China now boasts its fair share of the world's multibillion-dollar companies and business tycoons. They drive expensive cars, wear expensive watches, live in expensive homes and work in expensive offices. But there is still one big thing today's high-flying Chinese executive lacks: a corporate jet in which to fly high, let alone smaller general aviation aircraft to fly as a hobby. Despite growing hype about the development of the general aviation industry, it remains stunted.

There's definitely a lot of smoke surrounding the industry right now. Cirrus Aircraft, with capital injected from new parent company China Aviation Industry General Aircraft (CAIGA, the general aviation subsidiary of state-owned Aviation Industry Corporation of China, or AVIC), has announced it is coming to market with the Vision SF50, the world's first civilian single-engine jet aircraft. This will be the first true foreign-Chinese jointly developed new aircraft. Meanwhile, Cessna's partnership with AVIC and the Chengdu government to produce Citations and Caravans in China will develop local production capability. Their plans to jointly develop a large-cabin business jet in the future will lead to eventual domestic development that can influence the industry abroad.

But despite that smoke, fire is in short supply. China still has fewer than 200 registered business jets, and just over 1,500 general aviation aircraft. That includes turbine jets, propeller aircraft and helicopters. Many of those 1,500 aircraft are not modern imports, but rather crop-dusting aircraft, worn Soviet-era trainers and poorly built domestic planes from an earlier era.

By way of comparison, the general aviation industry accounts for greater than 1 percent of America's annual economic output, but only 0.001 percent in China. There are more general aviation operations in one minute in the U.S. than in a whole day in China. Based on statistics on the number of aircraft and hours of use, there is a larger general aviation industry in North Dakota alone than in all of China.

General aviation should be a natural outgrowth of China's broader economic development. Why hasn't it been? Several factors are at play.

Partly it's chicken and egg. Without more aircraft, it's hard to generate investment in other aspects of the industry, including operational infrastructure such as general aviation airports, aircraft operators, flight schools and maintenance. Such investments would tie up capital for five to 10 years, with little certainty as to if or when the industry will ever fully develop. Yet aircraft numbers can't increase proportionally without this kind of ancillary investment.

And although foreign aircraft manufacturers are enthusiastically moving and selling in China, they can't develop a whole industry ecosystem on their own. There is no general aviation culture in China - no method for the public to learn about flying, and underdeveloped flight training. The limited infrastructure can barely support the aircraft already here. The Civil Aviation Administration of China (CAAC) has only a handful of officials and very minimal resources dedicated to general and private aviation.

But the largest problem of all is the airspace management and reform process. Ultimate airspace authority is still vested with the People's Liberation Army Air Force, with all civil traffic subservient to military operations and control. A successful general aviation industry requires giving flyers (whether hobbyists in single-engine propeller planes or busy executives in business jets) the freedom to fly wherever they want, whenever they want. China's current system of airspace management precludes this. More than 75 percent of the airspace is closed to all civil traffic, including both scheduled commercial and private flights.

Reforms were announced in 2010 to liberalize low-altitude airspace by 2015. Yet to date, there have been only a few announced test projects, all in cities that host PLA regional commands, that have yet to proceed. The PLA appears to be reluctant to surrender any control. The U.S. encountered a similar issue 60 years ago, but with the Federal Aviation Act of 1958 made a successful transition from military control to oversight by the civilian Federal Aviation Administration. This created what is now the largest, busiest, freest and safest airspace in the world. Without achieving similar flexibility through liberalization, China's aviation industry will struggle to develop.

Absent discernible movement, the private aviation industry is growing more reserved about its prospects in China compared to its earlier optimism. Those companies have witnessed other industries run into trouble in the face of idiosyncratic regulation, or not succeed at all. At the same time, the gradual recovery of mature aviation markets in the U.S. and Europe after the financial crisis presents opportunities to rebuild proven business at home.

Beijing says it aspires to eventually have a general aviation industry and market comparable to that of the U.S., with its own domestic manufacturing, training and operational capabilities. But this turns out to be easier said than done. If it doesn't start to make tangible progress in implementing reforms, Beijing could itself become the barrier to the growth it desires. Until already approved reforms see full implementation, and relevant government and industry parties can increase cooperation, this will be one economic goal that struggles to get far off the ground.