That could reshape aviation and economic dynamics in Southeast Asia, Laos has expressed keen interest in acquiring Chinese-manufactured commercial aircraft. This comes as the country struggles with an immense debt burden, largely stemming from Chinese infrastructure loans. The move is seen as both an opportunity and a challenge, as Laos navigates its financial crisis while deepening its reliance on China.
Chinese Premier Li Qiang played a pivotal role in promoting these aircraft during a Southeast Asia tour. A joint communique released on October 12 highlighted Laos’ intention to cooperate with China on commercial aviation, a development that aligns with China’s Belt and Road Initiative (BRI) and Laos’ aspiration to transition from being a “landlocked” to a “land-linked” nation.
The communique emphasized the importance of the aviation sector in bolstering regional connectivity and economic growth. “China appreciates Laos’ interest in and intention to cooperate on Chinese commercial aircraft and welcomes Laos’ aviation enterprises to introduce these aircraft,” it noted. Furthermore, China committed to providing technical support and establishing a customer service network for these aircraft, a step that could bolster the Southeast Asian country’s fledgling aviation sector.
The partnership between Laos and China on commercial aviation reflects a broader strategic alignment. It taps into China’s ambition to promote its domestically produced aircraft—particularly the narrowbody C919 and the regional ARJ21—as viable alternatives to the global dominance of Western aircraft manufacturers Boeing and Airbus. These ambitions are especially significant in the context of China’s Belt and Road Initiative, which seeks to foster economic and infrastructure links across Asia, Africa, and Europe.
For Laos, improving its aviation infrastructure and capabilities is crucial for the country’s goal of enhancing regional connectivity. By transforming itself into a “land-linked” nation, Laos aims to reduce its historical isolation and foster closer trade and transportation ties with its neighbors. This fits well with China’s grand infrastructure vision, where aviation can complement existing rail and road networks built under the BRI.
Laos’ interest in Chinese aircraft is also motivated by practical concerns, as the country seeks cost-effective and efficient ways to develop its aviation sector. Chinese aircraft, particularly the C919, are pitched as affordable alternatives for countries looking to expand their aviation capabilities without relying on Western-made planes.
While the communique did not explicitly state whether Laos is interested in the narrowbody C919 or the regional ARJ21, the focus on the C919 reflects China’s broader efforts to promote this aircraft in Southeast Asia and beyond. Produced by the state-owned Commercial Aircraft Corporation of China (Comac), the C919 is seen as China’s answer to the Boeing 737 and Airbus A320, both of which dominate the global narrowbody aircraft market.
Since the C919 began commercial operations in May 2023, Comac has secured over 1,000 orders, primarily from domestic airlines. Although only 10 units have been delivered thus far—including eight to China Eastern Airlines—China’s ambitions for the aircraft are global. Yet, securing international customers has been a challenge. There were reports of negotiations with Brazil-based Total Linhas Aereas for four aircraft, but no concrete deals have emerged.
Comac’s efforts to expand production capacity are notable. A second assembly line was launched at the Shanghai factory, and according to Zhang Yujin, deputy general manager of Comac, the company expects to produce 150 C919 aircraft annually within the next five years. This signals China’s determination to carve out a significant share of the global aviation market, positioning the C919 as a serious competitor to Western models.
The promotion of the C919 to Southeast Asian nations, including Laos, represents a calculated move to gain traction in a region that is increasingly central to China’s economic and strategic interests.
Southeast Asia, with its burgeoning aviation industry and rapid economic growth, is a prime market for China’s aviation ambitions. Countries in the region have close economic ties with China and have signed various aviation agreements, making them ideal candidates for Chinese aircraft like the C919 and ARJ21.
Laos stands out in this context as a potential launchpad for Chinese aircraft in the broader Southeast Asian market. The two nations already share a robust economic relationship, with China being Laos’ largest foreign investor. In fact, Laos has signed a bilateral memorandum of understanding with China that includes the recognition of China’s aviation certification, thereby opening the door for the potential entry of the C919 into the Laotian market.
The strategic location of Laos, nestled between several ASEAN nations, makes it an attractive partner for China as it seeks to promote its aircraft. Moreover, the partnership could strengthen Laos’ connectivity with its neighbors and provide new opportunities for tourism and trade, both of which are essential for the country’s economic recovery.
However, Laos’ growing reliance on China also comes with significant financial risks. The Southeast Asian country is currently grappling with a severe debt crisis, and over half of its external debt is owed to China. As of 2023, Laos’ total public and publicly guaranteed debt stood at $13.8 billion, which is 108% of its GDP.
A substantial portion of this debt is linked to infrastructure projects under the BRI, including the Laos-China railway, highways, and hydroelectric projects. While these projects are designed to enhance Laos’ connectivity and economic prospects, they have also placed a heavy financial burden on the government.
In an effort to manage the crisis, Laos deferred $670 million in debt payments last year. However, concerns about the long-term sustainability of such debt remain. China has offered assistance, but questions linger over whether Laos can continue to manage its obligations without sacrificing its economic sovereignty.
The decision to collaborate with China on commercial aviation may be seen as a way to offset some of these financial pressures, as the country looks for new revenue streams through its aviation sector. However, there is also the risk that this partnership could deepen Laos’ financial dependence on Beijing, especially if the aviation venture does not deliver the expected economic benefits.
China’s efforts to promote the C919 and ARJ21 in Southeast Asia go beyond Laos. Earlier this year, Comac conducted demonstration flights of both aircraft in several Southeast Asian countries, including Cambodia, Indonesia, Malaysia, and Vietnam. This came on the heels of the C919’s international debut at Singapore’s largest regional aviation event, signaling China’s intent to tap into the region’s rapidly growing aviation market.
Southeast Asia, with its extensive network of low-cost airlines, represents a lucrative market for narrowbody jets like the C919. The region’s airlines are constantly looking for cost-effective solutions to meet growing demand, particularly as air travel rebounds in the post-pandemic world. Chinese aircraft offer a potentially cheaper alternative to Boeing and Airbus models, which have dominated the market for decades.
The C919 is often described as China’s equivalent of the Boeing 737 or Airbus A320, both of which are widely used by budget carriers in Southeast Asia. With Boeing facing recent safety issues and delays in delivering new aircraft, Chinese manufacturers may find an opportunity to capture a share of the market.
Additionally, China’s shared certification agreements with several Southeast Asian nations make it easier for Chinese aircraft to enter these markets. Laos, having already accepted Chinese aviation certification, could serve as a model for other nations in the region to follow.
The deepening aviation partnership between Laos and China has far-reaching implications for the region. If successful, it could pave the way for broader adoption of Chinese aircraft in Southeast Asia, thereby enhancing China’s influence in the region’s aviation sector. This would also strengthen China’s position as a global player in the aviation industry, challenging the long-standing dominance of Boeing and Airbus.
However, much depends on the success of the C919 and ARJ21 in terms of performance, reliability, and cost-effectiveness. Southeast Asian airlines, known for their competitive pricing models, will be looking for aircraft that offer not only affordability but also durability and efficiency. If Chinese aircraft can meet these criteria, they may well become a viable alternative for airlines in the region.
For Laos, the partnership with China offers both opportunities and risks. While the potential for economic growth through enhanced aviation connectivity is significant, the country must carefully manage its financial relationship with China to avoid falling deeper into debt.
