‘Prisoner’s dilemma’: How China is using the West to try and rule the skies

China’s state-owned aircraft maker had just announced the Western engine it had chosen for its new aircraft.

One month later, in January 2010, American cyber researchers started to see the “preparatory activity” of a Chinese hacking group focusing on an American turbine company that made a part needed for jet engines.

For years afterwards, a division of China’s intelligence apparatus could be seen trying to steal engine design information from Western companies. By 2017 and 2018, the US government had opened indictments – with convictions to follow – against figures in the US and China trying to steal Western aerospace information.

The subterfuge, now largely forgotten by the public, is an essential chapter in the origin story of the C919, which was developed to compete with two of the world’s most widely used passenger aircraft – the Boeing 737 and the Airbus A320neo. It was also the foundation of establishing the Commercial Aircraft Corporation of China (COMAC) as a serious player in the global commercial aviation market.

The C919 is now in regular production, and it’s taking its first steps in aiding China’s systematic efforts to both develop its aerospace industry and to produce a viable passenger aircraft.

But years after concerns were raised over Chinese intellectual property theft, few of the affected parties are keen to talk openly about the alleged cyber-espionage.

Repeated attempts to contact COMAC by this masthead were unsuccessful. And Western aerospace parts makers have been quiet too. Not even Crowdstrike, the US company that wrote the pivotal 2019 report spelling out China’s cyber activities around Western aviation, was willing to discuss it.

As one of the Western jet engine makers explained: “Sorry, but we do not comment on this subject.”

But that’s not to say the Western aerospace industry is unaware or unconcerned about China’s industrial espionage.

China’s habit of acquiring foreign technology, absorbing it and then re-innovating it for export has been seen with smartphones, wind turbines, electric vehicles, solar panels and high-speed trains.

So it’s not a complete surprise that the C919 narrow-body jet looks like the peers it seeks to compete with.

The C919 is designed to carry from about 158 to 192 passengers, close to the same capacity as Western planes such as the Boeing 737 MAX 8 and the Airbus A320neo. The Boeing and Airbus planes have a range of more than 6300 kilometres, while it’s estimated that the C919 has a range of about 5500 kilometres.

“The fact that the C919 looks like an A320 … is all the reason Western manufacturers need to maintain a cautious stance regarding technology transfer,” AeroDynamic Advisory managing director Richard Aboulafia testified to the US-China Economic and Security Review Commission in February.

Meanwhile, Western companies have not turned their back on the Chinese market.

COMAC’s C919 programs have forged ahead with the help of international companies and global supply chains.

The C919 has been designed in Shanghai with its fuselage, wings, flags and ailerons made in China. Much of the complexity of a jet is in the innumerable onboard systems.

Estimates vary on how much of the plane is actually China-made, with figures suggesting up to 60 per cent of the plane’s components come from Western aerospace companies such as Collins Aerospace, GE Aerospace and Honeywell.

The C919 flying today still doesn’t use China-made engines. Not yet, anyway. It uses the CFM LEAP 1-C, an engine co-produced by GE Aerospace and France-based Safran.

The Centre for Strategic and International Studies’ senior adviser Scott Kennedy told this masthead: “Regardless of Chinese intentions, the C919 is still entirely dependent on Western technology providers.

“Any supposed efforts to outright steal technology have not succeeded. And none of the tech-transfer arrangements has led to the emergence of a competitive domestic alternative.

“Foreign aerospace firms have been extremely smart about protecting their technological advantages, and integrating technologies is even more of a challenge that COMAC is still leagues behind [compared with] their American and European counterparts.”

Trade barriers rising

The pace of production of the C919 has been slower than anticipated. COMAC planned its first flight for 2014, but the plane was repeatedly delayed, and the first flight was not until 2017. Its first commercial flight took place in 2023.

Shanghai-based China Eastern Airline now operates 10 C919s on routes between Shanghai and Beijing and Shanghai and Hong Kong. The C919 is also operated by Air China and China Southern Airlines, domestic carriers the Chinese Communist Party government can direct to purchase the plane.

There are reportedly 1000 orders for the C919, but so far, COMAC has only produced 10 in 2024 and a number in the teens this year.

Being a prize project of Beijing during the US-China wars doesn’t help.

At the end of May, the US Commerce Department suspended some licences, allowing US companies to sell products and technology to COMAC for use in its C919 aircraft, The New York Times reported.

‘Prisoner’s dilemma’

“This is an industry with extremely high entry barriers,” Aboulafia said. “Since World War II, except for Embraer of Brazil, no company or country has successfully entered the civil jet transport manufacturing sector.” (The European companies grouped together into Airbus date back 100 years.)

But China’s rapid industrialisation has brought with it the practice of piracy and technology extortion that challenges the legal framework and capacity of Western courts. China is big enough to essentially make its own rules around industry practices, or at least to try to, which in turn challenges the basis of patents in the West and the system of innovation that it supports.

For example, China’s strategy has been to require Western companies to set up co-production facilities within China, where technical knowledge can either be shared or acquired legally or illegally.

Airbus, active in China since 1994, operates a final assembly line facility in Tianjin, as well as an R&D Centre and Airbus China Innovation Centre. It will soon open a second assembly line in Tianjin.

“All Airbus sites around the world have robust systems in place to protect intellectual property rights and data,” a company spokesman said.

Should COMAC eventually succeed in producing cheaper, competitive jets at scale, the competitive landscape for Boeing and Airbus will change dramatically.

”Airbus welcomes competition, and the entry of COMAC in the market will not affect our commitment to continue working with our customers, partners and suppliers in China,” the company said.

The people who are most willing to talk about China’s aggressive technology acquisition are not COMAC or Boeing, but the people concerned about the relative power of democracies in the face of China.

Emily de La Bruyère, a senior fellow at the US-based Foundation for Defence of Democracies, believes Western aerospace companies are mistaken for partnering with China in their commercial aerospace programs.

They are “incredibly short-termist and blind for ignoring the consequences of their action”, de La Bruyère told this masthead.

(Airbus rejects the claim of being “short-term” focused, pointing to its history in China dating back to 1994.)

De La Bruyère believes Western aerospace companies face a “prisoner’s dilemma” in China.

If any single aerospace company pulls out of China over intellectual property theft fears, they will get punished financially, she says. But their individual action won’t stop the larger trend of China’s forced technology transfers, industrial espionage and hacking.

So the Western companies are “sowing the seeds of China destroying their [the companies’] markets all over the world for the sake of what is a very short window of access to the Chinese market”.

Engine-makers GE Aerospace and Safran were contacted for comment.

A market looms

Although the price of the C919 has reportedly come in higher than expected, expectations are that if it can be built at enough scale, it would eventually undercut the price of giants Airbus and Boeing.

As Michael O’Leary, chief executive of the ultra-low cost Irish carrier Ryanair, put it recently: “The Chinese are basically building a f—ing A320. So if it was cheap enough – 10 or 20 per cent cheaper than an Airbus aircraft – then we’d order it,” he told aviation publication Skift in May.

To eventually establish a large position in the market, COMAC must have a customer base. COMAC has successfully sold a smaller, 80-seat regional jet, the C909, to airlines in South-East Asia: Lao Airline, VietJet, TransNusa (of Indonesia) and soon GallopAir of Brunei.

Alton Aviation Consultancy’s Beijing-based Jiang Shuai notes: “If C919 can be successfully operated in Asia, the track record will support COMAC’s C919 future sales outside of Asia.”

Focus on Asia

As for the continued technological development of COMAC’s aircraft, China’s experience in other industries is instructive.

When Western bans on telco equipment-maker Huawei hobbled its exports into developed markets in 2018, the company pivoted to the Global South, where governments were less fussed by the prospect of security concerns.

CSIS’s Kennedy notes that regulators in most of the world still only consider purchasing aircraft certified by the FAA or the EASA.

As for the Huawei example, “there is no comparable Western-based regulator of telecom equipment”.

“Neither [the FAA nor EASA] has certified or is likely to certify the C919 any time soon because of concerns over safety,” Kennedy says.

Yet demand for new jets is real.

After years of supply disruptions, difficulty in sourcing parts, and the impact of COVID, the backlog to be delivered to airlines exceeds 17,000 planes, says the International Air Transport Association.

Boeing is still contending with the aftermath of two 737 Max jetliner crashes that killed 346 people, blamed on the botched rollout of a software system. Production restrictions have slowed Boeing’s all-important 737 further.

Alton Aviation’s Shuai says: “Given Boeing’s and Airbus’ supply chain issues and delayed deliveries, we expect Chinese airlines to continue to demand and take deliveries of C909 and C919 aircraft.

“Domestic demand is sufficient to fill COMAC’s production rates for the next few years.”

Efficiency matters

The economics of aviation are not just the upfront costs of planes. Earnings in commercial aviation are underpinned by ever more inexpensive planes to operate in fleets. Each new plane model must be a full 20-30 per cent more efficient than the last to stay profitable over its lifetime.

If COMAC produces a structurally less efficient and more costly plane, it will saddle buyers with more expenses, making the plane less competitive. Yet China is determined to achieve what Aboulafia refers to as “autonomous (or autarkic) aviation power”, autarky being complete economic self-sufficiency.

Aboulafia has testified that China hopes to introduce a fully Chinese version of the C919, which includes the hardest part, “all-Chinese engines”, around 2035.

With this trajectory, China will be closer to its goal, aided deeply by Western aerospace companies, says Foundation for Defence of Democracy’s de La Bruyère.

“Early on, maybe it was harder to see a future in which China would be able to develop real, competitive technology in the field,” she said, so the logic of engaging in China “maybe made a little more sense”.

“But the fact that the partnerships continue despite China’s proven and advancing capabilities, proven intention to disrupt the incumbents and methods of doing all that, is fundamentally destructive for them.”

Asked what’s wrong with China succeeding in the commercial aerospace, de La Bruyère said Western businesses fundamentally misunderstand the concept of success to the Chinese Communist Party.

“The CCP has a different vision for what industrial and technological success means.

“It’s not profit, it’s control.”

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