Commentary: There is a bigger threat to US trade than Chinese chips
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AEROSPACE COMPETITION
Sales of aircraft, including related parts and equipment, were the largest component of exports to China in each of the past three decades. Those days are gone. Over the past three years that ratio dropped to just 3.4 per cent, having stood at 18.8 per cent in the 1990s, and falling to 9.5 per cent in the decade to 2019.
On an annual basis, exports peaked in 2018 and have since fallen by two-thirds. That’s the same year Boeing’s sales to China reached their zenith before plunging by a similar amount.
While the COVID-19 pandemic takes some of the blame for this decline as flights were halted and airlines were forced to park planes in the desert, the writing was on the wall more than a decade earlier when COMAC began work on the C919.
Fatal crashes of Boeing’s 737Max in 2018 and 2019 prompted Beijing to join regulators globally in banning the jet. Flights on those models already in service resumed in China this year, with Air China indicating it will take delivery of 12 Max aircraft in 2023 and more in 2024.
That short-term boost won’t last. Multiple cases of espionage and an increasingly rancorous trade war show there’s little chance of turning back. COMAC leaned on foreign partners to develop the C919, using engines from General Electric and parts from across the globe. In 2011, the company signed a cooperation partnership with Canada’s Bombardier, which later included an agreement to share cockpit technology and designs.
Yet even as China’s aerospace sector has sought to procure technology through the front door with joint ventures and licensing deals, Beijing has been very busy acquiring know-how through the back door.
In one effort uncovered by the FBI in 2017, Chinese intelligence agents directed a project to steal engine technology from GE Aviation, while a separate case involved a Chinese national and Air Force contractor who helped the People’s Liberation Army obtain more than 630,000 files related to Boeing’s C-17 Cargo plane.
It may take years before the foreign intelligence community can ascertain how much of the C919, or the forthcoming twin-aisle CR929, was built from pilfered technology
There are numerous similarities between the semiconductor and aerospace industries. Both rely heavily on technological development, have high barriers to entry, and bestow upon their nations significant national-security advantages. There’s one huge difference though, one that makes US maintenance of its supremacy even more important.
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