Working in secret, Chinese aircraft engineers have taken one of the Boeing 707 jetliners bought by China in 1972 and built their own copy of it, according to a foreigner allowed a rare look at the new aircraft.
Aircraft industry sources here say the direct copy of a major American civilian aircraft design without benefit of a license is unprecedented and may be a violation of U.S. export control laws. It tends to confirm the fears of some Western businessmen here that the Chinese plan to save money in the future by copying other high-technology equipment they buy abroad and limit the opportunity for future foreign sales.
The foreign visitor, who asked not to be identified, said he saw the assembled aircraft inside a plant on the outskirts of Shanghai about a month ago. The Chinese have officially designated it the Y10, he said, but some Chinese who noted its resemblance to the American aircraft jokingly refer to it as "the 708."
The visitor said the aircraft had been fitted with four Pratt & Whitney engines identical to those used in China's fleet of 10 Boeing 707s purchased in 1972. China bought about 40 extra engines at the time of the Boeing sale, which aircraft executives said at the time were far more replacement engines than would ordinarily be needed.
The visitor said plant officials told him the new aircraft had undergone structural tests, in which special jacks put stress on the wings, but said that it had not yet been taxied or flown. He got the impression that the Chinese were working on a second 707 copy somewhere else in the factory complex he visited.
A diplomat here said it would not be possible to tell if the Chinese project violated U.S. export control laws unless more was known about the actual equipment inside the aircraft and what was the language of the export control permit issued when the Boeings were sold to China. The permit is the work of an interagency U.S. committee which usually limits the ways high-technology equipment sold abroad can be used.
[Donald Johnson of the East-West trade section of the State Department said, "We try to make the copying of technology as difficult as we can," but he deferred to the Commerce Department for specifics of the Boeing license.]
[Archie Andrews of the Commerce exporter service group said information in the Export Administration Act Licenses is kept confidential to protect the exporters but he thought it would be up to Boeing to contest copying of a 707.]
Eugene Bauer, manager of Boeing's customer-support office in Peking, said he had heard stories about the 707 copy but "it is considered to be some kind of secret." He said he did know that "one of our planes had not been flying for a couple of years and has been in Shanghai." He said it could be used "as some sort of a guide."
Bauer said he had not asked the Chinese about the reports because they were a customer and he sensed such questions would make them feel uncomfortable. The American company recently sold China three Boeing 747 jetliners and is in the midst of what appears to be an intense competition with McDonnell Douglas for a large order of smaller civilian aircraft, the Boeing 737 vs. McDonnell Douglas DC9.
Other Western businessmen have complained that they have been unable to conclude contracts with China for sale of other high-technology equipment, such as antitank weapons, because of what they sense is a Chinese desire to buy just enought items to allow them to make copies without paying for a license.
Chinese have become energetic window-shoppers in world markets, taking as much technical information as they can without making actual purchases. Some foreign businessmen say the Chinese are operating foreign-purchased aircraft at a loss on their domestic and foreign routes to gain experience in operation and maintenace but plan eventually to save foreign exchange earnings by building up their own aircraft industry and buying less overseas.
Bauer said of the 707 copy: "Officially we didn't even know about it and I haven't said anything to the company. As far as my personal opinion goes, I would expect that Boeing would not be concerned because the 707 is really a 1954 design." He said the last commercial 707 was sold two years ago and the company is keeping its assembly line for the aircraft open for a modified version used by the Air Force as a listening and communications aircraft.
The Chinese "wouldn't attempt to build a 747 because it is far too complex a technology," Bauer said. "They are very primitive in a lot of their technology, particularly in manufacturing capacity . . . They probably want to use the airplane as a model, at least for certain parts, but I would hope they would make improvements."
A spokesman for the Chinese Foreign Ministry said he had no information on the Y10 project in Shanghai.
Bauer said the original sales contract for Boeing 707s did not specifically prohibit the Chinese from trying to make a copy of the aircraft. "The way that we keep people from copying is that we do not furnish the drawings, so you have to start from scratch," Bauer said.
That desire seemed to explain China's interest in a proposal by McDonnell Douglas for a joint venture aimed at assembling, and eventually manufacturing completely, DC9 twin-engined airliners in Shanghai. Businessmen here indicate the deal would allow the Chinese to acquire a great deal of new technology from the American firm as its engineers were trained to take over the Shanghai plant operations.
Boeing, however, has made a counteroffer to sell China relatively cheap, early-model versions of its 737. The Chinese could not acquire as much advanced technology under the Boeing proposal, but Boeing has offered to do refurbishing of the aircraft in China and to set up a repair and renovation program that would teach the Chinese new skills. Chinese efforts to build an aircraft industry also have military applications. They created their jet fighter manufacturing facilities by copying Soviet models. Some observers feel Peking's interest in McDonnell Douglas stemmed in part from the hope that the U.S. ban on lethal arms sales to China would be ended and China could buy F15 and F18 fighters made by the company. A Lockheed delegation was also recently in China, apparently to discuss Chinese purchases of cargo planes that could be used for civilian or military purposes.