Friday, August 12, 2011

China’s AVIC Comes of Age

Defense News
China’s AVIC Comes of Age

TAIPEI — This year’s parade of revelations by China’s aerospace defense industry — new types of fighter jets, helicopters, unmanned aerial vehicles and airborne weapons — was a decade or more in the making. But analysts say the catalyst was the 2008 restructuring of state-owned Aviation Industry Corporation of China (AVIC).

Since December, new aircraft have emerged that were considered unthinkable five years ago: the J-20 stealth fighter, J-18 vertical/short­takeoff-and-landing fighter, J-15 carrier-borne fighter and L-15 lead-in fighter trainer. And that followed November’s Zhuhai air show, the biggest in China’s history, where major European and U.S. aerospace companies vied for space.

The People’s Liberation Army (PLA) had long struggled to lift its defense industry out of a morbid Communist system that mass­produced cheap copies of Russian junk. In 1993, the Chinese government spliced AVIC together from various parts of the former Ministry of Aerospace Industry and military­owned factories and research institutes.

Yet a decade ago, observers still joked that “R&D” at AVIC meant not “research and development” but “receive and duplicate.” So in 1999, the government attempted to encourage competition by splitting the company into AVIC I, centered on complex fixed-wing aircraft such as fighters and bombers, and AVIC II, which built smaller fixed-wing aircraft and helicopters.

The results were disappointing. AVIC II had “a real disadvantage” since it “got neither fighter aircraft or the commercial airliner business,” said Richard Bitzinger, a defense industry specialist at the Institute of Defence and Strategic Studies, S. Rajaratnam School of International Studies, Singapore.

So in 2008, the two were recombined.

“This pooling of expertise and resources, usually under the centralized direction of some top-notch talent … is the most efficient way of harnessing China’s limited capabilities and resources,” said Gary Li, an intelligence analyst for U.K.-based Exclusive Analysis.

Commercial aircraft operations were swept into the Commercial Aircraft Corporation of China (COMAC). Nominally independent, the new company holds many factories and facilities that are still under military control despite corporate facades. Still, the spinoff removed some of the export-control obstacles that had hindered cooperation with Western aerospace companies.

“The remerger is to more effectively utilize the excess capacity of AVIC II for commercial airliner production, especially future anticipated production,” Bitzinger said.

Today, AVIC and COMAC and their subsidiaries produce all Chinese-made aircraft and components. COMAC also is building two commercial airliners, the C919 and ARJ21.
Next Steps 

The sinking European economy may help weapons makers to overturn the 22-year-old embargo on selling arms to Beijing. That may help the Chinese defense industry advance, but it would likely be replaced by a code of conduct that continued to prevent the Chinese import of whole weapon systems such as the Eurofighter Typhoon, said Roger Cliff, a China defense specialist at the Project 2049 Institute.

Cliff said he doubts China’s military would be interested in importing such systems at this point, but “are undoubtedly interested in acquiring advanced military and dual-use technology from Europe, and my concern is that the lifting of the arms embargo will result in a loosening of controls on exports of technology from Europe to China.
Li said that China might not be interested in the Typhoon or Sweden’s Gripen fighter jet, but it most certainly would be interested in the Airbus A400M or other heavy airlifters that “would give the PLA a considerable boost in operational range and power projection.” The A400M has double the range and hauling capability of China’s aging Y-8 transport plane.

However, Li said he does not see the PLA relying too much on imported aircraft.

“It is generally a bad idea to be sitting in an aircraft that your potential adversaries know everything about,” he said.

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