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Note To China: Get Out of the Airplane Business - Leave it to Boeing and Airbus

Santa Monica, Calif. (TheStreet) -- A new report by the Rand Corporation said China should get out of the aircraft manufacturing business, where it is hopelessly behind Airbus and Boeing (BA_) and losing ground.

Commercial aviation manufacturing "is a huge waste of money for China," said Keith Crane, director of the Rand Environment, Energy and Economic Development program and co-author of the report "The Effectiveness of China's Industrial Policies in Commercial Aviation Manufacturing."

China has already spent more than $7 billion to develop the C919, a narrowbody aircraft. The problem is that "by the time it gets out there in the market, it will be a full generation behind the Boeing 737MAX and the Airbus A320neo," Crane said in an interview.

Being so far behind means that the C919 "will be competing against used aircraft, where you are really in a very tough position," he said. "The bottom of the used aircraft market is scrap value, (where) you just look at how much you can get out of it."