China Maneuvers for U.S. Defense Contracts

BEIJING—The maker of China's new stealth fighter jet has teamed up with a tiny, unprofitable California company to try to launch bids for U.S. defense contracts, possibly including one to supply Chinese helicopters to replace the aging Marine One fleet used by the president, according to people involved in the partnership.

Any Chinese bids for this or another contract under discussion would be certain to meet intense political resistance and would appear to have very little chance of success given mounting U.S. concern about China's military power and long-term strategic goals, and the often-prohibitive opposition in the past to Chinese attempts to enter other strategic U.S. sectors, such as energy and telecommunications.

However, the fact that state-run China Aviation Industry Corp., known as AVIC, is even considering bids for these contracts, which industry insiders expect to be awarded in the next two to three years, reflects the rapid development and lofty ambitions of China's aerospace industry.

AVIC has been in talks for more than a year with California-based U.S. Aerospace Inc. about offering the AC-313—China's largest domestically produced helicopter—as the next generation of Marine One, the people involved in the partnership say.

They say the two companies have also been discussing putting forward AVIC's new L-15 trainer jet as a candidate to replace the U.S. Air Force's fleet of Northrop T-38s, which entered service 50 years ago and on which American fighter pilots learn skills such as how to fly at supersonic speeds.

That contract is expected to be one of the most lucrative military aviation contracts this decade, with the U.S. likely to buy about 400 and other allied countries about 600 more as the jet will become the standard for training pilots to fly the U.S. F-22 and F-35 stealth fighters.

AVIC already supplies civilian aircraft components to U.S. companies, but U.S. officials and lawmakers have expressed concern about U.S. technology being diverted to AVIC's military arm through such cooperation.

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