Imagine this: During the congested morning rush hour, you casually hop in a "flying taxi" to work, then enjoy a freshly brewed, drone-delivered coffee at the office, isn’t it like a scene in sci-fi movies? 

It may soon become a reality in China, with different types of seemingly futuristic drones delivering packages and takeaway food, work commutes using winged taxis and sightseeing helicopters as a hobby, bolstered by a suite of supportive policies.

Little known before, the low altitude sky is growing increasingly busy, setting the stage for the rise of the low altitude economy and a trillion-yuan market scale, which is gearing up for a "take-off."

China recently issued its first production license for electric vertical take-off and landing (eVTOL) aircraft, further solidifying its position in the global race to broaden commercial applications and win market share in the up-and-coming tech-driven sector.

The EH216-S, an unmanned eVTOL aircraft capable of transporting passengers, received a production certificate from the Civil Aviation Administration of China (CAAC) on April 10, according to the aircraft's Guangzhou-based manufacturer EHang. The craft obtained its type and standard airworthiness certificates - both required for commercial operations - from the CAAC last year.

The licensure marks a breakthrough in China's multi-pronged effort to bolster what it calls the “low altitude economy", a wide range of industries related to manned and unmanned vehicles operating below an altitude of 1,000 meters. 

The low altitude economy was included as a strategic emerging industry at the country's annual central economic work conference in 2023 and written into this year's government work report as a new growth engine. 

The newer and more open low altitude arena, driven by wide adoption of eVTOL aircraft and unmanned aerial vehicles, thus presents a clear path for China to become a world leader in the industry.

New growth engine

While still in its early stages, the low altitude economy has become a consensus among the government, industry, and enterprises as a new engine for economic growth.

The sector grew by 33.8 percent year on year in 2023 to 506 billion yuan (US$70 billion) and is expected to surpass 1 trillion yuan by 2026, according to a report released by a research institute under the Ministry of Industry and Information Technology (MIIT) earlier this month.

In particular, the scale of China's eVTOL industry reached 980 million yuan in 2023 - a year-on-year increase of 77.3 percent - and is projected to reach 9.5 billion yuan in value by 2026. China is expected to account for about 25 to 30 percent of the global eVTOL market in 2030.

A guideline for the general aviation industry released last month showed Beijing aimed to jump-start equipment supply and innovation by 2027, turning aviation into a trillion-yuan market and driving force for low altitude economic growth by 2030.

Han Jun, deputy head of the CAAC, said the low-altitude economy has a long industrial chain and wide applications in the industrial, agricultural, and service sectors. He said the CAAC seeks to simplify application and approval procedures for low altitude flight plans.

According to CAAC data, there were 689 general aviation firms in China as of the end of 2023, with 3,173 general aviation aircraft registered and 451 general aviation airports established.

"The low altitude economy is a frontier fiercely contested among major global economies," according to a low altitude economy development white paper published last month by International Digital Economy Academy in Shenzhen.

The low altitude economy could contribute between 3 trillion yuan (US$422 billion) and 5 trillion yuan to China's economy by 2025, the white paper said.

It added that with its innate digital economic DNA, the low altitude economy is also poised to fully capitalize on the dividends brought about by the development of information technology, digitization and intelligent technologies.

"From an investment perspective, the construction of low altitude infrastructure is poised to drive effective investments with investment-led economic growth as traditional infrastructure investments face growth bottlenecks," the white paper said.

China is also keen for companies to continue making leaps in flying vehicle technology and last year announced a “green aviation” development plan, including for eVTOL. Important measures include setting up economic demonstration zones and test bases for low-flying aircraft. The plan includes the construction of infrastructure to integrate flying vehicles into urban transport and the daily commute.

Vertical mobility, a new-quality productive force in transportation, is building up in China thanks to multiple advantages. The homegrown C919 jetliner provided the local aviation chains with more knowledge about aircraft engineering, safety, and airworthiness. The Beidou navigation and 5G network revolutionized management in low altitude airspace. 

Furthermore, companies like JD.com, SF Express, Meituan, ZT Express, Cainiao, and China Post are increasing their efforts to develop large-scale logistics drones, thereby building an airway logistics network.

Plus, China's technical capacity accumulated in the hardware and telecom sectors has laid a foundation for the industry's fast growth. The country's prosperous electric vehicle manufacturing brought about rich know-how in high-density batteries, high-reliability motors, electronic control, and autonomous driving. 

Farasis Energy, a Chinese battery cell manufacturer, has delivered ternary lithium soft-pack batteries for electric airplane makers. The power batteries have a maximum cruising range of 250 km in a single trip and can realize more than 10,000 cycles.

At Auto Shanghai 2023, battery giant CATL displayed a high-density condensed matter battery and revealed its plan to develop manned electric aircraft jointly with collaborators.

Chengdu-based Aerofugia Tech, a subsidiary of China's EV giant Geely Auto, has received its first purchase order of 100 eVTOLs from Sino Jet, a Chinese business aviation management firm. In February, U.S. Aviation Week listed the flying car maker among the top 10 eVTOL developers in the world.

Cities rush to unlock potential 

While 2024 has been considered the inaugural year for the development of this sector, provinces and cities across China have accelerated its layout, aiming to gain a competitive edge in the emerging industry.

Approximately 20 provinces and cities across the country have prioritized the development of the low altitude economy in 2024, leading to implementation of favorable policies and regulations, attractive funding and subsidies, infrastructure support and suitable sites for eVTOL operations, and paving the way for establishing a sustainable low altitude ecosystem.

In 2021, East China’s Anhui Province received authorization to lead the way in low altitude airspace management reforms, becoming the first province in the Yangtze River Delta to undertake such initiatives. 

EHang entered into a strategic cooperation agreement with the municipal government of Hefei, Anhui Province, in October 2023 for joint development of a low-altitude service ecosystem, which includes a financial support fund of US$100 million by the city government.

The aviation authorities in southwest China's Sichuan Province have streamlined the drone trial flight procedure. Previously, drone enterprises were required to apply for approval seven working days in advance. Now, they can be green-lit with notifications one hour before takeoff.

Since Sichuan kicked off a low altitude pilot project at the end of 2018, more than 630,000 safe flights with roughly 180,000 hours have been recorded in an airspace extending to 7,800 square km across the province.

The CAAC will also support enterprises in carrying out drone logistics distribution pilot projects in provinces including Jiangxi, Guangdong, Shaanxi, and Sichuan.

In the Greater Bay Area, where some of the biggest eVTOL firms are based and has emerged as the world's largest aviation market, local governments are racing to get a head start in the new territory.

Shenzhen, the Chinese city that is home to leading civilian drone maker DJI Technology, released the country's first regulations for the industry around the low altitude economy to support its further development, well-positioning itself to lead China’s foray into the low altitude economy.

The regulations, which have taken effect on Feb. 1, have 61 provisions on infrastructure, flight services, industry applications, technology innovation, and security management. The provisions are designed to guide capital into the industry through direct investment, finance leases, and other methods.

Shenzhen has already issued policies to support the low altitude economy. In December 2023, it rolled out a policy to award up to 20 million yuan every year to companies starting new low altitude logistics and delivery routes in the city.

With up to 1,500 enterprises related to the low altitude economy chain, the value of civilian drones made in Shenzhen reached almost 75 billion yuan in 2022, accounting for 70 percent of the country's total.

Shenzhen is set to build more than 600 takeoff and landing platforms for low-flying aircraft and open over 220 inner-city UAV routes by 2025.

By the end of 2023, China had roughly 2,000 UAVs design or manufacturing enterprises and over 1.2 million registered UAVs. According to the CAAC, these drones flew more than 23 million hours last year, up by 11.8 percent compared with 2022.

According to the National Bureau of Statistics, the manufacturing of intelligent UAVs grew by 18.2 percent from January to February this year.

As unmanned technology and network scale dramatically bring down costs, drones could account for one-third of same-day package deliveries by 2040, suggests a report from L.E.K Consulting.

Neighboring Guangzhou has also actively participated in low altitude economic development initiatives, hosting conferences, forums, and seminars. The city released a set of measures and detailed policies to promote the high-quality development of the low altitude economy, including a subsidy of up to 30 million yuan for eligible low altitude industry projects, in an effort to forge a multibillion-dollar industry cluster.

To boost the development of the low altitude economy industry, Guangzhou will also launch the first unmanned aerial tourist sightseeing route, with more than 10 stations set up across three routes.

Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI 

Sound Editor: Stephanie LI

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

Produced by 21st Century Business Herald Dept. of Overseas News.

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策划、编辑：李艳霞 

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