Policymakers in China could still deal a blow to Boeing by favouring Airbus for future orders
BEIJING • Boeing Co painted an optimistic forecast for China, an aviation market soon poised to become the world’s biggest. The planemaker also needs to overcome a tit-for-tat trade war that US President Donald Trump is ratcheting up.
The country will need 7,690 new planes worth US$1.2 trillion (RM4.98 trillion) over the next two decades, the Chicago-based planemaker said in Beijing yesterday. That’s a 6% boost from its projections a year ago, as China’s middle class continues to grow and seek out air travel, according to Randy Tinseth, Boeing’s VP of marketing.
“The future of commercial aviation in China is very exciting,” he said in a statement.
But that outlook could be threatened if Trump makes good on a proposal to slap tariffs on another US$267 billion of Chinese exports, on top of the US$200 billion of items his administration is putting final touches on and the US$50 billion he’s already targeted. That would cover basically everything China exports and could trigger retaliation in kind from Beijing, a move that could ensnare Boeing’s passenger jets — which have been left off tariff hit lists thus far.
The US$12.2 trillion Asian economy, the world’s biggest source of outbound travellers, is a crucial market for both Boeing and Airbus SE as mainland carriers expand capacity and add new destinations across the world. The nation accounted for about 13% of Boeing’s revenue last year, according to data compiled by Bloomberg.
In the battle for dominance in the market, which the International Air Transport Association said could surpass the US to become No 1 in about four years, the American company has managed to maintain a lead over its European rival.
While China has said it would be forced to retaliate against all of the US tariff measures, it isn’t clear if President Xi Jinping would include passenger jets on his list of American targets. The US imported US$505 billion of Chinese products in 2017, Census Bureau figures show.
In a warning shot back in April, China had proposed an extra 25% tariff on an older generation of Boeing’s 737 models that was nearing the end of its production run, but has steered clear since.
At the Farnborough air show in July, both Boeing CEO Dennis Muilenburg and Airbus chief of commercial aircraft Guillaume Faury said the aerospace business thrives on free trade, and no one wins such awar.
In its forecast yesterday, Boeing said China would need 5,730 singleaisle planes, accounting for 75% of total new deliveries during the next two decades. The country would need 1,620 widebody aircraft, or triple the country’s current fleet size, it said.
At present, China has 15% of the world’s commercial airplane fleet, and that is likely to expand to 18% by 2037, Boeing said.
In August, Boeing raised its global forecast by 4% to 42,700 planes valued at over US$6 trillion. The predictions are based on a blend of economic and airline-user data and don’t include the potential ripple effects from geopolitical or economic turmoil.
Policymakers in China could still deal a blow to Boeing by favouring Airbus for future orders. Premier Li Keqiang said in June that his government is willing to step up cooperation with Airbus.
But for now, Boeing seems to be insulated from the tensions with China. It delivered 202 aircraft to Chinese airlines in 2017, compared to 176 by Airbus.
China itself is likely to join the race for commercial planes in the next couple of decades. State-owned Commercial Aircraft Corp of China, known locally as Comac, has been conducting test flights for its C919 narrowbody jet since May last year. The company said it has racked up more than 800 orders from Chinese carriers and lessors. — Bloomberg