Guangdong China's low-altitude economy gains momentum

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is a dynamic region with major cities like Guangzhou, Shenzhen, Hong Kong, and Macau. As of the latest data, the GBA has over 86 million people. The region is a major economic powerhouse, with a GDP of approximately USD 1.88 trillion. The per capita GDP in this region is over USD 23,300, reflecting its high economic productivity and living standards, making the GBA one of the most economically significant areas in the world.

The GBA aims to foster further economic growth and innovation by developing an “Altitude Economy.” This initiative, endorsed by the central government, imagines a future where drones deliver groceries within minutes, eVTOL aircraft transport critical medical supplies, and autonomous aerial taxis whisk you to your destination. The Low-Altitude Economy is poised to drive economic growth and technological innovation in Southern China. This transformative vision aims to enhance technological advancements and stimulate regional economic expansion.

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA)

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) Includes the cities of Guangzhou, Shenzhen, Hong Kong, and Macau.

Guangzhou, the capital city of Guangdong province, is one of China’s largest and most vibrant cities.
Shenzhen is a sleek modern metropolis that links Hong Kong to China’s mainland. It is known for its rapid economic growth and as a global technology hub,
Hong Kong, a Special Administrative Region of China, is known for its deep natural harbor, towering skyline, and status as a global financial center.
Macau, another Special Administrative Region of China, is located across the Pearl River Delta from Hong Kong. It is known for its unique blend of Portuguese and Chinese cultures, a legacy of its colonial history. Macau is often called the “Las Vegas of Asia” due to its many casinos and luxury resorts.

Pilot Programs and Technological Integration

Guangdong is launching several pilot programs to explore the practical applications of low-altitude flying vehicles. These programs will test the feasibility of using drones and eVTOL (electric vertical take-off and landing) vehicles for services such as freight delivery. Shenzhen, a major city in Guangdong, is particularly active in this area. In July, the local government signed agreements with startups like EHang Holdings Ltd (NASDAQ: EH) and Shanghai AutoFlight Co. Ltd. to pilot their eVTOL vehicles in the city. Ehang recently obtained a production certificate for its EH216-S passenger-carrying eVTOL aircraft, the first globally, paving the way for mass production and commercial operations. EHang’s strategic partnerships with local governments, including a $100 million partnership with the municipal government of Hefei, exemplify the collaborative efforts to build a robust low-altitude economy.

Shenzhen’s initiatives are not limited to pilot programs. In the past year, the city has also established over 600,000 cargo drones and 20,000 helicopter flights, highlighting the practical benefits of these technologies. A supportive regulatory environment and significant investments in infrastructure facilitate this rapid adoption.

Market Potential and Economic Impact

The Low Altitude Economy market size has reached 505.95 billion yuan ($69.9 billion) in 2023. This figure represents a 33.8% year-on-year increase, underscoring the sector’s rapid growth. By 2026, the market will surpass 1 trillion yuan; by 2030, it could reach 2 trillion yuan. Investments in infrastructure, technological advancements, and the expanding commercial applications of eVTOL and drone technologies drive this growth.

The low-altitude economy in the GBA is already substantial, supporting various services, from transportation, cargo delivery, emergency rescue, and power line patrolling to agricultural monitoring and urban transportation. In Shenzhen, drones deliver food, transport emergency medical supplies, and enhance urban security. Shenzhen has established a network of drone delivery routes capable of delivering orders within 15 minutes to destinations within a 3-kilometer radius. This service has been particularly beneficial for providing medical supplies and other critical items quickly and efficiently. These applications demonstrate the practical benefits of low-altitude technologies, which can offer new services to communities.

Infrastructure and Airspace Management

Guangdong’s ambitious plan aims to establish a comprehensive low-altitude airspace management system and complete the necessary infrastructure by 2026. This initiative is about creating new technologies and ensuring these technologies can operate smoothly within an orderly and well-regulated airspace. The region’s planners will coordinate closely with the PLA (People Liberation Army), local governments, and civil aviation authorities to develop a low-altitude airspace classification system and robust flight management protocols.

The development of an internet-connected platform is also central to this initiative. This platform will facilitate communication, navigation, and surveillance for aerial vehicles operating in low-altitude airspace, ensuring safety and efficiency. This infrastructure is crucial for integrating these new technologies into everyday use and maximizing their economic potential.

PLA’s Role in Accommodating the Low-Altitude Economy

Historical Control: The PLA traditionally exercises tight control over Chinese airspace to ensure national security and military readiness. Consequently, they will carefully monitor any increased use of low-altitude airspace by civilian drones, eVTOLs, and private aircraft to prevent interference with military operations.
Sensitive Military Installations: The PLA will insist that civilian air activities do not compromise the security of sensitive military installations. This necessitates stringent airspace management protocols and may lead to more regulations to safeguard these areas.

While the PLA’s involvement is crucial, some argue that it also reflects a strategic move to maintain control over emerging technologies and the commercial benefits they promise. Critics might view this integration as a way for the military to extend its influence into civilian sectors, ensuring that technological advancements align with their national security interests.

To address these considerations, the PLA works collaboratively with civil aviation authorities and local governments to develop infrastructure supporting the low-altitude economy. This includes creating communication and navigation platforms that ensure the safe operation of aerial vehicles. Additionally, the PLA is involved in pilot programs integrating these technologies into civilian applications, ensuring they coexist smoothly with business and commercial airlines.

It would be interesting to see if this new attitude towards low-altitude flights affects Business aircraft travel over China. Currently, operators must deal with large swaths of randomly closed or restricted airspace, necessitating schedule and route adjustments and increasing travel times for private aircraft operators.

This high-level collaboration reflects the strategic importance of the low-altitude economy in China’s broader economic and technological development goals. By working together, military and civilian authorities aim to foster innovation while maintaining national security, highlighting a balanced approach to advancing the commercial aerospace industry.

Strategic Importance and Future Prospects

The Chinese government has outlined several key documents and plans to support the development of the low-altitude economy, aiming to transform it into a significant growth engine.

14th Five-Year Plan for General Aviation Development: Issued by the Civil Aviation Administration of China (CAAC), this plan includes a roadmap for urban air mobility, UAV (unmanned aerial vehicle) operations, and drone logistics. The document emphasizes the development of critical technologies and the establishment of infrastructure to support these initiatives. For more details, refer to the full text of the 14th Five-Year Plan for General Aviation Development here.
The 2024 Government Work Report recognized the Low Altitude Economy as a new growth engine. The report commissioned by Premier Li Quing, Premier of the State Council of the People’s Republic of China, highlights the “low-altitude economy” and “commercial spaceflight” as a key emerging industry and a new growth engine. This economy focuses on developing activities and services within low-altitude airspace, including manned and unmanned aerial vehicles like drones and flying cars. Key points regarding the low-altitude economy from the 2024 report include. For more details, you can refer to the full text of the 2024 government work report here.

Key Challenges in Developing China's Low-Altitude Economy

As China aims to develop its low-altitude economy, it must address several critical challenges. Overcoming these challenges is essential to create a safe and efficient system that supports innovation and ensures public safety. Some of these challenges include:

Regulations and Standards

Establishing comprehensive regulations for airworthiness, pilot certification, maintenance
Continuously updating frameworks for new technologies

Unified Airspace Management

Coordinating national, regional, and local authorities
Creating a unified airspace control system

Safety Protocols

Ensuring collision avoidance and redundancies
Developing and enforcing stringent safety standards

Infrastructure

Robust communication networks for real-time data
Accurate GPS/navigation for precise maneuvering
Take-off/landing sites requiring major investment

Environmental and Social Impacts

Managing noise, privacy, and environmental effects
Clear data usage guidelines and green technologies

Market Readiness

High costs limiting widespread eVTOL/drone adoption
Building public trust by demonstrating safety/reliability

Training and Emergency Response

Developing protocols for operators and emergencies
Rigorous certification and training programs

Overcoming these regulatory, safety, infrastructure, and social challenges through collaboration between the military, aviation authorities, and governments is crucial for safely integrating new technologies.

Conclusion

The rapid development of China’s low-altitude economy is driven by robust support from the central government and proactive initiatives at the provincial level. Approximately 20 provinces and cities have implemented favorable policies, funding, and infrastructure support to foster this emerging market. Guangdong’s low-altitude economy is a prime example of this forward-thinking initiative, leveraging cutting-edge technologies and close collaboration between government and industry. As Guangdong continues to build its infrastructure and refine its regulatory framework, it is poised to become a global leader in urban air mobility, driving economic growth and technological innovation for years.