US-China Trade Tensions and COMAC's C919: Navigating Supply Chain Shifts and Equity Plays

The U.S. decision to lift export licenses for GE Aviation engines to China's Commercial Aircraft Corporation of China (COMAC) in May 2025 signals a temporary de-escalation in trade tensions. Yet, lingering restrictions on avionics and broader U.S. export controls continue to reshape aerospace supply chains, creating both risks and opportunities for investors. While COMAC's C919 program breathes new life with the resumption of GE's LEAP-1C engines, its reliance on Western technology remains precarious. This article analyzes the strategic implications of bifurcating supply chains and identifies equity plays in companies positioned to capitalize on shifting dynamics.

De-escalation in Engine Exports, But Avionics Remain a Thorn

The U.S. Commerce Department's May 2025 decision to reinstate licenses for GE's LEAP-1C engines—a critical component for the C919—eased immediate supply chain pressures. reflects this relief, with shares rebounding 15% in the following quarter. However, avionics systems—supplied by firms like Honeywell and Collins Aerospace—remain under suspended licenses, threatening C919's international certification and operational safety. Analysts estimate a 2–3 year delay in securing alternative avionics, pushing COMAC toward unproven domestic alternatives.

COMAC's Indigenous Push: CJ-1000A and the Reliability Question

China's CJ-1000A engine, designed to replace the LEAP-1C, has comparable thrust metrics but faces skepticism over reliability and compliance with ICAO standards. shows a 30% annual increase since 2023, underscoring Beijing's resolve. Yet, certification delays and unproven track records pose risks. Investors should treat bets on Chinese engine manufacturers like AVIC (600895.SH) as high-risk, requiring patience for long-term payoff.

Investment Opportunities in Diversified Suppliers: Thales, Safran, and UEC

The bifurcation of aerospace supply chains favors European and Russian firms with diversified exposure. Thales (HO.PA), a key avionics supplier to Airbus, stands to gain if COMAC shifts contracts from U.S. firms. Its stock has outperformed peers by 20% in 2025 amid rising Chinese demand. Similarly, Safran (SAF.PA), a partner in the LEAP engine, benefits from COMAC's dependency while maintaining Boeing and Airbus ties. Meanwhile, Russia's United Engine Corporation (UEC) is emerging as a C929 engine provider if Western restrictions persist. highlights their asymmetric upside.

Bifurcating Supply Chains and Selective Equity Plays

The split into Western and Chinese supply chains creates two investment themes:
1. Diversified Global Players: Boeing (BA), Airbus (AIR.PA), and Spirit AeroSystems (SPR) are less exposed to U.S.-China friction, with Boeing's 10% dividend yield offering downside protection.
2. Regional Winners: COMAC's reliance on non-U.S. suppliers boosts firms like Premium AEROTEC (EAD.PA) (airframe components) and Lukoil (LKOH.MM) (jet fuel).

Avoid pure-play U.S. avionics firms like Honeywell (HON) until trade policies stabilize.

Conclusion: Monitor Policy Shifts, Bet on Diversification

While the GE license lift offers a tactical reprieve, strategic risks persist. Investors should:
- Buy into European/Russian suppliers with COMAC exposure (Thales, UEC) for near-term gains.
- Hedge with global aerospace stocks offering dividends and diversification.
- Avoid overexposure to U.S. avionics, as de-escalation remains fragile.

The C919's success hinges on COMAC's ability to navigate dual supply chains—a race where geopolitical moves could shift outcomes overnight. Stay agile, track export license renewals, and prioritize firms with cross-border resilience.