Sunday, February 16, 2025

The Silent Dragon Flight

By Cdr Rahul Verma (r)

Cdr.Rahul Verma(r)
Former TDAC, Indian Navy

In the complex tapestry of global geopolitics, the silent yet strategic expansion of China’s influence in the aviation sector has become a pressing concern for democratic nations worldwide. As the dragon extends its wings in flight, democratic leaders must grapple with consequences of intricate challenges. The People’s Republic of China, led by the Chinese Communist Party (CCP), has emerged as America’s primary strategic competitor. All thinktanks across the globe now recognize this reality. Leveraging growing economic, technological, and military means, the CCP is expanding China’s power and influence internationally including by revising international norms and institutions. Beijing’s strategy of military-civil fusion (MCF) plays a core role in this global campaign.

Since 2020, the U.S. Department of Defense (DoD) has identified 44 Chinese companies that operate in the United States and have ties to the People’s Liberation Army (PLA). They include traditional Chinese defense contractors as well as companies that specialise in information technology (IT), engage in commercial business, and operate in legacy industrial domains. Most are state-owned enterprises. All are state supported. Every one of the 44 companies deploys internationally in accordance with Beijing’s global “Go Out” offensive to acquire strategically important technology. MCF is a national-level Chinese strategy with a corresponding institutional apparatus, designed to fuse military and civilian actors, resources, and positioning for the sake of overarching national power. The term “military-civil fusion” emerged in the late 1990s under Hu Jintao, then-vice chairman of the CCP’s Central Military Commission. MCF entails the two-way transfer of technology, resources, and information between military and civilian entities. The MCF strategy also uses international commercial and civilian, as well as military, positioning for coercive ends. At the broadest level, MCF is intended to strengthen all elements of China’s national power by fusing economic, military, and social governance. MCF provides China with a diverse array of levers for influence and coercion. Dominance in certain supply chains, like engines, avionic components, datalinks might be used to compel a state or company to cave to Beijing’s geopolitical agenda.

The National Security Conundrum

The People’s Republic of China, under the guidance of the Chinese Communist Party (CCP), has emerged as a formidable global competitor, particularly in the aviation domain. The cross-border mergers-and-acquisitions spree, primarily focused on small and medium-sized aviation companies, raises fundamental questions about national security. The intricate ties between civilian and military applications in the aviation industry create a complex landscape where the strategic intentions of these acquisitions blur the lines between economic advancement and potential military leverage. As democratic nations grapple with the evolving landscape of national security threats, the infusion of Chinese capital and technology into critical aviation sectors demands scrutiny. The dual-use nature of acquired technologies, particularly in areas like propulsion systems, avionics, navigation systems, and composite materials, heightens concerns about unintended military applications. Military Leaders must reassess and fortify screening processes to ensure that economic cooperation does not inadvertently compromise national security interests.

China Inc. sometimes seems unstoppable. The perception is understandable; no other nation has come close to matching the economic strides China has made since the late 1970s. The changes in the country have been so rapid and dazzling, that it sometime seems magical. The cross-border mergers-and-acquisitions spree that Chinese companies went on in the past decade bears ample testimony to that. As of 2023, Chinese acquisitions have been limited to small and medium sized aviation companies, all of which were worth under four hundred million euros (and a strong majority under one hundred million) when acquired. One of the earliest acquisitions, Austria-based FACC by AVIC’s Xi’an Aircraft Corporation in 2009, also marked the first M&A operation implying a Western tier-one supplier to Boeing and Airbus. Chinese acquisitions have mostly focused on general aviation, especially in the early years, some of the details as available online is shown below:

Fig. 1 – Timeline of the larger Chinese acquisitions of Western aviation companies (>1M turnover)(courtesy hello@china-aerospace.blog)

Why the intense focus on the General Aviation

Although benefits in terms of product support, international marketing or industrial efficiency may be learned through general aviation companies, analysts have stated that technologies involved are usually of no interest for commercial or military aircrafts (piston engines, different certification standards, etc. The most important factor for the focus on GA, as per my perception, could be the screening process of national governments regarding acquisitions in the defense sector. Many aerospace suppliers have contracts with both commercial and military projects, and mechanisms like the CFIUS are likely to block any acquisitions straying too close to national security, thus leaving essentially only GA open to foreign acquirers. AVIC’s international technology acquisition strategy is echoed by its JV policy on the mainland, in the supplying of parts for Chinese indigenous aircrafts. The multiple JVs set up by AVIC with foreign players for supplying the COMAC C 919 aircraft for example were characterized by “encouraged technology transfer” and a quasi-obligation to have production located in China. But there is an underline factor, that all these acquired companies, also supply engines, parts, components to Civil Aviation as well as Military Aviation industry too. So, strategically knowledge of these is also moving to Mainland China.

Supply Chain Dynamics

China’s acquisitions in the aviation industry extend beyond individual companies, they strategically penetrate global supply chains. The acquisition of General Aviation (GA) companies, which often serve as key suppliers in the broader aviation ecosystem, provides China with a foothold in critical components and technologies. The repercussions are felt throughout the supply chain, affecting both military and commercial aviation sectors.

The resilience and security of supply chains become paramount considerations for democratic nations. Dependence on Chinese-owned or influenced companies in the supply chain introduces vulnerabilities that could be exploited for strategic leverage. Government must engage in a comprehensive assessment of the supply chain to identify and mitigate potential risks, ensuring that the nation’s aviation capabilities remain secure and untethered from external pressures.

Spare Management Challenges

The acquisition of aviation companies by China raises questions about spare parts management, a crucial aspect of maintaining operational readiness in both military and commercial aviation. With Chinese entities controlling key suppliers, the availability and reliability of spare parts come under scrutiny.

Military Leaders must navigate the delicate balance between cost-effectiveness and operational resilience. The consolidation of spare parts manufacturing and distribution under Chinese ownership introduces a layer of complexity, necessitating strategic planning to mitigate the risks associated with potential disruptions. A failure to address these challenges could compromise the readiness of aviation fleets, with far-reaching consequences for national defence and economic stability.

Electronic and Coercive Power

China’s strategic acquisitions in the aviation sector extend beyond technology transfer; they position Beijing to exert coercive power through geolocation capabilities. The Beidou satellite navigation system, developed with both military and civilian applications in mind, underscores China’s ambitions to assert control over critical geospatial information.

The potential integration of Beidou chips into aviation components, including engines and navigation systems, raises concerns about data security and strategic autonomy. We were aware of the GPS location systems being fitted in aviation engines from MH 370 crash investigations. Hence, nations must assess the geopolitical implications of Chinese-controlled geolocation technologies in these aviation components/ engines, considering the potential for coercion and influence in times of international tension.

These days most aviation IC engines are FADEC, Full Authority Digital Engine Control (FADEC). These systems are used in aviation for precise and automated control of aircraft engines, optimizing performance and efficiency while ensuring safety by electronically managing and regulating engine parameters. FADEC eliminates the need for manual pilot input, providing a seamless and efficient engine operation experience, particularly in complex flight conditions and Autonomous Drones. These are vulnerable to RF interference and Electronic Warfare. RF interference poses a multifaceted challenge to Full Authority Digital Engine Control (FADEC) systems in aircraft engines. Its impact encompasses communication disruptions, erroneous sensor readings, corruption of command signals, cybersecurity concerns, electromagnetic compatibility challenges, and regulatory compliance issues. This vulnerability if known to the PLA could leave to loss of a very strategic piece of military aircraft.

At a more structural level, AVIC had proposed the concept of an “Air Silk Road.” The project is an aviation industry-specific offshoot of China’s One Belt One Road (OBOR) initiative, focusing on “the three major areas of aviation infrastructure construction, aviation network construction, and aviation project trade.” The Air Silk Road’s goal is to shape the aviation industry and systems within and among target countries as well as to propel the “going out” of China’s aviation supply chains. The “Air Silk Road” is a transport corridor for some thinkers but then the strategical and military impact of Belt and Road initiative makes me wonder otherwise.

Conclusion

As the dragon’s wings span the global aviation landscape, democratic leaders face a confluence of challenges at the nexus of national security, supply chains, spare management, and geolocation. The economic strides made by China in acquiring key players in the aviation industry demand a recalibration of strategies to safeguard critical interests. Navigating this complex terrain, leaders must adopt a comprehensive approach that integrates national security imperatives into economic decision-making.

Robust screening processes, resilient supply chains, proactive spare parts management, and strategic geolocation considerations are essential components of a comprehensive response to the evolving dynamics of China’s aviation acquisitions. One of the examples could be Technify Motors GmBH which is an aircraft Diesel engine manufacturer based at Sankt Egidien Germany. In Jul 2013 AVIC acquired the aircraft Diesel engine designs and manufacturing assets of the former Thielert Aircraft Engines GmBH and added them to Continental Motors group as Techinfy Motors GmBH. Thielert aircraft engines was well known for its Centurion and TAE range of aircraft engines.

Continental Aerospace Technologies is an aircraft engine manufacturer located at the Brookley Aeroplex in Mobile, Alabama, United States. It was originally spun off from automobile engine manufacturer Continental Motors Company in 1929 and owned by Teledyne Technologies from 1969 until December 2010. The company is now part of Aviation Industry Corporation of China (AVIC), which is a Government of the People’s Republic of China state-owned aerospace company headquartered in Beijing. Further, Continental is incorporated in Bermuda and listed at Hongkong Stock Exchange.

According to a report from a U.S. newspaper, there has been considerable confusion surrounding the origin and nomenclature of these companies, leading to the U.S. government granting coronavirus relief loans to numerous subsidiaries of Chinese corporations. This includes a company associated with the Chinese military, which has attracted attention from Congress, as per data released by the Treasury Department. The Paycheck Protection Program bailout loans, designed to aid businesses severely impacted by pandemic-related restrictions, allocated between $5 million and $10 million to Continental Aerospace Technologies Inc., based on Treasury Department records. Additionally, a joint venture of AVIC, named Aviage Systems, situated in Arizona, received funding ranging from $150,000 to $350,000. Aviage Systems, jointly operated by China’s AVIC and General Electric Co., specializes in producing avionics equipment. Responding to these developments, in June 2021, U.S. President Joe Biden issued an executive order prohibiting U.S. securities investment in 57 Chinese companies with defence connections, prominently featuring AVIC among them. The objective as described was to “ensure that US investments are not supporting Chinese companies that undermine the security or values of the United States and our allies,” according to a fact sheet that accompanied the executive order.

In the pursuit of economic cooperation, democratic nations must remain vigilant, ensuring that the silent flight of the dragon does not compromise the sovereignty, security, and strategic autonomy of their aviation capabilities whether Military, Civil or General. The skies above are not merely an arena for economic competition but a realm where the delicate balance between national interests and global cooperation determines the trajectory of democratic nations in an increasingly interconnected world.

(Cdr Rahul Verma (Retd), former Cdr (TDAC) at the Indian Navy, boasts 21 years as a Naval Aviator with diverse aircraft experience. Seaking Pilot, RPAS Flying Instructor, and more, his core competencies span Product and Innovation Management, Aerospace Law, UAS, and Flight Safety. Holding an MBA and Professional certificates from institutions like Olin Business School, NALSAR, Axelos and IIFT, he is enthusiastic about contributing to aviation, unmanned technology, and policy discussions. Through writing for various platforms, he aims to leverage his domain knowledge to propel unmanned and autonomous systems and create value for Atamannirbhar Bharat and Indian Aviation industry.)





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