In the aerospace industry is a crucial dual-use industry for a country, providing essential defense and commercial capabilities for national strength. The global commercial aircraft industry has long been dominated by two giants, Boeing and Airbus.
However, China Commercial Aircraft Co., Ltd. (COMAC) has rapidly risen and eroded international market share through massive subsidies, intellectual property theft, forced technology transfer, below-market financing, and increasingly closed domestic markets, all supported by the Chinese regime. This poses a significant threat to the foundation of the U.S. and Western commercial aviation industry based on market rules.
Stephen Ezell, Vice President of Global Innovation Policy at the Information Technology and Innovation Foundation (ITIF), Director of the Center for Life Sciences Innovation, and President of the Global Trade and Innovation Policy Alliance (GTIPA), warned in a recent analysis that COMAC poses a fundamental threat to the global aviation industry, a threat largely overlooked by European and American politicians.
Ezell proposed that just as Chinese electric vehicles pose a survival threat to the U.S. automotive industry, once COMAC rises, it will also pose a fundamental threat to the American commercial aviation industry. The U.S. government must take immediate action to block COMAC on two fronts.
First, the U.S. needs to develop a comprehensive strategy to support the competitiveness of the U.S. aerospace industry, including investing in research and development and developing new technologies through public-private partnerships. Second, to prevent the development of COMAC from the outside, agree with allied countries not to purchase Chinese commercial aircraft, control aircraft engine exports, and prevent COMAC from acquiring foreign engines.
The article pointed out that the U.S. and Europe pioneered the global commercial aviation era, giving rise to major companies like Boeing, Douglas, and Lockheed. The U.S. aerospace industry has always been one of America’s most important advanced technology industries, providing a key source of innovation, exports, high-tech employment, and spillover effects for the defense industry.
However, like almost all other high-tech sectors such as AI, biotechnology, electric vehicles, and semiconductors, China has aggressively supported COMAC through massive industrial subsidies, intellectual property protection, forced technology transfers, and support for domestic companies, aiming to weaken the global profit, research and development capabilities, and innovation capabilities of Western aircraft manufacturers.
The article noted that the barriers to entry in the commercial aircraft sector are extremely high, with significant investments required from aircraft design and development to the entire aerospace ecosystem, making it difficult to achieve significant economies of scale, especially with the presence of Airbus and Boeing.
The author pointed out that Europe’s Airbus, Brazil’s Embraer, and Canada’s Bombardier have also relied on continuous massive government subsidies to develop into globally competitive commercial aircraft companies from scratch. However, at least these companies compete under market conditions, while COMAC, like Chinese industries from semiconductors to solar panels and high-speed rail, engages in low-priced malicious competition under non-market conditions. From a market perspective, COMAC is an illegal enterprise.
The U.S. aerospace industry is one of America’s most important high-tech industries, with aircraft manufacturing being a crucial dual-use industry. In 2023, the industry generated a total output value of $306.9 billion, including aircraft manufacturing, aircraft engines and components, spacecraft and missile production, and aircraft components, directly and indirectly creating 1.6 million jobs, maintaining a significant global trade surplus almost every year.
The U.S. aerospace industry has achieved enormous success, but facing ruthless competition like COMAC, aircraft manufacturing giants like Boeing may go bankrupt, losing the intangible knowledge of aircraft manufacturing, and the U.S. may not be able to rely on market forces alone to rebuild the domestic civil aviation industry, needing massive subsidies like Europe did in creating Airbus and as China did in creating COMAC.
This means that the U.S. government must pay attention to the health of the domestic commercial aviation industry and prevent unfair foreign trade and economic practices from causing damage.
The commercial aircraft industry requires a large number of highly skilled professionals, a vast network of professional suppliers, and mature aviation regulatory bodies. In addition, designing and developing a modern commercial aircraft is extremely costly, with costs rising with each generation.
The commercial aerospace industry is a typical innovative industry, characterized by increasing economies of scale, with average costs far exceeding marginal costs. While other industries such as semiconductors, software, automobiles, and biopharmaceuticals have similar features, the aviation industry’s production volume is lower, spreading costs across a few thousand sales annually, unlike other industries with tens of thousands to hundreds of thousands of products sold annually. This highlights the challenge for commercial aircraft manufacturers to recoup the initial investments of several billion dollars across various aspects like product development, tooling, and training from a small volume of sales.
At the same time, profit margins in the aviation industry are precarious. Research indicates that in 2024, the profitability of the U.S. aerospace/defense industry was only 4.37%, lower than the European average of 6.64% and the global average of 5.15%. Boeing’s average profit margin from 1970 to 2010 was only slightly above 5%. Additionally, projects like the Boeing 737 and Airbus A320 cross over fifty years and require high production rates to be profitable.
In comparison, COMAC, backed by the Chinese regime, engages in ruthless low-cost competition to grab market share without considering market returns. This non-market competition model is insidious and detrimental, disrupting the learning curve and economies of scale on which the aviation industry relies.
An assessment in 2024 found that COMAC reported at least $3 billion in losses since its establishment, indicating it functions as a strategic industry policy tool rather than a normal commercial enterprise.
Advanced industries like commercial aviation require scale for production and development. Malicious low-cost competition from competitors could bring swift and devastating blows. Many North American companies like Qualcomm and Nokia are currently facing similar challenges from China, and the U.S. solar panel industry has rapidly lost its leading position. The commercial aviation industry may similarly face a similar situation.
Like almost all other advanced technology industries, China is eager to outpace Europe and the U.S. in commercial jet manufacturing, though its early efforts in the 1970s to 1990s ended in failure. In the early 21st century, China clearly identified commercial aircraft as a key “priority” industry.
In May 2008, with a $700M capital injection backed by the Chinese regime, COMAC was established, with its first commercial aircraft being the ARJ-21 regional jet. Over the past few decades, China’s “other transport industry” (aerospace manufacturing being a crucial component) has experienced explosive growth, partly due to heavy development support for COMAC. From 1995 to 2022, China’s global market share in this industry grew from 1.8% to over 14%, an increase of over 700%. The U.S. still leads in the field, but like many other high-tech sectors, is being rapidly caught up by China.
An evaluation in December 2022 found that the first C919 aircraft delivered by COMAC to China Eastern Airlines was a “knockoff” aircraft imitating the first-generation Boeing 737 MAX or Airbus A320. Approximately 91% of its critical systems are imported from foreign suppliers, with only 14 out of 82 suppliers being Chinese enterprises.
Analysis indicates that COMAC’s biggest challenge is integrating top-tier semiconductor manufacturing equipment and jet engine suppliers globally. With low production volume, complex technology, and the inability to rapidly iterate and learn from successes like the electric vehicle industry relying solely on massive subsidies for large-scale production, and rapid market dominance.
In 2020, the Center for Strategic and International Studies (CSIS) calculated that COMAC received a total of $72.1 billion in subsidies over the past 12 years from the Chinese government, not including undeclared R&D subsidies, free or low-cost land and public facilities provided by the Shanghai municipal government, tax incentives, and more.
China has long practiced a “technology-for-market” strategy, particularly in aerospace development. COMAC also aims to promote independent research breakthroughs and overcome technological bottlenecks through international partnerships and joint ventures.
Among Western aircraft manufacturers, Airbus dominates the Chinese market. As of now, out of Airbus’ 10 global assembly lines, two are in China. From 2010 to 2018, Boeing’s and Airbus’s aircraft sales in China were almost equivalent, but from 2019 until the beginning of this year, Airbus sold approximately four times as many planes as Boeing in China.
By cooperating with China, Airbus has also paid a significant price. Analysts point out that the C919 closely resembles the A320 produced by Airbus in Tianjin, prompting Western manufacturers to become cautious about technology transfer.
Moreover, COMAC has been pushing for suppliers of the C919 to manufacture parts in China. While some suppliers have started local production, most critical technologies and components, especially avionics, engines, and hydraulic systems, are still imported from Western countries.
Interestingly, in return, China has long been urging Western aircraft manufacturers to use Chinese-manufactured components. Currently, over half of Airbus aircraft include at least some Chinese-made parts.
In terms of technological superiority strategies, China does everything possible, mainly through theft and espionage, especially in the aerospace sector. In February 2020, the Director of the U.S. National Counterintelligence and Security Center, William Evania, specifically noted that China’s top two areas for technology theft are electric vehicles and aircraft.
Almost all Western aerospace companies, from Airbus, Boeing, and General Electric Aviation Group to Rockwell Collins and Safran Group, have been targets of Chinese network espionage activities.
Industrial Week revealed in its article, “How China Steals an Aircraft,” that for a mere $3,500, Chinese security recruited General Electric (GE) engineer Zhang Zhanggui to steal GE’s confidential information. Spies at the Safran Group plant in Suzhou, France’s aerospace manufacturer, implanted malicious software in the company’s computer network to download confidential files. From 2010 to 2015, a Chinese hacker group named “Turbine Panda” launched multiple cyber-espionage attacks on several C919 engine component suppliers, causing significant losses.
Another Chinese tactic is secretly acquiring foreign aerospace companies. For example, in 2010, Aviation Industry Corporation of China’s Technify Motor acquired Teledyne Continental Motors (TCM) for $186 million, with TCM formerly known as Continental Motors Company and its subsidiary Continental Aerospace Technologies (CAT). Shockingly, the Aviation Industry Corporation even received government subsidies to maintain CAT’s operations in the U.S.
Additionally, in 2016, Aviation Industry acquired German Aerotec to gain access to aircraft steel structures and indirectly enter Airbus’ network. In 2021, AVIC Capital acquired a minority stake in Spain’s aerospace structure expert, Aernnova. In the mid-2010s, to obtain turbofan engine technology, China’s AECC attempted to acquire Ukraine’s Motor Sich company, which fell through under Western pressure.
Through various mechanisms, China forces its airlines to purchase COMAC’s planes, including pressuring for having enough Chinese-made airplanes in fleets to gain priority landing and take-off times.
Furthermore, China aggressively markets its aircraft worldwide under the guise of the “Air Silk Road.” In addition to global sales of Chinese aircraft, the “Air Silk Road” initiative advocates aligning civil aviation rules, standards, and certifications with partner countries. It also aims to provide financing for these countries’ transportation infrastructure and explore the possibility of local suppliers participating in China’s aerospace supply chain.
Another goal of the “Air Silk Road” initiative is to stimulate passenger demand by “strengthening route network connections with countries along the Belt and Road, opening new international passenger and cargo routes, and increasing flight frequency.”
To increase the market penetration of domestically-made aircraft in emerging markets, Chinese entities have bought stakes in regional airlines. For example, in November 2025, Chinese investment acquired 49% of Lao Airlines. In April 2026, the Vietnamese budget airline VietJet Air agreed to lease up to 10 Chinese-made C909 regional jets.
Chinese state-owned enterprises have long taken advantage of massive industrial subsidies to achieve significant economies of scale and then engage in low-cost dumping to capture market share globally. Chinese imports of electric vehicles into the European market are 32.5% cheaper than similar European models. The C919 is expected to be priced between $90 million and $100 million, lower than similar products from Boeing and Airbus.
To prevent these threats from materializing, the article proposes a series of policy recommendations centered around technology/innovation, labor/skills, and trade policies. Among the key messages, the U.S. and Western countries must unequivocally reject China, and Western countries, including Asian and European allies, must declare unequivocally that they will not allow the purchase of Chinese aircraft, no matter how much domestic airlines may aim to save costs.
The author notes that while COMAC is currently far from reaching industry-leading technology, especially in engines and advanced systems, with limited aircraft models, it cannot compete with China’s continued subsidies and protection, as well as the expanding influence in emerging markets. Over time, this could pose a serious threat.
The aerospace industry heavily relies on scale and profits from a small number of sales. Even a slight loss of market share can have a huge impact on existing companies and their competitiveness. While the real pain may not be felt in the next decade, when it does come, the situation may have advanced to a stage where there’s no cure.
The U.S. and the EU (along with major allies like Japan and South Korea) must implement coordinated policy responses focusing on increasing competitiveness while restraining COMAC’s development. Otherwise, the Western commercial aviation industry may be destroyed by China and eventually have to depend on China’s whims and wishes.