Potential US sanctions on AVIC will harm global aviation supply chain: expert

Source: Global Times Published: 2020/10/14 23:46:58

The Aviation Industry Corporation of China displays its latest aircrafts at Airshow China 2018. File Photo: VCG

China's aviation company Aviation Industry Corporation of China (AVIC), might be the next target in the deteriorating relationship between the US and China and could face restrictions from the US, according to a report by Bloomberg, leading Chinese experts to say that such restrictions would hit the global aviation supply chain hard. 

Founded in 2008, AVIC is one of China's leading producers of airlines and private jets. It is also the top company in aerospace research and design. The company is already on a list of enterprises the US government claims are controlled by China's People's Liberation Army. 

The US has been intensifying its pressure on Chinese companies in the name of national security. Sanctions imposed on AVIC, make it the latest in a string of victims that include China's telecommunication giant Huawei, short video platform TikTok from Bytedance and WeChat from Tencent. 

Restrictions on AVIC will not only affect its own operation, but will have a ripple effect on the global aviation industry, given the company's deeply integrated role in the world aviation supply chain, Wang Yanan, chief editor of Aerospace Knowledge magazine told the Global Times.

"AVIC is not just a company that produces what the US regards as 'sensitive military parts,' it's also a long term partner of many airplane makers in the US and Europe, and some of their planes were manufactured in China," Wang said.

"Unlike the lower-end manufacturing sector which might find alternative contractors or materials in other countries, any piece of the  aviation industry is hard to replace," Wang added.

According to the Bloomberg report, AVIC is not only a premium contractor, it also owns several joint ventures with some of the key US companies in the aerospace industry, including General Electric, Honeywell International and Textron. 

"Neither China nor the US is going to fare well if such sanctions are put in place, but if it happens the Chinese government will not shun from retaliation," Wang said. "It will possibly reduce purchases of US planes, for example."

Posted in: COMPANIES

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