China is projected to overtake the United States as the world’s largest commercial air passenger travel market by the mid-2020s.

To meet this rapidly growing demand for air travel, Boeing’s latest 20-year forecast projects 7,000 new commercial passenger jets will need to be delivered to Chinese operators over the next two decades.

That type of demand – combined with new investment in manufacturing facilities and joint ventures from the likes of Airbus, Boeing, Honeywell and Collins Aerospace – is fueling the growth and future potential for expansion of China’s avionics industry. The majority of avionics manufactured in the country are produced in much the same way airframe programs are: through joint ventures and partnerships with the aforementioned manufacturers and others.

The U.S. government plans to raise tariffs from 10 to 25 percent on up to $200 billion worth of Chinese goods, including wiring and rubber for use on aircraft, optical instruments, parts and accessories for aeronautical or space navigation and dozens of other line items related to aerospace, unless the two sides can reach a new comprehensive trade agreement by March 2.

But that has not stopped progress in western aerospace manufacturers with Chinese manufacturing facilities from moving forward supplying programs such as those being built by the Aviation Industry Corporation of China (AVIC) and the Commercial Aircraft Corporation of China (COMAC).

One of the biggest aircraft development programs that will continue to fuel investment and provide demand for avionics systems is COMAC’s ongoing development of the C919 program, which the state-run company wants to use to compete with the Airbus A320 and Boeing 737 on a global scale.

Avionics for the C919

COMAC began production on the C919 in December 2011, with the goal of challenging the duopoly of international commercial passenger carrying jets controlled by Airbus and Boeing. The aircraft made its maiden flight in 2017 at Shanghai’s Pudong International Airport and is scheduled to achieve its first delivery to airlines in 2021. To date, COMAC has amassed more than 1,000 orders for the C919 from Chinese airlines and lessors.

The majority of the C919 program’s key components, such as the engines and avionics systems, are supplied by western companies such as Collins Aerospace, GE Aviation and Honeywell Aerospace – which all have joint ventures and partnerships with Chinese companies supplying COMAC. The corporation requires foreign suppliers to manufacture parts made for the C919 in China.

Aviage Systems, for example, is a 50/50 joint venture between GE Aviation and AVIC. Currently, it specializes in the supplies of the integrated modular avionics system to the C919.

“We’re responsible for three avionics work packages on the C919,” said Alan Jones, the former CEO of Aviage Systems, now in a new role with GE, during an interview with Avionics International.

“It represents the next generation of avionics systems architecture in a multi-functionality, display-driven setup, taking on important tasks such as core data processing, signal transmission and signal function logic conversion,” Jones said. “Through the avionics system a pilot processes complicated data, and connects and interacts with flight control systems to have full control of the plane and fulfill flight missions.”

Honeywell Aerospace is another major supplier of avionics to the C919. According to Amit Kaul, head of the business and general aviation wing of Honeywell’s Asia Pacific aerospace division, the company has more than 12,000 employees in China right now.

“We have 700 aerospace experts working across seven manufacturing plants, including two joint ventures for the C919,” Kaul said. “These include supplying the aircraft’s fly-by-wire system with HonFei Flight Controls and the supply of the braking system under a joint venture with Boyun Aviation Systems.”

Collins Aerospace also supplies avionics technologies to the C919, including its communication, navigation and integrated surveillance systems under joint ventures established with China Electronics Technology Avionics Company and AVIC.

COMAC is projecting demand for 2,300 C919s, which cost half as much as an A320 or 737 at $50 million.

The J-20 Program

Global avionics majors’ choice to operate in close cooperation with local manufacturers isn’t just due to the specifics of doing business in China; it’s an implicit requirement imposed by Chinese companies in order for foreigners to do business, which over time has become common practice.

In 2015, the Chinese government released its “Made in China 2025” strategic plan, through which it seeks to become a major manufacturer of high-end technology, including avionics and aerospace equipment. In pursuit of this goal, Chinese state-owned companies leverage the country’s highly-desirable market to persuade foreign companies seeking market access to share technology.

Liu He, a Vice Premier of the People's Republic of China and a member of the State Council, sent an emailed statement in response to an interview with Avionics International outlining the Chinese government’s position on keeping the outsourcing of the development of the nation’s commercial and military avionics industry supply chain.

“American and other Western companies, operating in the Chinese aviation and avionics sector already secured large profits thanks to technology transfer and licensing,” a representative for He said. “They benefit most from technology collaboration. The U.S. and other Western companies can get access.”

But a report published in 2018 by the United States Trade Representative accused China of using joint ventures as “a key mechanism for obtaining the technology needed to support the development of a domestic supply chain for Chinese-made aircraft.”

As an example, the report claims COMAC “has made clear that foreign suppliers to the C919 program must enter into [a joint venture] with Chinese suppliers to participate in tenders for key components and systems. This pressure is particularly prevalent for high-tech functions where Chinese capabilities are lagging.”

The U.S. government claims these activities as well as other more overt forms of economic espionage have resulted in multi-billion-dollar losses and cites them as grievances in the ongoing China-U.S. trade war.

An example of such expropriation is the development of Chengdu J-20, China’s fifth generation fighter jet. Although few details have been made public, it was largely built on the basis of Russian and U.S. technologies – including avionics – which were likely acquired through military espionage and copied by local developers. A Chinese national named Su Bin was arrested and sentenced to 46 months in federal prison in 2016 for participating in a years-long conspiracy that involved Chinese military officers hacking into the computer networks of major U.S. defense contractors in order to steal military technical data.

“China continues to lag behind in avionics for advanced fighter jets and until Chinese companies develop capabilities on a par with leading competitors from the US and Russia, they will likely double down on industrial espionage to steal designs,” said Bonnie Glaser, senior advisor for Asia at the Center for Strategic and International Studies, in a comment to Avionics International.

“China has developed techniques to target U.S. defense contractors and hack defense industry computers,” Glaser added. “Both methods are proving effective in acquiring the most advanced military assets.”

According to publicly available data about the J-20, its avionics include electronic surveillance measures, infrared search-and-track and electro-optical targeting systems, and third-party sensor data fed to it via data-link to help locate its targets. Experts believe the J-20’s avionics is most likely comparable to that installed on the F-22 and F-35 fighters, but of lower quality.

A January 2019 U.S. Defense Intelligence Agency (DIA) report assessing Chinese military air, land and sea power noted that the J-20 features sophisticated electronic warfare suites with advanced DRFM jammers and electrical optical defensive systems.

The ability of the J-20 to conduct air-to-air refueling was confirmed by Chinese state television CCTV, which broadcast footage of a J-20 with its refueling probe deployed from below the right canopy during the Zhuhai Airshow in November 2018.

Future Growth

Despite trade disputes and known state-funded efforts to steal classified military aircraft design criteria from U.S. companies, western avionics suppliers are thriving in China.

China Southern Airlines will be one of the leading reasons for this, as the airline plans to expand its domestic fleet from 786 to 1,000 cargo and passenger aircraft by 2020 and double that to 2,000 aircraft by 2035, the carrier’s chief executive confirmed during a press conference held at the World Routes conference in September 2018. The carrier selected Thales to provide the avionics for a fleet of 80 combined Boeing 737 MAX and Airbus A320neo aircraft in November.

Under that contract, Thales will equip those aircraft with flight management systems and satellite communications systems featuring access to Inmarsat satellite-based connectivity. The fleet will also be equipped with head up display systems from Thales to meet the Civil Aviation Administration of China’s (CAAC) 2025 mandate for Chinese carriers to have 100 percent of their domestic fleet equipped with head up displays.

Elsewhere, Collins Aerospace, headquartered in Shanghai, has had a presence in the country for more than 30 years, according to Grace Du, managing director for the avionics division of Collins Aerospace China.

Collins plans on continuing to expand in China, Du said, mostly through the design and launch of new products and technologies specifically designed to meet the needs of Chinese customers.

“Collins Aerospace has been active in the development of the Chinese civil aviation industry since the 1980s,” Du said. “We supplied avionics and interior systems to Chinese airlines for their Boeing and Airbus platforms. We also delivered our business and regional avionics solutions to Chinese airframers for indigenous regional airplane and helicopter programs.”

The number of new product launches has significantly increased in recent years for Collins as well, according to Du.

For instance, she said Collins supplied ProLine 4 avionics systems to the Avicopter AC312 as well as the latest displays and Pro Line Fusion 21 avionics for the new AC312E platform. Collins also served in the avionics system integrator role for these programs and has a position on Avicopter's AC352 with its Pro Line 21 radio equipment.

Through a Chinese joint venture partnership, Collins is also producing full flight Boeing 737 simulators, completing its first simulator delivery to a local pilot training center last year.

In addition to the U.S. avionics majors, Chinese aircraft-builders are interested in Russian avionics – potentially due to their comparably lower cost and generally acceptable quality level.

AVIC is currently in talks with Concern Radio-Electronic Technologies (CRET), a leading Russian designer and manufacturer of military spec radio-electronic, for the design and further supplies of avionics for a new heavy helicopter currently being jointly developed by Russia and China.

Du sees big prospects for the Chinese avionics market to continue growing into the future.

“[Collins Aerospace] anticipates several growth opportunities in China in the near future,” she said. “Government policies encourage the development of the aviation industry and collaboration with proven western suppliers like Collins. National initiatives, such as Belt & Road and Made in China 2025, should benefit the aviation industry’s further growth for years to come.”