I suspect this trend will continue, and another prominent Chinese company may now be in U.S. crosshairs.
Aviation Industry Corporation (AVIC) is a CCP-owned enterprise with over one hundred subsidiaries and China’s crown jewel military aerospace provider. It’s a critical element for China’s unrelenting quest to become a military and industrial dominating force and employs more than both Boeing and Airbus combined. While weapons of war are its core business, it also makes civilian products and is known to partner with U.S. companies.The Trump administration placed AVIC on a list of firms controlled by the Chinese military back in June. With the U.S.-Beijing relationship continuing to deteriorate, and anti-Chinese sentiment at all-time highs due to Wuhan-originating Covid-19, this seems like a ripe target for new restrictions.
Its joint venture with Honeywell focuses on flight-control software and hardware. It works with General Electric to create avionics products. And it’s partnered with Textron to build business jets. All of this and its other U.S. ventures can be ended under the guise of national security.
The CCP can compel any Chinese company to work with the government and military at its whim. China hawks could make a credible argument that partnering with a Chinese company is de facto partnering with Chinese government; and it’s not much of a stretch. The overarching sentiment towards China is that of decoupling, and focusing on AVIC fits with this theme.
Just like the U.S. proselytized its allies to reject Huawei, it could also do so with AVIC. AVIC works with several European aerospace companies like Airbus and Safran, and those partnerships could be jeopardized, depending on how hard a line the U.S. takes.
The Trump administration has also started focusing on weakening business partnerships that directly help the PLA. With AVIC spending nearly $3.5 billion on 20 engineering and aerospace businesses in the U.S. and Europe, and a simple CCP phone call away from being compelled to help the Chinese military, one could easily see AVIC being earmarked under a more strategic, SMIC-type ban instead of the "national security" banner. If Trump gets a second term, I would not be bullish on AVIC's prospects in the U.S.