(Bloomberg) — China put on a spectacular military parade to celebrate the 70th anniversary of Communist Party rule last year, and President Xi Jinping wasn’t the only star of that show.
As Xi and other leaders watched from a Tiananmen Square grandstand, a squadron of fighter jets, attack helicopters, troop transports and surveillance planes roared overhead in a display orchestrated to impress TV viewers at home and warn potential aggressors abroad. The company that made those aircraft: Aviation Industry Corp. of China (AVIC), a state-owned conglomerate with 100-plus subsidiaries and 450,000-plus employees — more than Boeing Co. and Airbus SE combined.
Being China’s premier military aerospace contractor and a pillar of Xi’s strategy to become an industrial superpower are enough by themselves to warrant attention from the U.S. government. But AVIC builds more than war machines, running a civilian business that makes airliners and private jets — some built with parts made by joint ventures with American companies.
“AVIC is aspiring to be China’s Boeing and Airbus,” said Zhanfu Yu, a partner with consultancy Roland Berger in Beijing focusing on aerospace and defense. “Aerospace is a capital-intensive industry and, therefore, fits with China’s state system. AVIC has benefited from such state backing.”
With relations between Washington and Beijing deteriorating, and companies increasingly being caught in the crossfire, AVIC could join Huawei Technologies Co., ByteDance Ltd.’s TikTok and Tencent Holdings Ltd.’s WeChat as a target for U.S. politicians wanting to crack down on China’s reach. President Donald Trump’s administration in June already put AVIC on a list of firms it says are controlled or owned by China’s People’s Liberation Army.
AVIC hasn’t addressed those allegations publicly and didn’t respond to requests for comment for this story. The government says it owns AVIC.
The Beijing-based conglomerate is one of the biggest