Buzzing Drones Boost Economy

THE drone industry is taking off， fueled by aboom in the low-altitude economy. Accordingto the Research Report on the Developmentof China’s Low-altitude Economy（2024） ， released by CCID Consulting in April， thescale of China’s civilian drone industry reached RMB117.43 billion in 2023， up 32 percent year-on-year.

And in 2023， China’s low-altitude economy spiraledto RMB 505.95 billion， with a growth rate of33.8 percent. Low-altitude aircraft manufacturingand operation services contributed the most to theindustry， accounting for nearly 55 percent.

With the gradual formation of the drone industryand related consumer market， the low-altitude economy，generally defined as manned and unmannedactivities within airspace below 1，000 meters abovethe ground， with the possibility of extending to 3，000meters under special circumstances， is reaching newheights.

The Drone Industry on the Rise

On July 10， 2024， at the series of press conferencesthemed “Promoting High-Quality Development”held by the State Council Information Office （SCIO），Song Zhiyong， director of the Civil Aviation Administrationof China （CAAC）， disclosed that there arecurrently over 14，000 unmanned aerial vehicle （UAV）companies holding valid certificates for operatingcivil UAVs， and over 225，000 people holding UAVoperator’s licenses in the country.

Behind the figures lay the constantly growingmarket demand. Jiang Youqi， general manager ofChongqing Haocang Technology Co.， Ltd.， toldChina Economic Weekly that in recent years， moreand more people have jumped on the bandwagonto learn drone technology during recent years， andmany industries have also begun to apply it， suchas the lifting industry. “Drones are widely appliable.Over the past two months， we trained a couple ofcameramen for a TV station on how to use drones atwork，” said Jiang.

They are also selling well. An e-commerce livestreaming anchor said that among the products hepromoted， the best-selling are drones. “I am currentlyusing drones to attract traffic. 100 drones are"normally sold out within a minute，” he said， addingthat he sells relatively cheap small drones for photography，which many consumers buy as toys.

According to statistics from CAAC， there werenearly 608，000 newly registered drones in the firsthalf of 2024， an increase of 48 percent compared tothe end of last year. The cumulative flight hours ofdrones reached 9.82 million hours， an increase of134，000 hours compared to the same period last year.

In addition to the continuous expansion of thedrone market， multiple drone industry clusters havealso been established nationwide. More than 200 upstreamand downstream enterprises in the aviationindustry chain are gathered in Wuhu， Anhui Province，one of the first national comprehensive demonstrationzones for the general aviation industry.

In south China’s Hainan Province， the aviationindustry is also developing rapidly， with businessessuch as low-altitude tourism and short-distancetransportation on the rise.

Other provinces have followed suit， with policiesintroduced to promote the development of the droneindustry. Southwest China’s Guizhou Province supportsUAV test flight bases， while Jiangxi Provinceencourages research on unmanned power stationoperation and maintenance systems. Inspired bythe trend， many cities have developed advantageousindustries. A Zigong Aviation Industrial Parkspokesperson told China Economic Weekly that onAugust 12， Zigong， a city in Sichuan Province， testedits independently developed twin engine unmannedtransport aircraft， which has a loading space of 12cubic meters and a loading capacity of two metrictons.

This successfully tested aircraft can complete over90 percent of general transportation tasks with justone click of a button， providing support for China tocreate a new scenario of smart logistics.

The application of drones has injected confidenceinto the future of low-altitude economy. Luo Jun， executivedirector of the China Low-Altitude EconomyAlliance and secretary general of the Global Low-AltitudeEconomic Forum， said all regions across Chinaare working together to promote the development ofthe low-altitude economy， and all related resourcesare converging towards this field， especially thedrone industry.

According to data released by CAAC， China’s lowaltitudeeconomy is expected to reach RMB 1.5 trillionby 2025， and RMB 3.5 trillion by 2035.

Replicable Model for Rapid Expansion

So， why are drones so popular？ Luo believes thatChina’s very mature drone technology with good supportingfacilities enables the drone industry modelto be quickly replicated. Jiang agreed. He said thatfrom the composition of personnel receiving dronetraining， the number of people learning about smalland medium-sized multi-rotor aircraft has doubledcompared to two years ago. This indicates that thereare more and more practitioners using drones dailyfor photography， agricultural applications， and evenunmanned inspection in industry.

“This is a sign of the increasingly mature dronemarket，” Luo said.

According to Luo， in the future， only large andmedium-sized functional drones would fly over longdistances， while drones will develop into models withmore endurance， higher payloads， and more prominentfunctions.

This trend is also in line with the manned aviationindustry in the field of low-altitude economy.

For example， the market opened up by drones hasbrought opportunities to the electric vertical take-offand landing （eVTOL） field. He Tianxing， vice presidentof Guangzhou EHang Intelligent Technology Co.， Ltd.，told China Economic Weekly that its eVTOL productshave already gained a certain market share globally.For example， the Spanish National Police are nowclients. In addition， EHang is also cooperating withSaudi Arabia’s Public Investment Fund （PIF） and indiscussions with the Brazilian National Civil AviationAgency on how to promote the opening up of thecountry’s low-altitude airspace.

He revealed that in the past few years， over 300passenger-carrying aircraft sold at US $400，000 eachhave been delivered， adding that many more ordersare forthcoming.

He confidently revealed that their next strategicgoal is entering the Latin American market. “In theMiddle East， the U.S. companies and EHang eachhave a share， and in Europe， we have also secured ourmarket position. Next， we will tap into the potential ofLatin American countries like Costa Rica.”

The Need to Stay Realistic

As the scale of UAVs in China increases， localpolicies are also expanding， which has raised concernabout whether the industry has been overdeveloped.

An investor， who wished to remain anonymous，revealed to China Economic Weekly that he hadreceived a drone business order from Pakistan worthover RMB100 million， but his production capacitywas insufficient. Therefore， he hoped to cooperatewith other companies to complete the order. Thisraised the issue that many seemingly strong companiesare actually assembly plants， and the factoriesthat actually participate in the production of highprecisioncore components are still those companiesin the supply chain of leading drone enterprises.

Luo also said that China is not very competitiveso far in the fields of large and medium-sized drones，including military drones. The intense competitionin low-threshold sectors has caused many large-scaleunmanned aerial vehicle enterprises in China tooperate at a loss.

The reason for this， said Luo，is that though the scale of consumerdrones in China is relativelylarge， they do not containmany technologies. Regardingthe issue of repetitive investment，he said that the thresholdfor consumer drones is relativelylow and can be gained throughassembly. Therefore， a largeamount of capital has pouredinto the field of drone assembly，but what the drone industrytruly lacks is technological researchand development in areas such as increasingendurance and loading capacity.

Policy guidance is also one of the factors andLuo suggests more mature policy guidance from thegovernment is required.

“Many local governments have set the goals offostering a drone industry of tens of billions of yuan，but to achieve them， we must first realize large-scale（drone） flights. For example， a city once claimed thatcoffee takeouts can be quickly obtained throughdrones. However， without sufficient infrastructureand large-scale application scenarios， the transporta-tion cost of a cup of coffee will reach four digits. Whowould spend thousands of yuan on a cup of coffee？”asked Luo. In his opinion， to ensure transportationsafety， there needs to be a lot of technical support onthe ground， and vehicles may even be arranged tokeep track of the drones.

Therefore， to lift the airspace control in China ismore than reporting flight routes to relevant authorities.Luo said that the traffic situation in the air ismuch more complex than on the ground， and morecomprehensive traffic rules and corresponding trafficmanagement facilities are needed.

So， can the low-altitude economy be managed inthe same manner as civil aviation？ The answer alsoseems to be no.

In fact， there is a fundamental difference betweenlow-altitude flight and civil aviation flight. Accordingto Luo， unmanned aerial vehicles generally flyat altitudes of only a few hundred meters above theground and only tens of kilometers in distance. Theyfly point-to-point， with lithium batteries as the mainenergy sources. While the flight distance of highaltitudecivil aviation is thousands of kilometers， andthey are powered by traditional fuel. Therefore， theGPS technology used and security requirements arecompletely different.

A person in the telecommunications industry told"China Economic Weekly that in the future， there maybe millions of drones flying over a super large cityevery minute， therefore， rules are very important. As aresult， the opening up of airspace must be accompaniedby the improvement in communication technology，otherwise frequent collisions between drones willbe catastrophic.

There are indeed many restrictions in the field ofthe low-altitude economy， but they have not affectedthe imagination of drone application scenarios. Regardingthe current formulation of drone traffic rulesand infrastructure construction in China， Luo is veryoptimistic. “Two years is enough for our country toput drones into commercial use，” he said.

He Tianxing said that point-to-point low-altitudetransportation can save a lot of time and cost， and ifreaching a large scale， it also saves labor costs.

Luo envisioned a scenario where unmanned aerialvehicles could be used to transport supplies betweenhospitals. For example， the roof of the hospital may betransformed into a drone runway， where emergencydrugs， blood， and patients can be quickly handledby drones. Nowadays， many hospitals use traditionalhelicopters， which are noisy， costly， and almost impossibleto use on a regular basis.