to express a preference
for US-built passenger aircraft over those manufactured by other
foreign firms. The Chinese also are more likely to buy from
foreign firms that already are purchasing Chinese produced
parts. Boeing, McDonnell Douglas, and Canadair all buy Chinese
produced parts and have in turn sold aircraft.
China has historically constructed its own airports and
until recently only made limited purchases of foreign navigation
equipment. The new Xiamen airport was constructed with the help
of a long-term loan from Kuwait and the installation of
navigational aids supplied by Northrop's Wilcox Electric
Division. In addition to the ILSs, DMEs, and radars already
purchased from US companies, the Chinese are looking at more US-
built navigational equipment--ILS, VOR, DME, Radar, etc.--for
future airport expansion. However the Chinese also are
contactin other forei n firms.
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SUBJECT: CAAC--Expanding with Western Equipment
Distribution:
White House
1 - Craig Fuller, Assistant to the President for Cabinet Affairs
National Security Counci l
1 - David Laux, Senior Staff Assistant for China, Taiwan and
Hong Kong, Room 302
Department of Commerce
1 - Olin Wethington, Deputy Under Secretary for International
Trade, Rm 3840
1 - H. P. Goldfield, Assistant Secretary for Trade Development,
Rm 3832
1 - Crawford Brubaker, Deputy Assistant Secretary for Aerospace
Rm 6898C
1 - Mitchell F. Stanley, Director of Special Trade Mission, Rm
3832
1 - Byron Jackson, Office of Intelligence Liaison, Rm 6854
1 - Roger Severance, Deputy Assistant Secretary for East Asia &
Pacific, Room 3820
State Department
1 - Bob Price, Director, Office of East-West Trade, Bureau of
Economic and Business Affairs, Rm 3819
1 - Charles Martin, INR/EAP/CH, Rm 8840
1 - Thomas Colwell, Aviation Negotiations Division (EB/DA/AN) Rm
5830
Office of US Trade Representative
1 - John E. Ray, Assistant U.S. Trade Representative, Rm 300
Department of Transportation
1 - Bernard Ramundao, Chief, International Cooperation Division
and Secretarial for Transportation's Office of the
Secretary, Rm 10302
1 - Reggie Bourden, Chief, Office of International Affairs,
Maritime Administration, Rm 7310
Federal Aviation Administration
1 - Frank McCabe, Air Navigation Branch A1A-120, Rm 1026D
Central Intelligence Agency
1 - DDI
1 - Exec. Dir
1 - NIO/EA
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Distribution: (continued)
SUBJECT: CAAC--Expanding with Western Equipment
C/EA~
.C/PES
PDB
CPAS/ILS
D/OEA
Research Director
OEA/Ch/CH
OEA/CH/DEF
OEA/CH/FOR
OEA/CH/DOM
OEA/CH/DEV
FR/R
DDO/EA/
OCR/ ISG----
CPAS/IMC/CB
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