Aerospace

Aerospace covers a broad range of technologies covering everything from civilian aircraft to missiles and satellites. This broad range of devices includes engines, composite materials, and emerging capabilities such as hypersonic glide vehicles developed by Russia and China and being developed by the United States. Engines, composite materials and hypersonic glide vehicles each have their own technical and engineering nuances, being areas of expertise unto their own.

The aerospace and space sectors in China and Russia pose particular trade compliance challenges. In the case of China, there is little to no separation between the entities involved in the military program and the civil space program. When dealing with China, countries should ensure they have adequate mechanisms in place to review all cooperation with space-related entities. This could include an expressed callout in the military catchall or publication of a list of Chinese space-related entities.

While most Chinese aerospace entities have a specific focus, whether in the civilian sector or military sector expressly, these companies are generally just subsidiaries of two or three aerospace ‘giants’ which actively utilize MCF practices. For these reasons, due diligence in commercial aerospace is critical to the security of western technology. The exemplary case for MCF in the aerospace context was the testing of a hypersonic glide vehicle capable of circling the globe in 2021.[1] While foreign reports on the test indicate that the vehicle is capable of being weaponized, the PRC insisted that this technology was in a civilian program.[2] Due to the organizing structure of the aerospace industry in the PRC, however, it is likely that the vehicle was a subsidiary of a company with connections to the military. 

In more expressly military settings, the PRC has a network of research institutions that work directly with the commercial producers of said technologies. This is not inherently dissimilar to how companies like Raytheon and Lockheed Martin work in the US. However, there are fewer barriers between civilian and military research activities. The result is major producers such as the Aviation Industry Corporation of China (AVIC), China Aerospace Science and Industry Corporation (CASIC), and Commercial Aircraft Corporation of China (COMAC) [SI2] all having highly specialized subsidiary companies with explicit goals. So, while one subsidiary may be working in commercial spaces, there will be another subsidiary focusing on military applications, and so forth. For example, since COMAC produces commercial aircraft and AVIC military (and commercial) aircraft, each would have a similar subsidiary that focuses on the production of heavy machinery.[3]

Ultimately, the PRC is fairly self-sufficient in the ability to manufacture advanced aerospace systems, however, the PRC does lag in aeroengine development and is still reliant on foreign imports for some key components. To address this gap, AVIC and COMAC have jointly started Aviation Engine Corp General Information (AECC) to develop aeroengines.[4] Detailed further in sections below, and in case studies 3, 8, 10, and 15, there have been many instances in the last decade in which the PRC attempted to illegally obtain aeroengine research or equipment from abroad. The PRC works closely with universities, research institutes, and foreign partners to facilitate the acquisition of foreign technology.

A particularly important aspect of the China challenge for aerospace concerns the interconnection between its space programs and missile programs, with the same entity, the China Academy of Launch Vehicle Technology, being responsible for both. CALT is part of the larger China Aerospace Science and Technology Corporation and many other CASC subsidiaries are also involved in both military and civil space programs. Given this, ensuring that cooperation and technology supply is for civil purposes only can be challenging meaning that companies should consider referring any such cases to their national authorities for review.

Russia is arguably a global leader in advanced aerospace technologies such as hypersonic glide vehicles and related technologies. The area has the firm support and backing of state leadership. Russia uses a strong and longstanding network of military research labs, universities and veteran scientists who have been working on the topic for decades to achieve their success in this sector. Russia historically has engaged in academic collaboration on the subject, including with Western defense firms and scientists close to NASA, but this collaboration declined after the 2014 annexation of Crimea and subsequent growing isolation.[5]

Given the scope of Russia’s military aerospace and its level of importance to Russian national security it is impossible to predict the course of Russia’s increased isolation on their military aerospace programs. Russia is relatively self-sufficient with a robust and well-funded infrastructure for the research, development and production of military aerospace projects. There are hundreds of entities in Russia from technical universities connected to the defense base, military research centers, testing facilities and repair plants dedicated to maintaining Russia’s aerospace capabilities. [6] Russia is having problems with civilian engines post-February 24th, but the aerospace procurement information for military jets and secret research projects is classified and the extent of problems currently in that sector are unclear.[7] Russia has historically had problems with engine manufacture, but is still validating domestically produced military helicopter engines with potential Asian buyers.[8] Russia’s ability to maintain and manufacture will ultimately be impacted by factors such as the ability to maintain the advanced machine tools of foreign origin required for their timely manufacture. As machines bought in the 2000s age and break down, more production bottlenecks will appear. [9]

Take Aways

Aerospace is one of the sectors with the least clear military/civilian distinction due to the inherent dual use nature of many aircraft components, the use of satellites by both militaries and civilian enterprises, and the fact that many of the same entities are engaged in both activities. This blurred line magnifies the need for effective due diligence beyond normal controls to identify where an entity may be engaged in military-linked activities.

Outside of the dual use nature of the sector, specific advancements in hypersonic technology, including hypersonic glide vehicles, are a priority area for both Russia and China. China, in particular, coordinates a number of aerospace related research and development efforts with its university system and national labs. As such, scrutiny of transactions involving such entities, even in adjacent engineering focuses, is warranted.

Additionally, China’s civil and space missile program are not separated with one entity, the Chinese Academy of Launch Vehicle technology, which itself is a subsidiary of China Aerospace Science and Technology Corporation, playing a key role in both programs. Given this, careful due diligence should be undertaken regarding any technology transfers to China’s space sector particularly if it relates to these entities. In practice, this might mean referring all such cases to national authorities for review.