Laos, a key ally of China in Asia, has shown interest in Beijing’s domestically produced commercial aircraft. This development comes as the Southeast Asian country struggles with a significant debt crisis resulting from Chinese loans.

Chinese Premier Li Qiang promoted these aircraft during a recent Southeast Asia tour. In a joint communique released on October 12, China acknowledged Laos’ intention to collaborate on commercial aircraft.

This strategic partnership aligns with China’s Belt and Road Initiative and Laos’ ambition to transition from being “landlocked to land-linked,” enhancing regional connectivity and economic collaboration.

The communique noted, “China appreciates Laos’ interest in and intention to cooperate on Chinese commercial aircraft and welcomes Laos’ aviation enterprises to introduce these aircraft.”

It further outlined China’s willingness to offer technical support and develop a customer service network for these commercial aircraft operations.

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The communique did not specify whether Laos is interested in the narrowbody C919 passenger jet or the regional ARJ21, both produced by the state-owned Commercial Aircraft Corporation of China (Comac).

However, over the past year, Beijing has enhanced its efforts to attract customers for the C919 aircraft. China’s push to establish a foothold in the Southeast Asian aviation market is underscored by its ongoing efforts to promote the C919 narrowbody passenger jet.

COMAC has secured over 1,000 orders from domestic airlines since the C919 began commercial operations in May 2023. Although 10 units have been delivered so far, including eight to China Eastern Airlines, the absence of international deals for the C919 has been notable.

There were reports of potential negotiations with Brazil-based Total Linhas Aereas for four aircraft, but no concrete agreements have emerged.

Moreover, to bolster production capabilities, Comac has launched a second assembly line at its Shanghai factory.

Zhang Yujin, the deputy general manager, stated that the C919’s annual production capacity is expected to reach 150 within five years, signaling China’s ambition to establish its aircraft as a competitive player in the global market.

Laos, A Potential Market For Chinese Aircraft?

China is promoting its domestically developed aircraft, especially the C919, as a viable option for Southeast Asia, with Laos serving as a crucial pathway for this growth. With its proximity and strong economic ties with China, the Southeast Asian region is an ideal market for Chinese commercial aviation.

This push comes amid China’s growing ambitions to break the global aviation duopoly of Boeing and Airbus, with the C919 and ARJ21 at the forefront.

Earlier this year, the Shanghai-based aircraft manufacturer conducted demonstration flights of the C919 and ARJ21 in several Southeast Asian countries, including Cambodia, Indonesia, Laos, Malaysia, and Vietnam.

This came after the C919 made its international debut at Singapore’s largest regional aviation event, highlighting China’s intent to tap into Southeast Asia’s rapidly growing aviation market.

Southeast Asia, with its close economic ties to China and shared aircraft certification agreements, is a natural fit for the C919.

The aircraft, frequently described as China’s equivalent of the Boeing 737 and the Airbus A320 family, is attracting increased interest, especially following Boeing’s recent safety issues.

Southeast Asian airlines, renowned for their expansive budget airline networks, might consider the C919 as a cost-efficient and dependable alternative to established Western manufacturers.

Laos, in particular, stands out as a potential launchpad for Chinese aircraft in the region. The country has already signed a bilateral memorandum of understanding with China, accepting the certification of its aviation regulator.

This agreement opens the doors for the C919’s potential entry into the Laotian aviation market, which could have widespread effects throughout the region. Moreover, China is Laos’ largest foreign investor, with substantial economic cooperation across various sectors, including agriculture, electric vehicles, tourism, and energy.

However, Laos’ heavy reliance on China has created financial vulnerabilities. The country is grappling with a major debt crisis, with over half of its external government debt owed to China.

As of last year, Laos’ total public and publicly guaranteed debt stood at $13.8 billion, or 108% of its GDP. Much of this debt stems from infrastructure projects financed under China’s Belt and Road Initiative (BRI), including railways, highways, and hydroelectric dams.

While China has offered assistance in managing Laos’ debt, concerns about the long-term sustainability of such loans persist. Laos deferred $670 million in payments last year, offering temporary relief, but the broader economic impact remains uncertain.

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