On Thursday, the U.S. Department of Defense blacklisted nine Chinese companies linked to the Chinese Communist Party’s military, including three in the aviation sector, including Commercial Aircraft Corporation of China (COMAC). Some experts say that COMAC relies on U.S. imports for jet engines and other parts, and if it cannot source key core components from the U.S., China’s dream of building a large airliner may be dead in the water.
The U.S. Department of Defense announced Thursday (Jan. 14) that it has blacklisted nine Chinese companies on a list of Chinese companies owned or controlled by the Communist Party’s military, including three companies in the aviation sector, including Commercial Aircraft Corporation of China (COMAC).
Bloomberg reported on Jan. 15 that the U.S. move to increase sanctions against Chinese companies could threaten China’s dreams of competing with Boeing Co. and Airbus.
COMAC’s C919, which is currently seeking to become a narrow-body alternative to the Boeing 737 and Airbus A320, is still in the testing phase.
Just days before the new U.S. Pentagon list was announced, the Communist Party-backed jet maker made a breakthrough in its efforts to win over Indonesian customers when they agreed to buy the Chinese-made aircraft.
Bloomberg reports that the Indonesian order constitutes some support for the Communist Party’s aerospace dreams.
On Jan. 8, Hong Kong-based China Aircraft Leasing Group Holdings Ltd. said Indonesian airline PT Transnusa Aviation Mandiri will buy 30 ARJ21 regional jets, becoming the first airline outside China to use aircraft made by COMAC.
A COMAC spokesman was not immediately available for comment, Bloomberg reported.
Under a new version of the executive order signed by Trump on Jan. 13, U.S. investors will be barred from buying securities of listed companies and must divest by Nov. 11. While this provision will not affect COMAC, which is not yet listed, Trump’s ban, signed on Nov. 12, 2020, already includes COMAC shareholder China Aviation Industry Corp. as a target of tougher sanctions, including curbing access to cutting-edge technology.
In addition, the U.S. Department of Commerce announced on Jan. 14 that it has expanded another sanctions list, the Military End User (MEU) List, to include COMAC’s Shanghai Aircraft Manufacturing Corporation (SAC) and Shanghai Aircraft Design and Research Institute (SADRI) on a blacklist of prohibited sales, which will subject the two COMAC entities to export controls and tighter restrictions on purchases of U.S. products and technology.
Aviation analyst Shukor Yusof, founder of Endau Analytics, said COMAC’s reliance on U.S. imports for jet engines and other components could be a potential blow to the company.
Yusof said, “China doesn’t have the ability to provide the necessary parts domestically, so they rely heavily on U.S. parts.”
A report by the Center for Strategic & International Studies, a Washington think tank, shows that about 60 percent of COMAC’s major suppliers for the C919 are U.S. companies.
“The engines are the hardest part,” said George Ferguson, senior analyst at Bloomberg Intelligence, “and there are only two major companies available, and both are leading U.S. companies: General Electric (GE) and Raytheon.”
Ferguson said that if COMAC is included in the U.S. Department of Commerce’s list of military end-users, it will be “impossible” to procure engines without a waiver from the U.S. government.
Taiwan‘s “Free Finance” commented that Yusof originally estimated that COMAC’s “domestic” C919 airliner would be delayed until 2022, but if it could not procure key core components from the United States, China’s dream of making a large airliner would be dead in the water.
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