The China Problem

Back in the dark ages when j-school looked like it might lead to a sort of career, I was asked on a fall registration form to "state minor course of study, if any." With all the thoughtful consideration a 21-year-old could muster, I checked the box next to Asian history. Somehow, sociology seemed boring and my math skills were too poor to go for nuclear engineering.

That led me to the classroom of Kenneth Folsom, a then well-known scholar of Chinese history. He introduced me to the word xenophobic and it came up often in the study of Chinese and Japanese history, for both cultures recoiled from fear of the corrosive effects of Western influence. That's where the treaty ports you may have heard about came from.

Forty years later, I wonder if the shoe is on the other foot. As our Question of the Weekrevealed, U.S. owners and pilots take a dim view of Chinese investment in our aircraft industries and if xenophobic is too strong, wariness certainly is not.

The global economy being what it is, the China problem-if it is a problem-is encompassing. Surveying my desk, I find a USB headset, a pocket flashlight, an iMac and Microsoft mouse, an HP monitor, three external drives, a printer and a bucketful of thumb drives, all made in China. A helmet intercom whose battery I happen to be charging is the exception; it was made in Korea, as was the helmet it's attached to.

The point is that you can't engage in daily life or commerce without buying, owning or using something made in China. Aircraft and components have been and remain one exception to this rule. Even if some aviation companies are owned by Chinese interests, the manufacturing is done here or in Europe. But still, 38 percent of the readers who responded to our poll said Chinese investment in Western companies will result in the theft of technology and ought to be stopped.

This is an understandable sentiment, albeit one that's utterly impractical and potentially self-defeating if you set aside the patriotic in favor of the economic. In case you haven't noticed, the world has grown complicated since a bright line existed between us and them. Now, us is them and vice versa. I'll give you but a small example.

When I was at Lycoming two weeks ago, I was peering through the lens shooting the DEL 120, the company's diesel offering. I punched the pause button and asked myself: how did this thing get here? Why is it here? It's a long journey, but two reasons are that 10 years ago, the then-Thielert Aircraft Engines was the principal engine provider to General Atomics that makes … the Predator drone, now evolved into the Gray Eagle. Drone technology was really blooming back then, but it was mostly in the shadows.

General Atomics sniffed out that Thielert was about to go on the rocks and started looking for another engine supplier. That eventually led them to an Italian company called DieselJet, which aviationized a Fiat car diesel similar to the Mercedes Benz model Thielert used as it aerodiesel basis. They wanted plausible U.S. sourcing and that's where Lycoming came in. Enter the DEL 120.

When Continental bought Thielert in 2013, invested and turned it around, General Atomics should have had another capable engine supplier. But Continental is a Chinese-owned company and programs as sensitive as cutting-edge drones aren't going to buy engines from Chinese companies. It's not like the engines are dropped off at a blind post office box. Engineers go back and forth from the airframer to the engine maker and they unavoidably learn things about each others' systems. You can see the problem.

Now, of course, in Thielert-cum-Continental, the Chinese have their own highly developed diesel engine and U.S. and German talent to help them figure out how to put it into their own drones. I thought of this when I read James Fallows' recent long-form article in The Atlantic about how the U.S. public has become disconnected from its own highly evolved military.

In it, he said this: "During the years in which the United States has enjoyed a near-monopoly on weaponized drones … they have killed individuals or small groups at the price of antagonizing whole societies. When the monopoly ends, which is inevitable, the very openness of the United States will make it uniquely vulnerable to the cheap, swarming weapons others will deploy."

Do hoists and petards come to mind? They should. But as with everything else in the complex, interrelated and interdependent world we live in, there's a balance point, if not multiple balance points. When AVIC invested in both Cirrus and Continental, it brought in significant investment. The Middle Eastern money keeping Cirrus afloat pre-AVIC was not going to go another round of funding for Cirrus to complete its jet. But the Chinese did. Nor was Teledyne-nor any other Western company-going to seriously invest in Continental and bet big on diesel. But the Chinese did. (To be fair, Continental made its first diesel investment before AVIC purchased the company.)

These have directly observable effects in the factories at hand. Continental's diesel operation in Germany is perking with new energy is so is the Mobile engine plant. Jobs that may have been in jeopardy before are now less likely to be. That's doubly true because the Chinese appear to have far different standards for return on investment than do Western companies, where next-quarter thinking pervades the boardrooms.

In the favor of those airplane and engine factories, the Chinese are slightly bending the rule that capital will find the most efficient means of growing itself. Aviation is all but immune to that business school assumption.That's another way of saying Cirrus and Continental weren't likely to see Western investment, even though the opportunity was there to do that for several years, if not a decade or more. So if you blame the Western companies for selling to China, well, we had our chance many times over.

There is, among people who think about such things, a widely debated notion that states who are strong trading partners will be less likely to resort to armed conflict when their interests clash. Nice theory. I'm not sure it's true now, if it ever was. Prior to World War I, Britain and Germany had strong trade ties, but also naval competition, just as the U.S. and China do now. The potential for conflict in the Pacific, particularly in the East China Sea, isn't trivial. Allowing myself a worst-nightmare moment, it's possible to conceive of Continental-powered drones chasing Lycoming-powered drones with prejudicial intent. As I said, complicated world.

Every story needs a conclusion, so here's mine: The balance point swings in favor of allowing if not encouraging Chinese companies to invest in U.S. general aviation. The investments will foster jobs, or at least protect them in the short term, and also products that might otherwise never have been created. Mooney's new M10 series is a recent case in point. Even if those products go to China, Western customers are almost certain to buy them, too. As a community, we are facing the fact the general aviation may be in dusk for a long time and that when it does emerge, the sun will rise further east than we may have ever imagined.

GA technologies are by no means our most sensitive secrets, nor do they necessarily illuminate the path to those secrets. The Chinese aren't going to buy Boeing or Northrup Grumman. And if it ever comes to that, the world will have grown complex beyond my meager ability to analyze it.

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