The Chinese company that produces China’s new stealth fighter has teamed up with a small, unprofitable California company in an attempt to win U.S. defense contracts, including a new helicopter used to transport the president.

The state-run China Aviation Industry Corp (AVIC) has been in discussions with U.S. Aerospace Inc. for more than year about providing the AC-313—China’s largest domestically produced helicopter—to replace the next generation of Marine One helicopter. The contract is expected to be one of the most lucrative military aviation contracts this decade, with the U.S. expected to buy about 400 and other allied countries about 600.

Yet the idea of China—who has the second largest military expenditure in the world and is increasingly being seen as a potential military threat to the U.S.—providing military parts and equipment to the U.S. has been met with opposition.

“The President of the United States of America should not be flying around in a helicopter that is made in China,” said Congressman Maurice Hinchey (D-NY. “If the Chinese actually won the contract, our most sensitive national security information, the technology and systems we use to transport our president could be put directly into the hands of a foreign power. I cannot imagine a worse mistake.”

The fact that AVIC currently supplies civilian aircraft components to U.S. companies has already irked some lawmakers who believe U.S. technology could be diverted to China through AVIC. Yet U.S. Aerospace believes that procuring defense products from China has support among contacts in the U.S. government and military who want to improve ties with Beijing and help cut defense spending.

“It may sound ludicrous but that doesn’t mean it’s not going to happen,” said John Kirkland, a lawyer for U.S. Aerospace involved in the negotiations. “We want China to supply aircraft to the U.S. because we think it makes economic sense.”

The Pentagon is looking for ways to cut costs as defense spending will be cut by $78 billion over the next five years. These cuts have already cut into the Marine One Helicopter project. In 2005, the U.S. Navy awarded a contract to supply a replacement for the helicopter, but in 2009 President Obama cancelled the contract and called for a cheaper option. In February 2010, the Navy released a project option for a new project and is now in the “Analysis of Alternatives” phase before formal bidding opens.

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Chandler Harris is a freelance business and technology writer located in Silicon Valley. He has written for numerous publications including Entrepreneur, InformationWeek, San Jose Magazine, Government Technology, Public CIO, AllBusiness.com, U.S. Banker, Digital Communities Magazine, Converge Magazine, Surfer's Journal, Adventure Sports Magazine, ClearanceJobs.com, and the San Jose Business Journal. Chandler is also engaged in helping companies further their content marketing needs through content strategy, optimization and creation, as well as blogging and social media platforms. When he's not writing, Chandler enjoys his beach haunt of Santa Cruz where he rides roller coasters with his son, surfs and bikes across mountain ranges.

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