How Airbus built its competitor’s supply chain, and why the risk doesn’t appear in any annual report
On December 30 and 31, 2025, five Chinese companies ordered 148 Airbus A320-family aircraft in 48 hours.1 Every one will be assembled at a facility co-owned with the same state enterprise whose subsidiaries build China’s rival narrowbody. The orders were placed by airlines that have simultaneously committed to 300 of that competitor’s jets, in a country whose published industrial policy is to replace Airbus entirely.
Airbus SE delivered 793 aircraft in 2025, maintained a backlog of 8,754 airframes, and generated an estimated 72–77 billion in revenue.2 Its largest single-country market is China, where over 2,200 Airbus aircraft fly with mainland airlines, representing 55% market share (per Airbus).3 The structural connection between Airbus’s dependence on that market and China’s programme to build a domestic replacement is the subject of this analysis.
I. The playbook has a name
In October 2023, the Mercator Institute for China Studies (MERICS) published The Sky Is the Limit. Its thesis: China is replicating its high-speed rail strategy in commercial aerospace. MERICS identified commercial aerospace as “Europe’s last and most crucial bastion of technological superiority in advanced transportation equipment."4
The HSR precedent is an instruction manual.
When China built its high-speed rail network in the early 2000s, it invited Kawasaki, Siemens, Alstom, and Bombardier to compete for contracts. Every contract was conditioned on technology transfer. The Ministry of Railways had three explicit principles: import state-of-the-art technology, conduct joint design and production, establish local brands.5
Within six years of licensing the Shinkansen E2 design, CRRC Sifang was producing trains without Japanese input.6 When Siemens announced a follow-on contract for 100 high-speed trains on the Beijing–Shanghai line, the Ministry of Railways denied the deal’s existence. Chinese state-owned manufacturer CNR received a $5.7 billion contract. Siemens received a $1 billion component sub-contract.7 China then forced its two state-owned rail companies to merge into CRRC, a national champion controlling 95% of the domestic market.5 By 2022, CRRC held 56% of the global HSR market. Alstom was a distant second at 15%.4 In 2023, Indonesia’s Whoosh line opened as the first complete export of China’s HSR system.6
Total elapsed time from market entry to global export dominance: fifteen years.
The commercial aerospace version began in 2008 with the establishment of COMAC. The C919 entered commercial service in 2023. We are eighteen years in. The programme runs behind the HSR timeline because aerospace is harder. The pattern is identical.
II. What Airbus has built in China
Airbus’s China presence is a deeply integrated industrial ecosystem that Airbus itself constructed over two decades.
Assembly. Airbus opened its first Final Assembly Line outside Europe in Tianjin in 2008, through a joint venture with the Tianjin Free Trade Zone and AVIC.8 In October 2025, it opened a second Tianjin FAL, a 300,000-square-metre facility designed to double A320-family production capacity in China.9 CEO Guillaume Faury stated at the inauguration that Tianjin’s assembly capacity is “set to contribute 20 percent of the company’s total globally” for the A320 Family.9
One-fifth of Airbus’s single-aisle production, the product line generating roughly 70% of commercial aircraft revenue, now physically depends on infrastructure in China, co-owned with AVIC. If anything disrupts those two FALs, Airbus loses 20% of its narrowbody capacity with no ability to reallocate to European or American lines already running at rate.
Supply chain. Two hundred Chinese suppliers support Airbus’s global civil aircraft programme.10 AVIC has become Airbus’s largest non-engine supplier globally, accounting for more than half of Airbus’s total industrial cooperation value in China, worth over $1 billion annually.10 11
The critical dependencies:
Harbin Hafei Airbus Composite Manufacturing Centre (HMC): Sole composite structure supplier worldwide for the A350 XWB rudder, elevator, belly fairing, and S19 maintenance door. Produces 100% of all A320 rudder shells and 80% of all rudder assemblies globally.12 These components account for roughly 5% of an A350 airframe.13 AVIC subsidiaries collectively control about 70% ownership. Airbus holds 29%.14
AVIC Xi’an Aircraft Industry Group (XAT): Produces A320-family wings adjacent to the Tianjin FAL, shortening transportation time by 60 days compared to shipping from Europe.11 Won the “Ramp-up Champion Award” at the 2024 Airbus Global Supplier Conference.15 In July 2025, Airbus expanded the partnership to include A321 fuselage equipping, a significant deepening of the relationship.16
Additional AVIC subsidiaries produce A220 fuselage sections, cabin doors, and components flying on over 3,000 Airbus aircraft worldwide.11
Revenue. Airbus does not disclose China-specific revenue. At roughly 20% of global deliveries, China represents an estimated 10–14 billion in annual commercial aircraft revenue, or 15–20% of consolidated group turnover.3 17
Taken together: Chinese entities manufacture sole-source composite structures for Airbus’s widebody flagship, produce critical wing and fuselage components for its narrowbody, and assemble one-fifth of total single-aisle output.
III. Who Airbus’s largest supplier actually is
AVIC is the Chinese state’s primary aerospace and defence platform. It is a perennial Fortune Global 500 company, the sixth-largest defence contractor globally, with over 500,000 employees.18 Its subsidiaries build the J-20 stealth fighter. In November 2020, the Trump administration designated AVIC as a PLA-linked entity, prohibiting American investment.18 In February 2023, the Center for Advanced Defense Studies identified customs data showing AVIC had shipped fighter jet components to a subsidiary of sanctioned Russian defence company Rostec following the invasion of Ukraine.18
AVIC is COMAC’s founding and most operationally influential corporate shareholder. Although its equity stake has diluted to an estimated 12% following subsequent capital raises, its operational influence is disproportionate: CSIS notes that much of COMAC’s “original leadership, employees, facilities, and technology came from AVIC."19 AVIC subsidiaries build the C919’s outer wing box and supply fuselage components.19 In 2016, AVIC and COMAC jointly capitalised the Aero Engine Corporation of China (AECC) with $7.5 billion to develop domestic replacement engines for the C919 and C929.18
The technology transfer is structural. Engineers working on Airbus programmes at AVIC subsidiaries accumulate composite manufacturing, wing assembly, and fuselage equipping expertise directly applicable to COMAC programmes. The same workforce, facilities, and institutional knowledge serve both customers.
Airbus’s largest non-engine supplier globally, the sole source for critical A350 structures, the producer of A320 wings and rudder assemblies, is simultaneously COMAC’s founding shareholder, a co-investor in the engine programme designed to eliminate the C919’s Western dependencies, and a designated PLA-linked entity.
IV. COMAC: behind schedule, on strategy
COMAC does not need to win on merit. It needs to exist as a credible domestic alternative in a market where the government controls the airlines.
IBA, the leading independent aviation consultancy, forecasts COMAC will capture approximately 65% of new Chinese narrowbody deliveries by 2030, with deliveries rising to 90 per year.20 The order book is entirely state-directed: China’s three largest carriers have each ordered 100 C919s.21 COMAC claims over 1,200 total orders.22 CSIS estimates cumulative government support at $49–72 billion.19 The domestic market, 9,500 new aircraft over twenty years, can sustain a manufacturer that would be commercially non-viable anywhere else.3
Current production is behind target. COMAC delivered 15 C919s in 2025, against a C919-specific target of 30–50 aircraft later revised to 25.23 24 US suspension of LEAP-1C engine export licences in May 2025 disrupted the production system; nine of fifteen deliveries came in the final quarter once supply improved.23 By year-end, 32 C919s were in service across four operators, with a combined COMAC fleet of over 200 aircraft (including C909/ARJ21 regional jets) representing 4.5% of China’s commercial fleet.25
The programme is accelerating across multiple vectors simultaneously.
In January 2026, COMAC rolled out the C919-600, a shortened variant designed for high-altitude airports across western China, with 40 orders from Tibet Airlines and first flight targeted for 2027.26 A stretched C919-800 seating over 200 passengers is under development with China Eastern Airlines, targeting service by 2030.27 In two years, COMAC has built a three-model family covering 130 to 240 seats, mirroring the A320 family it is designed to replace.
In January 2026, two EASA test pilots conducted C919 verification flights in Shanghai, the third of four certification stages.28 EASA’s executive director estimated certification would take three to six years, placing it between 2028 and 2031.29 At the Singapore Airshow in February 2026, the C919 performed a flying demonstration for the second consecutive edition, while the C909 was displayed in Indonesian TransNusa livery, already operating in three Southeast Asian countries.30 The regional jet is the export wedge. The narrowbody follows.
The CJ-1000A domestic turbofan, which will eliminate the C919’s last Western dependency, is nearing CAAC airworthiness certification. Industry analyst Mayur Patel of OAG Aviation estimated in January 2026 that initial deliveries are likely in 2027 or 2028, with mass production from 2030.31 The strategic significance is sovereignty: the moment the CJ-1000A passes certification, COMAC no longer needs US export licences for LEAP engines. The last external constraint on C919 production ramp-up disappears.
V. The widebody is next
The C929 is a widebody twinjet, 280–400 passengers over 12,000 kilometres, positioned directly against the A330neo and Boeing 787.32 Originally a joint venture with Russia (as the CR929), COMAC confirmed in November 2023 that development is now entirely Chinese.32 COMAC targets Chinese type certification by 2032, a timeline most independent analysts consider optimistic given the programme has not yet reached first flight.33
The CJ-2000 engine being developed for the C929 has, according to Chinese industry reports, reached 35.2 tonnes of thrust, placing it in the same performance class as the GE GEnx and Rolls-Royce Trent 1000.34
The connection that matters: HMC engineers have spent fifteen years mastering advanced composite manufacturing for the A350. Rudders, elevators, belly fairings: precisely the structures a new widebody programme must learn to produce. The C929’s airframe is planned at over 50% composites. HMC is supermajority-owned by AVIC, COMAC’s founding shareholder. Airbus is, through its supply chain investments, developing the composite manufacturing expertise the C929 requires.
VI. The Boeing precedent
In April 2025, Beijing instructed Chinese airlines to suspend all Boeing deliveries and halt purchases of US-made aviation parts, retaliating for 145% US tariffs.35 Boeing had delivered only 18 aircraft to nine Chinese carriers before the directive.36 The ban lasted six weeks before a tariff truce restored deliveries.37
The speed of the reversal sharpens the precedent rather than diminishing it.
First, Beijing will weaponise fleet procurement. It issued the directive with a single communication, applied it uniformly, and reversed it with equal precision. Second, the ban was calibrated: it hit Boeing, not Airbus. Cooperation with Chinese industrial policy is rewarded; geopolitical friction is punished. Third, the ban accelerated COMAC adoption. With Boeing frozen, carriers moved C919 introductions forward.
Airbus benefits from US–China confrontation. This benefit is conditional on the EU–China relationship remaining warmer, a geopolitical dependency Airbus cannot control. The EU’s own tensions with China are escalating: anti-subsidy tariffs on Chinese EVs took effect in October 2024, and political pressure across European capitals for a harder stance is intensifying. Airbus’s own H1 2025 report acknowledges that “the Company’s direct financial exposure derives mainly from the cost increase of sub-assemblies imported into the Final Assembly Lines located in the US and China."38
VII. The demand erosion arithmetic
The impact compounds gradually, then appears everywhere at once.
Volume. Airbus delivers roughly 150 narrowbodies to China annually. If COMAC captures 90 annual deliveries by 2030 (IBA’s forecast), and each displaces an A320neo order worth 66 million in net revenue, the annual impact is 5.9 billion in displaced revenue, roughly 8% of projected group revenue.20
Pricing. Net A320neo-family prices run $50–65 million, reflecting discounts of 40–60% from catalogue.39 This pricing power derives from a decade-long backlog creating scarcity and Boeing’s inability to compete effectively, both conditions that COMAC substitution will erode in China. Even a 5–10% compression in net pricing on remaining Chinese orders means 250–500 million in annual margin erosion.
Production economics. Rate 75 is dimensioned for roughly 20% of output going to China. If Chinese demand drops to 12–15% of deliveries, the Tianjin FALs are underutilised first. Fixed costs do not scale down linearly.
Backlog quality. The 8,754-aircraft backlog includes significant volumes for Chinese state carriers that have simultaneously ordered 300 C919s, in a market where the government allocates fleet composition. The risk is attenuation: deliveries pushed, terms renegotiated, concessions extracted. The headline number stays large. The cash flow weakens.
Airbus’s FY2024 consolidated EBIT Adjusted fell year-on-year to 5,354 million despite commercial aircraft EBIT rising to 5,093 million; the decline was driven by 1.3 billion in Defence and Space charges.2 Spirit AeroSystems integration carries a “mid triple-digit negative” free cash flow impact for 2025.2 China exposure amplifies every existing pressure.
VIII. The supply chain leverage problem
The demand story is gradual. The supply chain story is immediate.
HMC is the sole worldwide source for A350 rudders, elevators, belly fairings, and maintenance doors. No dual-source exists. Building one requires 18–36 months minimum for tooling, qualification, and ramp-up. Aviation Week reported in 2023 that some Western OEMs had begun establishing dual sources for Chinese-supplied components.40 MTU Aero Engines stated publicly that “a lot of OEM suppliers tend to pull back or have built up dual sources as alternatives to their Chinese suppliers."40
Airbus has not announced any such programme for its critical Chinese-sourced components. Instead, it expanded AVIC XAT’s role to A321 fuselage equipping in July 2025.16
The asymmetry is direct. If Beijing created friction in A350 composite supply, not a formal ban but regulatory delays, quality inspections, customs processes, every A350 delivered worldwide would be affected. Orders from Qatar Airways, Singapore Airlines, Delta Air Lines, all routed through a factory in Harbin controlled by a joint venture whose majority owners’ parent company is COMAC’s founding shareholder.
IX. The feedback loop
Connect the vectors, and the mechanism becomes visible.
COMAC captures domestic share; Chinese carriers defer Airbus orders; Tianjin utilisation drops; unit costs rise; margins compress; less capital flows to R&D; the next-generation aircraft programme slips; COMAC’s C929 enters service in a less competitive environment. And throughout, every Airbus component contract with AVIC generates revenue and capability that strengthens COMAC’s supply chain, feeding capability back into the competitor whose growth triggered the cycle. The loop closes on itself. Each vector reinforces the others.
X. What Airbus acknowledges, and what it does not
Airbus’s 2024 Board Report names COMAC as a competitive risk. It states: “Airbus considers the likely market penetration of this competitor to be a more significant risk in the 2030s."41
This is a direct acknowledgment. It is also a systematic understatement.
Airbus does not disclose: China-specific revenue as a percentage of total; the number of backlog aircraft destined for Chinese state-controlled airlines; HMC’s sole-source status for A350 composites or the absence of dual-sourcing; AVIC’s simultaneous roles as Airbus’s largest non-engine supplier, COMAC’s founding shareholder, the supermajority owner of HMC, and a PLA-linked entity; or any scenario analysis of COMAC substitution on pricing, demand, or backlog quality.
Board member Victor Chu, valued in Airbus AGM materials for his “profound knowledge of the Chinese and more broadly Asian markets,” confirms this is a company aware of its China exposure at the highest level.42 The absence of granular risk disclosure is deliberate.
XI. The eighteen-year clock
Kawasaki transferred Shinkansen technology to China on the understanding it would be used domestically. Within fifteen years, Chinese trains were being exported to Southeast Asia.
Airbus opened its first Tianjin FAL in 2008. It granted HMC sole-source status for A350 composites. It expanded AVIC from A320 wings to A321 fuselage equipping. Every decision was rational in isolation.
The problem is the pattern, not any individual decision.
The 148 aircraft ordered in the final hours of 2025 will arrive 2032. By then, the C919 will have been in service for nearly a decade. The CJ-1000A will likely be in mass production. COMAC’s share of Chinese narrowbody deliveries will, according to IBA, have passed 50%.
Airbus reports FY2025 results on Thursday. The revenue figure will include 10–14 billion from China, generated by aircraft assembled in AVIC joint-venture factories, using sole-source AVIC composite structures, for airlines ordering simultaneously from Airbus and its state-backed replacement.
The number will not be broken out. The dependency will not be quantified.
The pattern will not be named.
Footnotes
1 China Daily, “Airbus Lands Large-Scale Year-End Aircraft Orders from Chinese Carriers,” January 13, 2026. Air China (60), Spring Airlines (30), Juneyao Air (25), China Express Airlines (3), China Aircraft Leasing Group (30).
2 Airbus FY2025 preliminary: 793 deliveries per Bloomberg/Aero News Journal (January 4, 2026). Backlog 8,754 per Airbus Orders & Deliveries (January 2026). FY2024 revenue 69.2B; FY2025 estimated 72–77B based on delivery volume and mix (Airbus reports audited FY2025 figures February 19, 2026). FY2024 consolidated EBIT Adjusted 5,354M; commercial aircraft EBIT Adjusted 5,093M. Defence and Space charges ~1.3B. Spirit integration “mid triple-digit negative” FCF per FY2025 guidance.
3 Airbus, “Airbus in China,” airbus.com. “Over 2,200 aircraft with some 55% market share in mainland China.” Faury quoted in China Daily (January 13, 2026): China needs “about 9,500 new aircraft over the next 20 years.”
4 MERICS, The Sky Is the Limit: China’s Rise as a Transportation Superpower Challenges the EU, October 26, 2023.
5 ITIF, Heading Off Track: The Impact of China’s Mercantilist Policies on Global High-Speed Rail Innovation, April 26, 2021.
6 ITIF (2021); MERICS (2023). Sifang/Kawasaki timeline. Indonesia Whoosh line opened October 2023.
7 Der Spiegel, 2010; also reported by Wall Street Journal. CNR awarded $5.7B; Siemens received $1B sub-contract.
8 Airbus, “Airbus in China,” airbus.com.
9 Xinhua, October 22, 2025. Faury at second Tianjin FAL inauguration. Airbus press release, October 22, 2025.
10 China Daily, January 13, 2026. “Around 200 Chinese suppliers support Airbus’ civil aircraft program, and AVIC has become Airbus’ largest non-engine supplier globally.”
11 China Daily/Xinhua, “Airbus Seeks Full Lifecycle Cooperation with Chinese Suppliers,” February 4, 2024. $1B+ annual cooperation value; 60-day transportation saving.
12 Xinhua, “Airbus’ Joint Venture in China Becomes Sole Composite Structure Supplier of Some A350 XWB Parts,” June 10, 2019.
13 Global Times, “Chinese Suppliers Become Key Link in Aviation Industrial Chain,” June 2019.
14 EuropaWire, June 28, 2014. Ownership: HAIG (~50%), HAI (~10%), AviChina (~10%), HELI (~10%), Airbus China (29%).
15 Invest in China/China Daily, December 5, 2024.
16 ePlaneAI, “Airbus Signs New Agreement with Chinese Partner,” July 16, 2025.
17 Author’s estimate based on ~20% delivery share at ~66M average net revenue per delivery. Airbus does not disclose China-specific revenue.
18 DoD Federal Register (November 2020), PLA-linked designation; CADS Report (February 2023), Rostec component shipment; AECC capitalisation per CSIS.
19 CSIS, “COMAC: China’s Commercial Aircraft Ambition.” AVIC equity ~12% post-dilution; “outsized influence on COMAC’s operations.” Government support $49–72B cumulative.
20 IBA Group, “COMAC Aircraft Programmes — Status & Outlook,” September 17, 2025.
21 Multiple sources. Air China, China Eastern, China Southern each ordered 100 C919s.
22 Direct Pathways, February 12, 2026.
23 Aviation Week Fleet Discovery; Bloomberg (February 9, 2026).
24 ch-aviation, September 29, 2025. C919-specific target revised to 25. Reuters: LEAP-1C suspension May 2025, lifted July 2025.
25 China Daily, February 5, 2026 (Singapore Airshow). Combined fleet: 182 C909s + 32 C919s. 4.5% of fleet, 4.4% of flights.
26 Aviation Week (January 2026); Aero News Journal (January 24, 2026). C919-600 rolled out January 8. Tibet Airlines 40 aircraft.
27 Aerospace Global News (January 4, 2026), citing SCMP.
28 South China Morning Post, January 15, 2026; EASA confirmation to Reuters.
29 Reuters, April 29, 2025, citing EASA executive director Florian Guillermet.
30 China Daily/Xinhua, February 3–5, 2026 (Singapore Airshow).
31 OAG Aviation analyst Mayur Patel, January 2026.
32 CSIS; Aviation Week; FlightGlobal. Independent Chinese development confirmed November 2023.
33 ePlaneAI, June 19, 2025. COMAC targeting 2032.
34 Aerospace Global News, January 12, 2026.
35 CBS News, April 16, 2025; Bloomberg; Reuters.
36 Forecast International, May 2025.
37 AeroTime/Yahoo Finance, May 13, 2025. Ban lifted after 90-day tariff truce. US tariffs reduced to 30%, Chinese to 10%.
38 Airbus H1 2025 Financial Report, July 2025.
39 Simple Flying, November 20, 2025. Discounts 40–60% standard. IBA Insight (September 2024): A320neo market value ~$55M.
40 Aviation Week, “China’s Slowdown Turns It Into ‘Normal Big Market,’” September 29, 2023.
41 Airbus SE Report of the Board of Directors 2024, Risk Factors section, published February 20, 2025.
42 Airbus 2024 AGM materials. Victor Chu, independent non-executive director since 2020.