Trade War, Spy Claims Cloud Horizon for China Airshow

November 5, 2018 Updated: November 5, 2018

SHANGHAI/BEIJING—Trade frictions with the United States and accusations of industrial espionage are set to cast a cloud over China’s largest aerospace meeting this week, as suppliers consider what the country’s slowing economy could mean for booming jet demand.

The biennial Airshow China, to be held in the coastal city of Zhuhai during Nov 6-11, is traditionally an event for Beijing to showcase its aviation technology in front of aerospace executives, diplomats and arms buyers from over 40 countries.

But analysts say they are not expecting many headline announcements or big deals this year as a bruising trade war between Beijing and Washington and a slowing Chinese economy cause companies to be cautious.

While the tarmac will be filled with planes from the likes of Airbus and Embraer, the main symbol of China’s own commercial aviation ambitions, the Commercial Aircraft Corp of China’s (COMAC) C919 narrowbody jet, will not be there. A senior executive said it was undergoing test flights.

Boeing Co which is opening a 737 completion plant in China, will not display any of its planes but only models at its exhibition stand.

“We’re not expecting a big turnout this year,” said Chinese aviation expert Li Xiaojin. “As you know the Chinese economy is not doing great this year, so companies that would normally send 10 people will only send five instead.”

China’s economic growth has weakened to its slowest pace since the financial crisis and its relations with other countries have been tested by Beijing’s ambitions to grow its own domestic champions in industries such as aviation.

So far, Beijing has avoided showing its hand in either direction as deals by Chinese leasing firms to buy foreign aircraft are either pushed back or kept private.

Recent U.S. allegations in court filings that Chinese intelligence attempted to steal information on a French-U.S. turbofan engine developed for commercial jetliners—a clear reference to the Safran-General Electric LEAP—could further fray relations, analysts said.

Last week, prosecutors announced an indictment against 10 defendants, including two Chinese intelligence officers and other computer hackers and co-conspirators who are all accused of breaking into American company computers to steal the data.

In October, the Justice Department for the first time succeeded in extraditing a Chinese intelligence officer, Yanjun Xu, to the United States to stand trial for conspiring and attempting to commit economic espionage and steal trade secrets from multiple U.S. aviation and aerospace companies, including GE Aviation, a unit of General Electric.

U.S. President Donald Trump said on Nov. 2 that he will likely make a deal with China on trade, adding that a lot of progress had been made to resolve the two countries’ differences but warning that he still may impose more tariffs on Chinese goods.

By Brenda Goh & Stella Qiu