Why should anyone care about aviation in China? Perhaps a better question would be why should China care about aviation? People who know me probably understand why I’m making a big deal about Chinese aviation. I love aviation and I love China! But what about everyone else? Why should we care?

A classic answer suffices here: “Its all about the money.”

Oxford Economics published a study in 2011 entitled “Economic Benefits from Air Transport in China” succinctly explains how important China’s aviation sector is to its economy as well as the rest of the world’s.

Here are just a few takeaways from this important study. First on the overall economic impact to the economy and jobs environment:

“The aviation sector contributes ¥329 billion (0.8%) to Chinese GDP…

The aviation sector supports 4.8 million jobs in China…

¥26.9 billion in tax including income tax…, social security contributions and corporation tax… It is estimated that an additional ¥28.2 billion of government revenue is raised via the aviation sector‟s supply chain and another ¥14.3 billion through taxation of…spending of employees of both the aviation sector and its supply chain.”

As a geographer I found the study’s discussion of the importance of “connectivity” very intriguing. One of the over-arching theories in the discipline of geography is Tobler’s Law. In a nutshell the theory explains that everything is related to everything else, but nearer things are more related to each other than distant things. It may seem intuitive, but distance really can be a make or break obstacle to a business or an economy. Transportation, therefore, is crucial. It can connect businesses with more consumers and other business partners, and even open access to entirely new markets and economies. Air transport effectively makes distant things nearer, and that in turn can fuel further business and economic activity that might otherwise be impossible of too costly or slow to conduct. The Oxford Economics study showed just how important aviation connectivity is to an economy. The following are some selected highlights:

“China‟s integration into the global air transport network transforms the possibilities for the Chinese economy by:

• Opening up foreign markets to Chinese exports
• Lowering transport costs, particularly over long distances, helping to increase competition because suppliers can service a wider area and potentially reduce average costs, through increased economies of scale;
• Increasing the flexibility of labour supply, which should enhance allocative efficiency and bring down the natural rate of unemployment;
• Encouraging Chinese businesses to invest and specialise in areas that play to the economy’s strengths;
• Speeding the adoption of new business practices, such as just-in-time-inventory management that relies on quick and reliable delivery of essential supplies;
• Raising productivity and hence the economy’s long-run supply capacity. It is estimated that a 10% improvement in connectivity relative to GDP would see a ¥25.4 billion per annum increase in long-run GDP for the Chinese economy.”

“2 miles of waterway takes a boat 2 miles; 2 miles of road takes a car 2 miles; 2 miles of railway takes a train 2 miles. But 2 miles of runway will take people anywhere in the world.”