The drone industry is taking off, fueled by a boom in the low-altitude economy. According to the Research Report on the Development of China’s Low-altitude Economy (2024), released by CCID Consulting in April, the scale of China’s civilian drone industry reached RMB 117.43 billion in 2023, up 32 percent year-on-year.
And in 2023, China’s low-altitude economy spiraled to RMB 505.95 billion, with a growth rate of 33.8 percent. Low-altitude aircraft manufacturing and operation services contributed the most to the industry, accounting for nearly 55 percent.
With the gradual formation of the drone industry and related consumer market, the low-altitude economy, generally defined as manned and unmanned activities within airspace below 1,000 meters above the ground, with the possibility of extending to 3,000 meters under special circumstances, is reaching new heights.
A Meituan drone delivers takeouts in a shopping center in Shenzhen on August 21, 2024.
The Drone Industry on the Rise
On July 10, 2024, at the series of press conferences themed “Promoting High-Quality Development” held by the State Council Information Office (SCIO), Song Zhiyong, director of the Civil Aviation Administration of China (CAAC), disclosed that there are currently over 14,000 unmanned aerial vehicle (UAV) companies holding valid certificates for operating civil UAVs, and over 225,000 people holding UAV operator’s licenses in the country.
Behind the figures lay the constantly growing market demand. Jiang Youqi, general manager of Chongqing Haocang Technology Co., Ltd., told China Economic Weekly that in recent years, more and more people have jumped on the bandwagon to learn drone technology during recent years, and many industries have also begun to apply it, such as the lifting industry. “Drones are widely appliable. Over the past two months, we trained a couple of cameramen for a TV station on how to use drones at work,” said Jiang.
They are also selling well. An e-commerce live streaming anchor said that among the products he promoted, the best-selling are drones. “I am currently using drones to attract traffic. 100 drones are normally sold out within a minute,” he said, adding that he sells relatively cheap small drones for photography, which many consumers buy as toys.
According to statistics from CAAC, there were nearly 608,000 newly registered drones in the first half of 2024, an increase of 48 percent compared to the end of last year. The cumulative flight hours of drones reached 9.82 million hours, an increase of 134,000 hours compared to the same period last year.
In addition to the continuous expansion of the drone market, multiple drone industry clusters have also been established nationwide. More than 200 upstream and downstream enterprises in the aviation industry chain are gathered in Wuhu, Anhui Province, one of the first national comprehensive demonstration zones for the general aviation industry.
In south China’s Hainan Province, the aviation industry is also developing rapidly, with businesses such as low-altitude tourism and short-distance transportation on the rise.
Other provinces have followed suit, with policies introduced to promote the development of the drone industry. Southwest China’s Guizhou Province supports UAV test flight bases, while Jiangxi Province encourages research on unmanned power station operation and maintenance systems. Inspired by the trend, many cities have developed advantageous industries. A Zigong Aviation Industrial Park spokesperson told China Economic Weekly that on August 12, Zigong, a city in Sichuan Province, tested its independently developed twin engine unmanned transport aircraft, which has a loading space of 12 cubic meters and a loading capacity of two metric tons.
This successfully tested aircraft can complete over 90 percent of general transportation tasks with just one click of a button, providing support for China to create a new scenario of smart logistics.
The application of drones has injected confidence into the future of low-altitude economy. Luo Jun, executive director of the China Low-Altitude Economy Alliance and secretary general of the Global Low-Altitude Economic Forum, said all regions across China are working together to promote the development of the low-altitude economy, and all related resources are converging towards this field, especially the drone industry.
According to data released by CAAC, China’s low-altitude economy is expected to reach RMB 1.5 trillion by 2025, and RMB 3.5 trillion by 2035.
Replicable Model for Rapid Expansion
So, why are drones so popular? Luo believes that China’s very mature drone technology with good supporting facilities enables the drone industry model to be quickly replicated. Jiang agreed. He said that from the composition of personnel receiving drone training, the number of people learning about small and medium-sized multi-rotor aircraft has doubled compared to two years ago. This indicates that there are more and more practitioners using drones daily for photography, agricultural applications, and even unmanned inspection in industry.
“This is a sign of the increasingly mature drone market,” Luo said.
According to Luo, in the future, only large and medium-sized functional drones would fly over long distances, while drones will develop into models with more endurance, higher payloads, and more prominent functions.
This trend is also in line with the manned aviation industry in the field of low-altitude economy.
For example, the market opened up by drones has brought opportunities to the electric vertical take-off and landing (eVTOL) field. He Tianxing, vice president of Guangzhou EHang Intelligent Technology Co., Ltd., told China Economic Weekly that its eVTOL products have already gained a certain market share globally. For example, the Spanish National Police are now clients. In addition, EHang is also cooperating with Saudi Arabia’s Public Investment Fund (PIF) and in discussions with the Brazilian National Civil Aviation Agency on how to promote the opening up of the country’s low-altitude airspace.
He revealed that in the past few years, over 300 passenger-carrying aircraft sold at US $400,000 each have been delivered, adding that many more orders are forthcoming.
He confidently revealed that their next strategic goal is entering the Latin American market. “In the Middle East, the U.S. companies and EHang each have a share, and in Europe, we have also secured our market position. Next, we will tap into the potential of Latin American countries like Costa Rica.”
A small-sized unmanned aircraft conducts a low-altitude flight demonstration in the Ocean Development Experimental Zone in Zhuhai City, Guangdong Province, on June 28, 2024.
The Need to Stay Realistic
As the scale of UAVs in China increases, local policies are also expanding, which has raised concern about whether the industry has been overdeveloped.
An investor, who wished to remain anonymous, revealed to China Economic Weekly that he had received a drone business order from Pakistan worth over RMB100 million, but his production capacity was insufficient. Therefore, he hoped to cooperate with other companies to complete the order. This raised the issue that many seemingly strong companies are actually assembly plants, and the factories that actually participate in the production of high-precision core components are still those companies in the supply chain of leading drone enterprises.
Luo also said that China is not very competitive so far in the fields of large and medium-sized drones, including military drones. The intense competition in low-threshold sectors has caused many large-scale unmanned aerial vehicle enterprises in China to operate at a loss.
The reason for this, said Luo, is that though the scale of consumer drones in China is relatively large, they do not contain many technologies. Regarding the issue of repetitive investment, he said that the threshold for consumer drones is relatively low and can be gained through assembly. Therefore, a large amount of capital has poured into the field of drone assembly, but what the drone industry truly lacks is technological research and development in areas such as increasing endurance and loading capacity.
Policy guidance is also one of the factors and Luo suggests more mature policy guidance from the government is required.
“Many local governments have set the goals of fostering 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 that coffee takeouts can be quickly obtained through drones. However, without sufficient infrastructure and large-scale application scenarios, the transportation cost of a cup of coffee will reach four digits. Who would spend thousands of yuan on a cup of coffee?” asked Luo. In his opinion, to ensure transportation safety, there needs to be a lot of technical support on the ground, and vehicles may even be arranged to keep track of the drones.
Therefore, to lift the airspace control in China is more than reporting flight routes to relevant authorities. Luo said that the traffic situation in the air is much more complex than on the ground, and more comprehensive traffic rules and corresponding traffic management facilities are needed.
So, can the low-altitude economy be managed in the same manner as civil aviation? The answer also seems to be no.
In fact, there is a fundamental difference between low-altitude flight and civil aviation flight. According to Luo, unmanned aerial vehicles generally fly at altitudes of only a few hundred meters above the ground and only tens of kilometers in distance. They fly point-to-point, with lithium batteries as the main energy sources. While the flight distance of high-altitude civil aviation is thousands of kilometers, and they are powered by traditional fuel. Therefore, the GPS technology used and security requirements are completely different.
A person in the telecommunications industry told China Economic Weekly that in the future, there may be millions of drones flying over a super large city every minute, therefore, rules are very important. As a result, the opening up of airspace must be accompanied by the improvement in communication technology, otherwise frequent collisions between drones will be catastrophic.
There are indeed many restrictions in the field of the low-altitude economy, but they have not affected the imagination of drone application scenarios. Regarding the current formulation of drone traffic rules and infrastructure construction in China, Luo is very optimistic. “Two years is enough for our country to put drones into commercial use,” he said.
He Tianxing said that point-to-point low-altitude transportation can save a lot of time and cost, and if reaching a large scale, it also saves labor costs.
Luo envisioned a scenario where unmanned aerial vehicles could be used to transport supplies between hospitals. For example, the roof of the hospital may be transformed into a drone runway, where emergency drugs, blood, and patients can be quickly handled by drones. Nowadays, many hospitals use traditional helicopters, which are noisy, costly, and almost impossible to use on a regular basis. 
SHI QINGCHUAN is a reporter with China Economic Weekly.
