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Many aviation technologies are inherently dual-use. Thus, to the extent to which foreign firms are contributing to the capability of Chi-nese companies to produce civilian aviation products, they are also contributing to China’s capability to produce military products. These military products could include whole systems, such as transport air-craft or utility helicopters, or important subsystems and components. In addition, although North American and European countries restrict the transfer of weapons technologies to China, the restrictions vary by country. This variability has enabled China to acquire from other coun-tries technologies that the U.S. government would not have allowed American companies to transfer. Specific examples include Eurocop-ter’s assistance to China in developing the rotor system for a new heli-copter that was later determined to have assisted in the development of a new attack helicopter, and Turbomecca’s collaboration with AVIC to develop a turboshaft engine for a military transport helicopter, thus avoiding a potential U.S. embargo on the Pratt & Whitney engine the helicopter was originally designed to use.
There is no question, therefore, that foreign involvement in China’s aviation manufacturing industry is contributing to the development of China’s military aerospace capabilities. There is also little doubt that this is a deliberate policy of the Chinese government. This is not to say that encouraging foreign involvement in China’s aviation manufactur-ing industry is simply a ruse to facilitate the development of China’s military aerospace industry. Rather, encouraging foreign involvement in China’s aviation manufacturing industry serves two equally impor-tant purposes for the Chinese government: (1) it facilitates the develop-ment of a highly valued commercial sector, as part of China’s economic development strategy, and (2) it aids the development of China’s mili-tary aerospace industry.
Chinese Government Policies Toward Foreign Aviation Manufacturing Companies
International aerospace sales historically have involved not just the par-ticipating firms, but also the governments of the countries in which they are based. Many airlines are owned and operated by governments, and national governments, even in nominally free-market countries such as the United States, see it as their responsibility to promote the overseas sales of their nations’ products, particularly high-value-added goods such as airliners. Deregulation and market competition have diminished the government’s role in aircraft sales but certainly have not eliminated it.
Japan is a prime example of government influence on airplane sales. Since the 1970s, the Japanese government has subsidized three Japanese manufacturers—Mitsubishi, Fuji, and Kawasaki Heavy Industries—in taking on growing roles as major suppliers to Boeing, producing 15 percent of the 767, 22 percent of the 777, and 35 percent of the 787 (Newhouse, 2007, pp. 28, 171–172). This has involved the transfer of significant wing design experience and composite technol-ogy. Boeing has greatly benefited from the arrangement, with the dom-inant share of large commercial aircraft sales to Japan, access to low-cost capital, and risk-sharing with the three Japanese manufacturers (Newhouse, 2007, p. 61).
　
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