In Shandong, Pingyin’s controversial “selling of the sky” has been halted, and a new “Low Altitude Economic Development Bureau” (referred to as Low Altitude Bureau) was recently established by the Chinese National Development and Reform Commission. The authorities view low altitude economy as a “new growth engine,” but experts point out that China’s airspace has always been controlled by the Chinese Communist military. Now, with the introduction of the Low Altitude Bureau by the National Development and Reform Commission, it is not only to ensure central authorities monopolize relevant economic interests, but also to ensure the safety of Chinese Communist leaders.
According to the official announcement on the Chinese National Development and Reform Commission’s website on December 27, the newly established Low Altitude Bureau is responsible for drafting and organizing the implementation of low altitude economic development strategies, mid- to long-term development plans, and coordinating major issues. The bureau recently held discussions on promoting low altitude infrastructure construction and low altitude intelligent network system construction.
Low altitude economy, as defined officially, refers to activities of low-altitude flights by manned and unmanned aircraft below 3000 meters, serving as a catalyzer radiating various integrated economic forms across multiple sectors.
An industry veteran in mainland China, Xu Zhen, stated on December 30 that low altitude economy was previously known as general aviation. The development of general aviation in the United States is the most mature, having evolved over hundreds of years, with well-established airspace management and surveillance, airport construction distribution, aircraft, and application scenarios. Since 2010-2011, China started general aviation development, still in the pilot phase after 14-15 years, with Shenzhen currently leading in pilot efforts.
The Chinese government work report of March 2024 mentioned “low altitude economy.” Reports suggest that recent announcements from cities like Shanghai, Shenzhen, Guangzhou declared plans to build “Sky Cities,” with Shenzhen already establishing 249 various low altitude take-off and landing facilities. The goal is to have over 1200 low altitude take-off and landing points covering manned flights, logistics transportation, community delivery, and urban governance services by 2026.
Xu Zhen highlights that one of the key factors constraining China’s low altitude economic development is the openness and regulation of airspace use. Currently, China’s airspace management is under military control, managing both civil and military aviation. Due to airspace security concerns, authorities have been hesitant to fully open low altitude control. The current pilot project involving military, civilian, and land-based coordination poses challenges in the division and coordination among government departments such as the Air Force, National Development and Reform Commission, Transportation, Public Security, Industry and Information Technology, and Finance, a top-level design issue of power-hoarding among departments. National-scale implementation remains unlikely, with an emphasis on expanding pilot programs.
Professor Xie Tian from the Aiken School of Business at the University of South Carolina states that China has not yet opened up low altitude economy. In the United States and some European countries, all airspace is for general aviation and is open. For instance, purchasing a propeller-driven small aircraft and obtaining a license is straightforward and inexpensive. With nearly a thousand airports in the United States, once at the airport, take-off is feasible, constituting civilian general aviation. However, China’s general aviation remains closed, with airspace controlled by the Chinese Communist military.
Xu Zhen points out that various deficiencies exist in China’s low altitude economy within the industrial chain. These shortcomings encompass an inadequate number of general aviation airports, unmanned aerial vehicle low altitude landing points, scattered infrastructure like charging stations, urban airspace information systems, airspace management auxiliary systems, flight service station systems, and urban multi-dimensional transportation networks. Moreover, low altitude economy primarily serves as a substitute for traditional sectors, offering limited economic contributions; for instance, using drones for deliveries instead of couriers favors drone manufacturers but leads to significant unemployment among delivery personnel.
In early November of this year, Pingyin County in Jinan, Shandong publicly auctioned a 30-year franchise of low altitude economy operation, won by the state-owned enterprise Shandong Jinyu General Aviation for 924 million yuan, marking the mainland’s first sale of “low-altitude economic franchise rights.” The event sparked controversy, as the region’s government revenue, shifting from land sales to selling the sky, raised concerns among aviation companies about potential future tolls.
However, the Jinan Public Resource Trading Center website issued a correction notice on December 13, announcing that the bidding item was halted, following negotiations between the bidding unit Pingyin County Development and Reform Bureau and the winning unit, Jinyu General Aviation.
Professor Xie Tian emphasizes the potential of low altitude economy. For instance, currently relying on manual delivery workers for deliveries is costly, whereas using drones can significantly reduce expenses. As China is focusing on new quality productivity, there is an evident need for new sources of economic growth, with drone technology being a strength. However, within China’s low altitude economic sphere, it is a new domain. Pingyin’s sale of low altitude sky transportation rights allows some companies to engage in low-altitude drone transportation and other applications, marking an advancement. Nonetheless, full implementation is unlikely due to security concerns acknowledged by the Chinese Communist Party.
“The reason is simple: once civilian aviation is open, someone could fly a small plane with a few grenades into Zhongnanhai or the provincial party committee headquarters, which would lead to the demise of the Chinese Communist Party leaders. They dare not open this because of the massive public grievances and anger in China,” Xie Tian stated.
He further explains that once low altitude economy in China is established, a single county or city purchasing rights could result in aircraft flying across multiple counties, cities, and provinces, requiring nationwide uniformity. The Chinese Communist Party fears that Chinese citizens might use aircraft to distribute leaflets, target party leaders’ homes with bombs, or pour paint on Tiananmen Square. While the Chinese government aims to earn profits, ensuring safety is paramount, thus employing the National Development and Reform Commission to oversee activities.
Moreover, with the National Development and Reform Commission overseeing operations, it can monopolize benefits. Xie Tian mentions that the Chinese Communist Party can grant power monopolies to the second-generation and official offspring and other privileged groups, allowing them to monopolize power and sell the sky under the guise of government authorization, a contributing factor to the cessation of “selling the sky” in Shandong. However, the main concern remains the safeguarding of political power by the Chinese Communist Party.