In Depth: Getting China’s Low-Altitude Economy Off the Ground

Chinese policymakers are actively exploring the potential of the "low-altitude economy" as a means to stimulate economic growth. This emerging sector, highlighted in Premier Li Qiang's report at the "Two Sessions" in March, encompasses industries like unmanned drones and electric vertical take-off and landing (eVTOL) aircraft applied in transportation, logistics, tourism, and vehicle manufacturing [para. 1][para. 2][para. 3]. Despite technological challenges, there are significant developments such as the Civil Aviation Administration of China (CAAC) taking control over low-altitude airspace from the PLA Air Force [para. 4].

China is already a global leader in drone technology, spearheaded by companies like SZ DJI Technology Co. Ltd. The government aims to leverage this expertise to enhance other sectors including delivery services and tourism [para. 5][para. 6]. However, there are concerns regarding airworthiness certifications for eVTOLs and safety issues linked to autonomous technologies [para. 7][para. 8]. Additionally, integrating drone monitoring with general air traffic control remains unresolved [para. 9].

Despite these challenges, the low-altitude economy was recognized as a key strategic industry during China’s central economic work conference last December. Plans include trial commercial use of eVTOLs by 2025 and widespread use of unmanned aerial vehicles for city goods transport by 2035 [para. 10]. Global competition in developing flying cars is intensifying with major companies like Boeing, Airbus, and several automotive giants entering the market. Morgan Stanley estimates this market could reach $1.5 trillion by 2040 [para. 11].

In terms of airspace management reforms, CAAC opened two bands of low-altitude airspace zones for drones and eVTOL craft in December under a new classification system that also includes regulated zones over civil airports among others [para. 12][para. 13]. These changes signify a major shift from past practices dominated by military control.

Local governments are also supporting this initiative; Shenzhen is positioning itself as an urban air mobility hub with incentives for flying-car manufacturers. Other cities like Hefei have established significant partnerships with companies like EHang Holdings Ltd., which recently received airworthiness certification from CAAC for its EH216-S model—marking it as potentially leapfrogging international competitors in eVTOL technology [para. 14][para. 15].

However, operational limitations remain—for instance, EHang's EH216-S cannot fly over water or densely populated areas during initial stages. The company aims to lift these restrictions eventually to enable comprehensive unmanned operations across urban areas [para. 16]. Moreover, there's an urgent need for a unified air traffic management platform capable of integrating both manned and unmanned aerial vehicles to ensure safety amid increasing air traffic volumes [para. 17][para. 18].

Overall, while China’s push into the low-altitude economy presents promising economic opportunities and technological advancements, it also faces significant regulatory, safety, and integration challenges that need addressing to fully realize its potential.