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The Trump administration placed fifty-eight Chinese companies on the Military End User (MEU) list before leaving office. According to a Feb. 15 article in the U.S. publication Foreign Policy, China’s aviation industry cannot stand without U.S. help.
The companies on the list of “military end users,” released by the Commerce Department on Dec. 21 of last year, are alleged to have ties to the Chinese or Russian militaries, and the U.S. will tighten restrictions on their purchases of U.S. goods and technology. Richard Aboulafia, an aviation analyst with the Teal Group, an aviation industry analyst, wrote to Foreign Policy that the list means China’s aviation industry will need to restart its commercial aircraft development program from scratch. Without Washington’s help, China’s aircraft manufacturing industry would become extremely difficult, giving the United States more power in its dealings with China, and the new Biden administration would have to think carefully about whether to continue to impose sanctions.
Aboulafia noted that China’s aviation industry still relies on foreign companies to sell it equipment parts and technology, and that without foreign company deals, Chinese planes will not be able to fly. He wrote that after decades and tens of billions of dollars of effort, China’s aircraft manufacturing capacity is still very limited, with only a few dozen turboprops and 43 COMAC ARJ21 short- and medium-range passenger aircraft, which together account for less than 0.5 percent of China’s aviation industry.
Although COMAC has announced that it will deliver its first single-aisle C919 passenger jet this year, the C919 has not yet been licensed by the FAA and the European Aviation Safety Agency (EASA), with U.S. companies General Electric and Honeywell as its suppliers. The U.S. media reported in February that the Trump Administration intended to restrict GE’s export of aero engines to China, but GE said it had received an export license. Although COMAC is not on the Commerce Department’s list, Aboulafia believes the list reveals the fact that China’s aggressive civil aviation industry is struggling, with the aim of forcing China to change its strategy and develop its own aviation technology without relying on foreign companies.
Without Western equipment, China’s airliners would be hollow,” Aboulafia says in the article, adding that Beijing has always viewed Western aviation as a source of technology, but that the Chinese government has not respected U.S. intellectual property rights and has repeatedly reported thefts. But he also reminded that aviation trade between the two countries has benefited the U.S. greatly. In 2018, China bought more than 24 percent of Boeing-made planes.
Will the incoming President Biden revoke this list? Aboulafia believes that while Biden is not as bold as his predecessor Trump, he will not easily withdraw a similar list in keeping with his promise to “get tough on the Chinese Communist Party. In the article, he analyzes three possible outcomes if the Biden Administration continues the Commerce Department’s list. One is that Beijing would ultimately agree to comply with the World Trade Organization’s Trade Agreement on Civil Aircraft, and while it might switch to buying Airbus to reduce its dependence on the U.S. aviation industry, China would agree to respect aerospace intellectual property rights and maintain a line between civilian and military air technology applications.
A more likely outcome, according to Aboulafia, would be for Beijing to make some concessions, such as a commitment to respect intellectual property rights in exchange for removing Chinese airlines from the list, and to enhance its national aircraft manufacturing technological capabilities in preparation for future decoupling. And a third possibility is that China will turn to cooperation with Russia to reduce its dependence on U.S. technology. The best course of action for the Biden administration, Aboulafia writes, is to work with other countries to achieve the ultimate U.S. goal of ensuring that China respects free trade and intellectual property rights.
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