As the Trump Administration heads to its closing days, it continues to actively reshape U.S. policy toward China. On Dec. 22 the U.S. Department of Commerce published a list of 58 Chinese and 45 Russian companies as “military end-users…to assist exporters in screening their customers,” said Commerce Secretary Wilbur Ross.
While the U.S. and China veer ever closer to an economic uncoupling, the move threatens to derail the current trajectory of Chinese strategic commercial aerospace ambitions, and could set back by years its single-aisle Comac C919, ARJ21 regional jet and Xian MA700 turboprop. The new list effectively impedes Comac and Xian access to U.S. suppliers providing everything from hydraulic and fuel systems to flight control and propulsion systems.
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The publication of the list comes at the intersection of rapid changes in political and industrial relations between the U.S. and China. The Trump Administration has significantly reshaped the U.S. relationship over the past four years amid acute trade, security and human rights tensions. As 2020 ends, China is now the largest civil aviation market on the planet, achieving that expected superlative in May years earlier than the most optimistic forecasts with the help of a U.S. weighed down by the unchecked spread of COVID-19.
The incoming Biden Administration faces several early foreign policy challenges, including how it will approach its posture toward China relative to the previous administration. Companies are closely watching whether or not there will a reset, a continuation of the murky status quo or a full-blown economic fight. Further, the list, which officially went into effect on Dec. 23, adds another dimension and bargaining chip as China weighs the eventual recertification of Boeing’s 737 Max, as well as any future orders.
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The implications of the new end-user list are “all still under evaluation” according to one U.S. company official that is a supplier to Comac and Xian projects, but the early indications, according to one senior industry leader, are that U.S. suppliers will have to withdraw from participation on any civil aircraft project for which they provide hardware.Continue Reading...
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