China ups the ante by placing export controls on specific aviation and aerospace components

As China sees an opportunity to push its ‘Air Silk Road’ initiative, Beijing places export controls on aerospace and aviation components.

In what could be seen as an escalation in the ongoing trade war between the United States and China, Beijing announced on 30 May that it will control the export of some aviation and aerospace components starting 1 July.                                                                   

According to a joint statement by the Ministry of Commerce, the General Administration of Customs, and the Equipment Development Department of the Central Military Commission, the new regulations seek to better protect national security and fulfill international obligations such as non-proliferation.

Aerospace components, gas turbine engines, space suit equipment, and bullet-proof materials placed on Beijing’s export control list

The list of items that will require an export license includes aerospace structural components as well as equipment and software used in engine manufacturing. Licenses will also apply to gas turbine engines, molds for manufacturing spacesuit sections (and the equipment and software used to make them), and advanced polymers used in bulletproof clothing.

Citing a need to protect the country's national security and interests, the Ministry of Commerce noted that exporters will need to apply for an export license. The ministry will decide whether the component or software could find “dual use” military application. The new rules are part of China’s Export Control Law, which was introduced in late 2020 after the Trump administration placed $300 billion worth of tariffs on Chinese goods in 2018.

The Ministry of Commerce noted that "the relevant policy does not target any particular country or region. Exports will be licensed if they comply with the relevant regulations." However, the statement added: “The United States and European Union, for example, also control the export of various aerospace components over concerns such parts might find "dual use" application by hostile states. China has learned from international practices and implemented export controls on relevant items according to its own needs.”

China protects its ‘Air Silk Road’ ambitions

This move comes as China is seeking to dominate the aerospace sector, which it sees as an opportunity to jump ahead of the U.S., Canada, Japan, and Europe. China recently demonstrated its ability to tow a navigation satellite past the crowded LEO range (around 2,000km) to the 36,000 km (geosynchronous equatorial orbit, or GEO) – a feat only the U.S. has similarly achieved. (read here, for more on this topic).

China is also advancing its Air Silk Road initiative with the launch of its first-ever passenger jet airliner, the C919. While the C919 predominantly comprises U.S. and Western components, Beijing ultimately wants to build its own local aviation supply chain and rival the dominance of Boeing and Airbus (see blog here).

The move follows China’s Commerce Ministry announcement of sanctions against Boeing and two other defense companies on 20 May for alleged arms sales to Taiwan. The ministry placed Boeing’s Defense, Space & Security unit, General Atomics Aeronautical Systems, and General Dynamics Land Systems, on its “unreliable entities” list, which bans further investment in China.

In April, China froze assets of General Atomics Aeronautical Systems and General Dynamics Land Systems held within China.

Pamir: Guiding you through the delicate trade relations between the U.S. and China

Given the delicate nature of trade relations between the U.S. and China, it’s essential that Western companies are completely certain of their risk exposure, strategy, and their compliance with local regulations, from both sides.

Pamir Consulting has decades of experience and expertise guiding U.S. companies through the challenges and intricacies of dealing with, and investing in, the Chinese market. We are an agile management consultancy company that blends analytic and investigative experience with deep local expertise in countries such as China, as well as South-east Asia. 

We ensure that organizations understand, anticipate, and navigate change across key markets, so that you can build and execute the right strategy, across all business functions, balanced against risk exposure and opportunity.

To find out more about how we can help you to enjoy the benefits of the Chinese opportunity, while minimizing risk, maximizing opportunity, and ensuring compliance, contact us today.