China's Investment in U.S. General Aviation Companies

Miki Barnes
March 16, 2020

The involvement of China in U.S. general aviation airports and the flight training industry is not limited to pilot instruction at publicly subsidized Oregon facilities such as Hillsboro, Troutdale, Redmond and many other airports around the country. In fact, it extends to direct investments by the Chinese in U.S. general aviation companies.

Of the nearly 20,000 airports in the U.S., approximately 500 provide commercial scheduled airline passenger service. Most of the remaining 19,500[1] are classified as general aviation and, as such, predominantly serve flight training businesses, recreational pilots, and private and corporate jet owners.

The number of general aviation airports in the U.S. exceeds the number of commercial airports by a factor of 40 to 1. By contrast, of the 450 civil airports in China, just over half, 238, are classified as general aviation.[2] Civil aviation in China is heavily regulated and restricted, in part because "the military controls all the airspace..."[3]

According to a 2017 report, Chinese Investment in U.S. Aviation, "...the U.S.-China Economic and National Security Review Commission (USCC) asked RAND to assess Chinese investment in U.S. aviation." Part of RAND's directive was "to assess the implications of the resulting technology transfer on U.S. national security and aviation industry competitiveness."[4]

According to the report,

"Since 2005, Chinese companies have steadily increased investment in U.S. aviation by acquiring, merging, or establishing joint ventures with more than a dozen U.S. aviation companies without directly running afoul of U.S. regulation. Over the past decade, we identified from open sources on average one to two investments in U.S. aviation per year..."[5]

China's investments in general aviation have included the following:

• Mergers and acquisitions - Brantly, Superior, Teladyne, Nexteer, Cirrus, Glassair, Enstrom, Mooney, Southern Avionics, United Turbine (UT), Align and Henniges
• Joint ventures - Brantly, Cessna and GE
• Other agreements - Sikorsky, U.S. Aerospace, Epic Air, COMAC America and ICON
• Failed deals - Hawker, ILFC, Liberty and Sherpa.[6]

A number of the above companies engage in the manufacture of aircraft while others are part of the supply chain, specializing in avionic services, sales, parts, components, hardware, engine overhauls, and interior upgrades.

Chinese Defense Contractor a Major Investor in U.S. General Aviation Companies

According to RAND, the Aviation Industry Corporation of China (AVIC), a Chinese state-owned defense contractor, "has undoubtedly been the most prolific investor in U.S. aviation."[7] AVIC was identified by the Stockholm International Peace Research Institute as one of the top defense companies worldwide.[8]

The Cirrus Aviation sale is but one example. This company, which was sold to AVIC in 2011, was described as "one of the world's largest makers of GA aircraft, second only to Cessna, and is also one of the world's largest makers of piston-powered GA aircraft."[9] The report went on to say that the sale raised "technology-transfer concerns that might have national security or competitive implications."[10]

Other general aviation investments by AVIC and its subsidiaries such as Continental Motors Group include: Cessna, Teledyne, Nexteer Automotive, Southern Avionics, Align Aerospace, Henniges Automotive Holdings, GE Aviation of the United States, United Turbine and UT Aeroparts Corporations.[11]

Though the RAND report downplayed risks involved in China's U.S. aviation investments on the basis that general aviation technologies are "not particularly relevant to commercial or military aircraft,"[12] it did, nonetheless, acknowledge,

"There is always a possibility for some civil-military integration or comingling of civilian technologies with the military side. This is a very real concern in China because 'civil-military integration' continues to be emphasized by PRC [People's Republic of China] political and military leaders...civil-military linkages are real and numerous."[13] The report also states that, "A more competitive civil aviation industry broadly supports Chinese military aviation (e.g., larger talent pool, scales of efficiency, greater supply chain options)."[14]

It is worth noting that this RAND report was released two years before the Department of Homeland Security issued a warning stating that small planes can be vulnerable to hacking and as such can pose a national security risk.[15]

Linkages between Civil Aviation and the Military in China

The numerous civil-military linkages and "larger talent pool" are worthy of further reflection. A significant segment of China's students pilots receive training through the Hillsboro Aero Academy (formerly Hillsboro Aviation)[16] which has locations at the Port of Portland owned and operated Hillsboro and Troutdale Airports, as well as the Redmond Airport in Central Oregon. According to Hillsboro Aero Academy's website,[17] their graduates go on to work for Air China, a Chinese state-owned airline, as well as Eva Air, a Taiwanese company that provides flights to China and other Asian and European destinations "...we’re even approved by the Chinese government for airplane and helicopter training."[18]

Per a 2013 Pamplin Media Group article,

"Hillsboro Aviation has trained students from more than 75 countries with those from Europe, Brazil, Taiwan and China making up a few of the most recruited."

The article further reveals that,

"Hillsboro Aviation's Troutdale facility was opened on behalf of a request by Portland Community College to help grow their aviation flight program."[19]

The Portland Community College (PCC) Aviation Sciences program partners with Hillsboro Aero Academy (HAA). PCC provides the classroom courses while HAA provides the flight training, roughly 250-270 hours of flight time per student. This translates into 10 to 11 hours of noise over homes and neighborhoods per student as well as the release of lead emissions, PM2.5, and a host of other pollutants.

This joint business/educational venture is underwritten by public subsidies garnered through the FAA Airport Improvement Plan fund for infrastructure and air traffic controllers, Connect Oregon money to help pay for the construction of the Hillsboro Airport third runway, and educational tax dollars invested by PCC for their Aviation Sciences program.

China's Shameful History of Human Rights Abuses and Oppression

This state of affairs raises a number of legitimate questions, not the least of which is: Why are the U.S. in general and Oregon in particular, either directly or indirectly, contributing to the development of the China's military, especially in light of the enmity that exists between these countries? The People's Republic of China is a totalitarian regime with a long history of implementing repressive and brutal tactics in the pursuit of its goals. A few examples follow.

• For over six decades China has been committing genocide against Tibet, the home of a peace-loving people who have long advocated for autonomy and independence. The Dalai Lama was forced to flee his homeland in 1959 due to the Chinese invasion of his beloved country. Under Chairman Mao tens of thousands of Tibetans were killed. "Tibetans were not only sent to the firing squad but burned alive, drowned, strangled, hanged, buried alive, drawn and quartered, and decapitated."[20] Monasteries, sacred texts and holy objects were destroyed. "In Central Tibet, out of 2.500 monasteries, only 70 were spared."[21] Attacks on monasteries are still occurring, one as recently as 2019.[22] According to a 2020 Human Rights Watch report, "Authorities in Tibetan areas continue to severely restrict religious freedom, speech, movement, and assembly, and fail to redress popular concerns about mining and land grabs by local officials, which often involve intimidation and arbitrary violence by security forces."[23]
• China is now using the same brutal tactics implemented against the Tibetans to persecute Uighur Muslims. A 2/17/2020 New York Times article stated that, "As many as a million ethnic Uighurs, Kazakhs and others have been sent to internment camps and prisons in Xinjiang over the past three years, an indiscriminate clampdown aimed at weakening the population’s devotion to Islam...Nearly a half a million children have been separated from their families and placed in boarding schools..." China's "re-education" includes keeping the children under heavy surveillance while instructing them to eschew their culture, religion and family traditions. Instead they are taught to embrace the values of communist China's totalitarian regime.[24]
• China is currently implementing repressive and ruthless measures aimed at squelching the democracy movement in Hong Kong. In June of 2019 millions of protestors marched in opposition to China's efforts to deny fair trials and eliminate due legal process. The conflict remains ongoing as China continues to ignore calls for democracy and independence. Though China eventually withdrew the extradition order that initially spurred the protests, tensions remain high.[25]
• For more than 30 years, China has suppressed information related to the 1989 massacre of hundreds, if not thousands, of pro-democracy protestors at Tiananmen Square.
• China continues to persecute journalists and to arrest and incarcerate political dissidents and university professors who speak out about human rights and democratic values.
• China has developed an extensive system designed to monitor people within China and around the world. "...the Chinese Communist Party, worried that permitting political freedom would jeopardize its grasp on power, has constructed an Orwellian high-tech surveillance state and a sophisticated internet censorship system to monitor and suppress public criticism. Abroad, it uses its growing economic clout to silence critics and to carry out the most intense attack on the global system for enforcing human rights since that system began to emerge in the mid-20th century."[26] According to a PBS News Hour report, "China now has more than 200 million cameras, including at the entrance of an international conference. And cameras use software that recognize not only faces, but also how people walk, and then can then track their location as they move."[27]

Closing Remarks

For far too long, U.S. aviation policy has ignored human rights while maintaining a business-as-usual approach focused on garnering profits – a strategy that has led to national security concerns, a diminishment of livability and degradation of the environment for many impacted residents. Rather than continue down this reckless path, the time has come to take a stand for basic human rights and values. A good place to begin is by heeding the words of Kenneth Roth, the Executive Director of Human Rights Watch,

"No other government is simultaneously detaining a million members of an ethnic minority for forced indoctrination and attacking anyone who dares to challenge its repression. And while other governments commit serious human rights violations, no other government flexes its political muscles with such vigor and determination to undermine the international human rights standards and institutions that could hold it to account.

"If not challenged, Beijing’s actions portend a dystopian future in which no one is beyond the reach of Chinese censors, and an international human rights system so weakened that it no longer serves as a check on government repression."[28]

U.S. federal, state and local officials have a solemn responsibility to ensure that national security, the environment, public health, and fundamental democratic principles are protected from further encroachment by this totalitarian regime.

In addition, residents deserve clarity about how the flight training industry does business in Oregon, as there appear to be few safeguards and little transparency in place to protect the greater good. Even though Oregon's general aviation airports are subsidized by public funds, the Port of Portland routinely claims that it doesn't know who is training at the Hillsboro and Troutdale Airports.

As a result it appears that profit-driven private corporations and flight training schools, in partnership with Portland Community College, are wheeling and dealing with totalitarian regimes like China and other foreign interests with little discernable government oversight. The self interest and monetary gain bias inherent in this model skew the decision making process towards exploiting the community in order to cater to corporate interests and China's economic and military agenda.

Despite the guarded stance displayed by the Port, Hillsboro Aero Academy, Hillsboro Aviation and Portland Community College, there is significant evidence that U.S. companies are training large numbers of Chinese student pilots. A 2017 National Air Transportation Association (NATA) posting stated that "Flight Schools in Oregon, Arizona and Illinois are reporting over 50 percent of their students are now from Chinese airlines."[29] Five years ago, an Air and Space article reported that "Chinese airlines spend the equivalent of $162 million annually to send 80 percent of the student pilot candidates abroad: about 2,000 to the United States, the others to Europe and Australia."[30]

Because the line between civil and military aviation in China is murky, it is quite possible that Oregon has become a hub for providing flight training to students, many of whom may contribute to the build up of the military in the People's Republic of China.

This flight training, in combination with the RAND report findings on the multiple investments by AVIC, a Chinese state owned defense contractor, in U.S. general aviation companies, should bring into question policies espoused by federal, state and local politicians that force local residents to subsidize the expansion of the aerospace and defense industries on behalf of the People's Republic of China.

When China was admitted to the World Trade Organization in 2001, the expectation was that their participation would lead to a democratization movement in China.[31] In fact, the opposite is the case. While President Xi Jinping has become increasingly more repressive and authoritarian, U.S. politicians are all too quick to voice their support for their favorite dictators. The state of Oregon is not immune, as evidenced by its authoritarian, non-democratic, and environmentally irresponsible approach to managing its airports. In so doing, it has essentially chosen to promote the interests of the People's Republic of China and other foreign governments over the health and well-being of the community. This amounts to a disgraceful betrayal of Oregon residents.

Democracy requires vigilance and a respect for a vote of the people rather than autocratic decrees issued by the FAA, the Port of Portland and private aviation companies. The U.S. constitution was founded upon a core principle of government of, by, and for the people as opposed to the current model which has devolved into government of, by and for corporate and foreign interests.

Sources

[1] National Analysis of the Populations Residing Near or Attending School Near U.S. Airports. U.S. Environmental Protection Agency. (EPA). EPA-420-R-20-001. (February 2020). Last accessed on-line 03/16/2020.

[2] Keju, Wang. More Airports in Pipeline as Travel Demand Rises. ChinaDaily.com.cn. (11/09/19). Last accessed on-line 03/16/2020.

[3] Ohlandt, Chad, Morris, Lyle, Thompson, Julia, Chan, Arthur and Scobell, Andrew. Chinese Investment in U.S. Aviation. RAND Corporation. (2017). Pg. 13. Last accessed on-line 03/16/2020.

[4] Ibid. Pg. iii.

[5] Ibid. pg. xii.

[6] Ibid. Pg. 46

[7] Ibid. Pg. 58

[8] China's NORINCO, AVIC Among Top 10 Defense Companies Worldwide; SIPRI. DEFENCEWORLD.NET. (12/17/2015). Last accessed on-line 03/09/2020.

[9] Ohlandt, Chad, Morris, Lyle, Thompson, Julia, Chan, Arthur and Scobell, Andrew. Chinese Investment in U.S. Aviation. RAND Corporation. (2017). Pg. 49. Last accessed on-line 03/16/2020.

[10] Ibid. xiii.

[11] Ohlandt, Chad, Morris, Lyle, Thompson, Julia, Chan, Arthur and Scobell, Andrew. Chinese Investment in U.S. Aviation. RAND Corporation. (2017). Pgs. 49-55. Last accessed on-line 03/16/2020.

[12] Ibid. Pg. 72.

[13] Ibid. Pg. 82.

[14] Ibid. Pg.88.

[15] Associated Press. U.S. Warns that Small Planes are Vulnerable to Hacking. MarketWatch. (7/19/19). Lat accessed on-line 03/16/2020.

[16] Hillsboro Aviation is a fixed base operator located at the Hillsboro Airport. In 2014, Max Lyons, the owner of Hillsboro Aviation sold the flight training portion of it's business to Hillsboro Aero Academy, a company which is owned by two out of state investors. Max Lyons stayed on as the manager and one of the minority owners of Hillsboro Aero Academy.

[17] Turn Your Dream to Become a Pilot into a Career. Hillsboro Aero Academy website. Last accessed on 3/16/2020 at https://flyhaa.com/.

[18] Realize Your Dream at Hillsboro. Hillsboro Aero Academy website. Last accessed on-line 3/16/2020 at https://flyhaa.com/about/.

[19] Hachman, Carl. Troutdale Flight School is International Cockpit for Pilots. PAMPLIN Media Group. (06/04/2013). Last accessed on-line 03/16/2020.

[20] Dalai Lama and Stril-Rever. Sophia. My Spiritual Journey. (2009, 2010). Pgs. 181-182.

[21] Ibid.

[22] Tibet. World Report 2020. China: Events of 2019. World Report 2020. Human Rights Watch. Last accessed on-line 03/16/2020 at https://www.hrw.org/world-report/2020/country-chapters/china-and-tibet.

[23] Ibid.

[24] Qin, Amy. In China's Crackdown on Muslims, Children Have Not Been Spared. New York Times. (2/17/2020). Last accessed on-line 03/16/2020.

[25] Hong Kong. World Report 2020. Human Rights Watch. Last accessed on-line 03/16/2020.

[26] Roth, Kenneth. China's Global Threat to Human Rights. Human Rights Watch World Report 2020. Last accessed on-line 03/16/2020.

[27] Schifrin, Nick. and Sagalyn, Dan. China Power and Prosperity: How China's High Tech 'Eyes' Monitor Behavior and Dissent. PBS NewsHour. Last accessed on-line 3/16/2020.

[28] Roth, Kenneth. China's Global Threat to Human Rights. Human Rights Watch World Report 2020. Last accessed on-line 03/16/2020.

[29] Culmone, Claudia. China's Aviation Growth Fuels U.S. Flight Schools. NATA Compliance Services Blog. (11/10/2017). Last accessed on 3/16/2020.

[30] Emmett, Arielle. China Needs Pilots. (August 2015). Air and Space. Last accessed on-line 3/16/2020.

[31] Council on Foreign Affairs. What Happened When China Joined the WTO? World 101:Global Era Issues. Last accessed on-line 3/16/2020.