Powering Proliferation
The Global Engine Market and China’s Indigenization
Alexander Holderness, et al. | 2023.03.21
Combat air power is one of the cornerstones of modern military might, and relies on dependable, advanced propulsion systems. The engine is the heart of the combat air power and integrated weapon systems. Jet engines require sophisticated design and manufacturing expertise — which has been built up in aircraft engine–producing nations over decades — and not only produce thrust, but also power avionics and aircraft systems.
Introduction
Military jet engines power some of the most important combat capabilities for air forces around the world. The development, testing, and manufacturing of jet engines is a significant technical feat that industries in only a handful of nations can achieve. But there is a potential, serious new competitor: in recent decades, China has spent billions of dollars to grow its organic capability. The global engine ecosystem — and its links to global technology proliferation — may have played a vital role in enabling China’s campaign of learning. This brief seeks to determine how the global military turbofan engine market operates and whether there are possible avenues for technology proliferation that China has exploited as it seeks to build an organic jet engine industrial base.
The European Military Engine Ecosystem
The earliest jet engines were designed in Western Europe during the early stages of World War II, with both Germany and the United Kingdom making substantial investments in the technology. After the war, British jet engine technology was transferred to the United States as part of their partnership. Meanwhile, the Soviet Union was able to capture German technology, giving it its foundation in the industry.
▲ Figure 1: European Military Aircraft and Jet Engine Exports, 1990–2021. Source: “SIPRI Arms Transfers Database,” Stockholm International Peace Research Institute.
Western Europe’s leading aerospace firms maintain a strong presence in the international market, specializing in selling 4.5-generation aircraft and their respective engines. France and the United Kingdom lead in fighter exports to countries outside of Europe, as shown in Figure 1. Of the major European aerospace exporters, the United Kingdom maintained the largest market share from 1990 to 2018, with the number of French exports gradually overtaking their British competitors after 2018. However, the growing popularity of the United States’ F-35 among European nations may disrupt European aerospace firms’ opportunity to sell their fighters and accompanying engines to regional customers.
Rolls-Royce, the United Kingdom’s only jet engine manufacturer, plays a significant role in the global military and commercial turbofan markets. In its military business, Rolls-Royce engines have powered successive generations of European fighter aircraft. The Eurofighter Typhoon and Panavia Tornado feature engines developed by cross-European consortiums, but ones in which Rolls-Royce took on the most complex design and manufacturing tasks. The U.S. Department of Defense (DoD) also purchases Rolls-Royce propulsion systems for the B-52, C130, and F-35B programs. Its military output is, however, a comparatively small share of the company, with its commercial engines business accounting for roughly 2.5 times the revenue as that of military engines in 2021. This gives the company flexibility and the ability to sustain itself even when commercial or military business fluctuates.
Safran, France’s leading jet engine manufacturer, powers the majority of the French Air and Space Force’s (AAE) aircraft. Safran’s defense enterprise is financially supported by a robust commercial business that allows the firm to develop innovative technologies in tandem with foreign firms to enable broader market access. It does not enjoy formal links to the United States, since France pursues a “buy European” approach to aerospace defense procurements. However, this means that within the European Union, Safran is the most successful and sophisticated manufacturer of turbofan engines. Safran’s most advanced turbofan engines, the M88, began production nearly 30 years ago and have gradually been upgraded to power the Rafale series of aircraft; newer iterations of the M88 have 20 percent more thrust than the original model. Safran is currently leading a consortium of European firms to produce a new engine to power a sixth-generation aircraft that will enter service with the French, German, and Spanish air forces.
European government and defense contractors are beginning to develop sixth-generation aircraft platforms, comparable to the DoD’s Next Generation Air Dominance platform. The United Kingdom, Japan, and Italy are embarking on a sixth-generation fighter-development effort, the Global Combat Air Program, that will embrace expertise from across the three nations (and their largest defense contractors) in an effort to deliver home-grown combat air power. France, Germany, and Spain have also agreed to cooperate on a fighter aircraft, in what will undoubtedly be a complex industrial coordination effort. These two programs represent the bulk of future opportunities for European engine makers in the military turbofan space. Depending on the size of these aircraft fleets, future business prospects for military turbofans across Europe could prove to be limited.
Propulsion on a Budget: The Soviet Union, Russia, and the Struggle to Evolve
The Soviet Union built upon the technology it had extracted from Germany at the end of World War II to become a player in the engine market. During the Cold War, it exported a significant number of weapons to developing states at an affordable cost relative to Western equipment, a price dynamic that partially explains the prominence of Soviet and Russian turbofan engines abroad. The majority of Russian or Soviet fighter aircraft in use today are powered by Soviet-era turbofan engines that are comparable to the United States’ Cold War–era powerplants, especially when it comes to reliability and service life. As a result, Russian engines are not competitive relative to their current Western counterparts.
The Soviet Union was also able to be somewhat selective in whom it sold arms to and refused to sell weapons to China for decades, largely on political grounds. Post-Soviet Russia, however, has not had such a luxury, as financial pressures began to threaten its aircraft engine industry. As a result, Russia began making significant sales to China in the 1990s, a decision that could imperil the future of Russia’s export market.
▲ Figure 2: Soviet and Post-Soviet Military Aircraft and Jet Engine Exports, 1990–2021. Source: “SIPRI Arms Transfers Database,” Stockholm International Peace Research Institute.
The collapse of the Soviet Union presented the Russian aircraft engine industrial base with a myriad of organizational and financial challenges. The newly independent Russian government privatized the Soviet-era engine-design bureaus while dramatically reducing procurement. This prompted the design bureaus to engage in costly legal battles with Boris Yeltsin’s administration to protest privatization or to try to reorient their new businesses to producing aero-derivative gas turbines. In the latter case, these aero-engine design bureaus typically partnered with Western firms to develop new technologies better suited to commercial uses. This dynamic likely presented Russia with several opportunities to reverse engineer Western technological and procedural innovations. Eventually, these Soviet-era aero-engine design bureaus merged to form the state-owned United Engine Corporation (UEC) in 2008.
An ongoing challenge for Russian engine production is its lack of capacity in machine tools, which are vital to the precision manufacturing required for modern turbofan production. This capability gap derives from the advent of advanced computer numerical control (CNC) machine tools, meaning Soviet machine tools lost their competitiveness in the global market. As a result, Russia imported about 80–90 percent of its machine tools from 2009 to 2019.
While Russia had been rebuilding its machine-tool sector by the time it invaded Crimea in 2014, the nation was left unprepared to offset its reliance on Western imports when associated sanctions took hold. Specifically, Russia produced 3,871 pieces of machinery in 2014, up from 2,945 in 2013 — though its output tumbled by 14 percent in 2015 to 3,367 pieces of machinery as sanctions limited imports of components. Russia has managed to evade these sanctions in some cases, including by using shell companies. In 2018, the Ufa Engine Industrial Association, one of the largest subsidiaries of UEC, imported a German universal-grinding machine despite U.S. sanctions on the company. This tool is capable of resharpening existing tools to meet current and future production needs. Additionally, UEC Saturn imported machine presses from Germany in 2019 to manufacture engine blades for gas turbines, which could be repurposed for military applications.
As sanctions continue to tighten, Russia will likely inch toward near-complete isolation from the international machine-tool market for both new machines and replacement parts. Its aircraft engine production capabilities will continue to atrophy unless an alternative to Western machinery is found.
China’s Slow Climb toward Indigenous Engines
China and its People’s Liberation Army Air Force (PLAAF) have made significant investments in advancing capabilities to develop advanced air-superiority platforms, including a focus on fourth- and fifth-generation aircraft, with the PLAAF striving to operate modern aircraft, including the J-10, J-20, and J-31, in the near future. China is now able to develop and produce advanced airframes, although it still lacks the capacity to build fully indigenous aircraft engines. While China has certainly made improvements, it still lacks the manufacturing expertise and tacit knowledge required to build modern turbofan engines. In the past, China primarily turned to the United Kingdom and former Soviet Union for jet engines, as shown in Figure 3. However, as China’s needs have grown, Beijing has embarked on an ambitious indigenization effort that uses tools from across government and industry to offset foreign dependencies for key capabilities.
▲ Figure 3: Chinese Imports of Military Aircraft and Jet Engines, 1990–2021. Source: “SIPRI Arms Transfers Database,” Stockholm International Peace Research Institute.
China’s indigenous production of jets is relatively new, as the nation historically relied on imports from Russia to expand its fleet. SIPRI data show these countries are still major trading partners, with most Chinese imports of aircraft and jet engines from 1990 through 2021 originating in Russia. These imports have shifted from delivery of complete jets to that of engines. In 2001, China procured four Russian AL-31F engines, and this figure grew to 45 per year by 2011.
Chinese attempts to indigenize engine production began in the 1970s. The country’s initial efforts consisted of licensed production arrangements with established Russian and Western firms that exported parts, assembly lines, and necessary knowledge to China, which carried out the final assembly without needing to develop its own engineering expertise. This process allowed Chinese industry to gain access to the tooling and technical knowhow that it later deployed to produce indigenous engines, though ones that lagged their Western counterparts significantly in terms of reliability and performance.
However, it took until 2013 for the production line to produce homegrown engines, drawing on the tooling and manufacturing support of Rolls-Royce. In 1976, Rolls-Royce sold the rights and machinery to produce its Spey MK.202 turbofan engines, intended for use in Chinese tactical ground-attack aircraft, to the Chinese aerospace industry. It was expected that it would take about 10 years — not 30 — for China to start production of the WS9 engine, its version of the Spey. While China gaining this capability is certainly a concern, it also demonstrates how difficult it has been for China to successfully complete an allowed transfer of technology, let alone reverse engineer Western turbofan engines.
China’s changing political environment and the Tiananmen Square massacre in 1989 altered the nation’s relationships with the West, and Western arms-trade embargoes meant that the United States and other nations were no longer reliable trading partners. However, Rolls-Royce temporarily continued exports of its Spey engine to China due to the United Kingdom’s deliberately broad interpretation of the embargo, which allowed exports of components of tactical fighter aircraft. In the face of criticism in the House of Commons, the UK government defended this policy by arguing that it was conducting a rigorous risk analysis that included “the risk of reverse engineering or unintended technology transfer” as a possible condition for denial of license. China thus shifted its sights to a financially strained Russia still recovering from the dissolution of the Soviet Union. In 1992, Beijing and Moscow signed the Military-Technical Cooperation Agreement, which outlined joint cooperative efforts and signaled both states’ sustained national prioritization of bolstering each other’s air forces.
Throughout this period, cooperative activities included technical-exchange seminars, coworking events, the sharing of experts, and — most notably — the exchange of production capabilities, theoretically giving China the ability to meet its own demand. Russia agreed to aid China’s domestic production of SU-27 aircraft by giving it both a license to produce the airframe and entire assembly lines sourced from surplus Russian machine tooling. As part of this cooperation, Russians worked closely with Chinese engineers in a consultative capacity within China’s factories. China developed larger aspirations for its engine capabilities and initiated work on indigenous production of aircraft engines. Beijing began to reverse engineer the technologies of the SU-27 aircraft that Russia had provided and that would form the basis for the WS-10 engine, which China began to market as an indigenously made and produced engine despite being deeply reliant on foreign technologies for knowledge and inputs.
When Moscow discovered this unauthorized replication, the Sino-Soviet relationship began to deteriorate. In 2019, Yevegny Livadny, the chief of intellectual property (IP) projects at the Rostec State Corporation, publicly complained about China’s imitation of Russian engines and aircraft. Livadny’s comments exemplified broader Russian frustration that China was illegally reverse engineering many Russian technologies so it would not have to pay Russia for additional products.
China’s Modernization Efforts
In a 2017 report, Chinese analysts concluded that Beijing’s strategy to imitate rather than gradually develop indigenous technical knowledge caused it to lag international competitors. The analysts asserted that “China has no mature products for aviation engines; compared with the world’s aero-engine giants, we cannot be a first-tier supplier,” and China is “at the end of our industrial supply chain: our technical level and profitability is limited.”
There are additional signs of a lack of Chinese domestic expertise. China began development on its most advanced engine, the WS-15, in the late 1990s, but it is only recently beginning to use it an experimental capacity. The engine made its first flight on a J-20 aircraft sometime in 2022, according to Liu Daxiang, a Chinese expert who spoke at the 2022 China Aviation Industry Conference. In addition to trying to develop an engine that meets the thrust-to-weight requirements of fifth-generation aircraft, Chinese aerospace engineers are struggling to achieve meaningful reliability. Currently, Chinese jet engines can at best achieve one-fourth the life span of Western engines. This calls their reliability into serious question and suggests additional strains on China’s industrial base.
As China seeks to expand its engine-manufacturing capacity, developing and acquiring key competencies is a core goal for Chinese government and industry so they can overcome existing hurdles throughout the manufacturing process. To this end, Beijing has worked to harness expertise and equipment from outside China, including by forming partnerships with Western universities to gain critical aerospace experience and expertise. Building talented human capital in the aerospace sector is vital to indigenous Chinese jet engine manufacturing capabilities, and external experience and expertise will help Chinese engineers improve both manufacturing and engine-development techniques. The United States, along with select allies and partners, has recognized this route to gaining tacit aerospace knowledge and has been working to limit access to certain programs for students who may pose a proliferation risk.
Manufacturing Challenges
One barrier to Chinese domestic engine manufacturing is the availability of machine tooling that is suitable for aerospace applications. While the engines can be made of components completely produced in China, they are manufactured on Western machines. The most complex machine tools, five-axis and seven-axis systems, require immense engineering talent to manufacture and operate, and Chinese aerospace firms still have to import these systems from abroad — including from German, Japanese, Italian, and likely Korean firms. This dependence on the West for the most complex machinery limits comprehensive indigenization and, as China recognizes, is a source of risk for the country’s aerospace sector.
Globally, machine tooling is a strategic capability with direct ties to the strength of a country’s defense-industrial base. Access to advanced 5-axis and 7-axis machine tooling dictates the ability to manufacture products such as large aircraft structures, compressor blades on turbines, and inertial navigation systems. Russia’s failures to manage these technologies during the 1990s and early 2000s led to a plummeting demand in the face of the global market and technological advances from the West. This may serve as a cautionary tale to Chinese defense planners as they work to build secure, indigenous capacity.
Another barrier to large-scale Chinese jet engine manufacturing is lack of knowledge of how to optimize the manufacturing process, despite attempts to exfiltrate this information. In 2018, Chinese-American citizen Xiaoqing Zheng was convicted by the U.S. Department of Justice (DOJ) for his involvement in stealing trade secrets regarding turbine sealing, a dual-use technology that is commonly employed in the development of aero engines. In another case, Chinese intelligence officer Xu Yanjun targeted experts employed by Western aerospace companies to both provide sensitive manufacturing data and speak to Chinese engineers in an effort to improve the country’s manufacturing processes. However, China has not yet been able to use the stolen information successfully to indigenize its aircraft engine industry. According to David Markov of the Institute for Defense Analyses, “Many of China’s scientists, engineers, designers, and production managers . . . lack the know-how that comes from apprenticeship programs and decades of specialized experience,” as is increasingly evident by Chinese firms’ inability to successfully integrate stolen IP, especially from the aerospace industry, into their indigenous manufacturing processes, a problem that could take decades to resolve.
Implications
The engine market remains strong worldwide, with several competitors offering value to commercial and military users. The global nature of the market has also created opportunities for the United States’ competitors, namely China, to onshore components of jet engine technology. Despite numerous instances of jet engine technology proliferation to that nation, there is little evidence to suggest that China has, or imminently will, reach parity with Western engine technology. However, there is robust evidence that it is making a concerted effort to do so.
The United States’ primary strategic competitors, China and Russia, face different challenges in producing turbofan jet engines. Soviet aircraft engines were not designed to turn a profit and historically could count on government subsidies to finance production. After the breakup of the Soviet Union and the disappearance of these subsidies, Russian aircraft engine firms lost production capability — but not their knowledge base. China faces the opposite problem; its production capabilities are largely restricted due to a lack of technical knowledge rather than a lack of resources. China has actively pursued opportunities to gain this knowledge by copying the innovations of other firms, engaging in partnerships that involve technology transfer, and working with universities around the world to gain new insights. China’s public recognition of its existing challenges signals that this is a priority across its managed economy.
To close its capability gap, China has been able to import advanced machine tooling from nations such as Germany, Italy, and Japan, which have supplied China with key pieces of manufacturing equipment it cannot produce domestically. It has also resorted to espionage campaigns to capture necessary manufacturing expertise. However, despite these efforts — and partly due to the complexity of the manufacturing process — China has been unable to reach parity with Western firms. Historically, Chinese engines have been lagging their Western counterparts by roughly 30 years. In recent years, China’s efforts to develop maritime turbines, which rely on less complex but similar technology, seem to have taken closer to 15 years. While it may appear that the West has a comfortable lead over China in the turbofan market, strategic surprise is possible as the Chinese workforce becomes better educated and the government continues to make significant investments in the aerospace sector.
The United States is likely to maintain an enduring advantage in the engine market. However, if China grows its jet engine capabilities, it could not only increase its military capability but also potentially become a new market competitor with a demonstrated willingness to sell products at reduced costs to drive out competition. To reduce the chance of strategic surprise, the United States and its allies and partners may find it advantageous to take steps to limit China’s rise in this critically important industry. In the absence of such measures, an increasingly fiscally desperate and politically isolated Russia — more likely to take long-term risks — may upend the status quo by transferring sensitive technology to China. Understanding the historical impact that Western sanctions have had on the Russian aerospace industry could provide a valuable framework for confronting China; however, there are many confounding variables in the Russian aerospace industry, and additional research is needed to fully assess that case.
The United States and its allies and partners have two broad options for managing the rise of China’s aerospace sector. First, they can carefully control what information China has access to and continue to be vigilant in preventing the unintentional transfer of sensitive engineering information, including in a university setting. Given the size of some Western firms’ business in China, managing the flow of information may prove challenging, but these firms do have an incentive to keep China from gaining foreign manufacturing expertise that could limit its future expansion. Second, Western countries and firms could restrict Chinese access to machine tooling and associated design and manufacturing software. While export controls are not completely effective, limiting China’s access to manufacturing equipment would make it far harder for it to build out a domestic industrial base. However, there is an underlying structural challenge in this approach because some machine tools are inherently dual use, making it easier for China to circumvent hypothetical sanctions. As China continues to seek to exploit the global engine market in an effort to gain turbofan manufacturing independence, it is up to policymakers and individual companies to fight back and carefully control the gains China can realize from the global turbofan market.
If China was able to access — or indigenously develop — enhanced technology, it could begin to close the qualitive edge that the United States and its allies have enjoyed for decades. As the United States shrinks the size of its crewed fighter aircraft fleet in the coming decades, maintaining that edge will be increasingly vital as China’s air dominance fleet expands. If the United States and its allies are unable to safeguard key manufacturing and turbofan technologies, further investments in U.S. and allied turbofan innovation could help to make parity with the West a moving target and blunt Chinese technical and manufacturing advances.
Alexander Holderness is a research assistant with the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies (CSIS). His analytical focus is on issues relating to national security, government acquisition, supply chain risk, and industrial capacity.
KNicholas Velazquez is a research intern with the Defense-Industrial Initiatives Group at CSIS.
Jasmine Phillips is a research intern with the Defense-Industrial Initiatives Group at CSIS.
Gregory Sanders is deputy director and fellow with the Defense-Industrial Initiatives Group at CSIS.
Cynthia Cook is director of the Defense-Industrial Initiatives Group and senior fellow with the International Security Program at CSIS.