The civil aviation sectors in both the United States and China can expect a much-awaited tailwind, with Boeing to be thrown a lifeline after Donald Trump and Chinese Deputy Premier Liu He signed a trade war agreement last week.
Expect the Chinese market to be inundated by US exports in the next two years with Beijing’s US$200 billion pledge to boost purchases to offset the trade imbalance, given that the US only sold $186 billion worth of goods to China in 2017.
Media reports by the Wall Street Journal and other US papers say this time industrial equipment and products will nudge aside farm products in the new export bonanza to account for 43.5% of the total, or $87 billion.
China Aviation Insight also reported that Boeing, the ailing planemaker hamstrung by the fatal crashes of the latest variant of its best-selling 737 narrow-body jets, could get fat orders from Chinese carriers as Beijing will not have too many US products to choose from to signal its goodwill to fulfill the promise.
The aviation news portal cited experts as saying that high-tech, high-precision equipment like those for semiconductor device fabrication has always been on Beijing’s shopping list, yet Washington will be indisposed to reject such orders on the grounds of national security and intellectual property protection, while the demand for lower-end processed goods is weak since China is grappling with overproduction of such products itself.
Boeing stands to benefit as multibillion contracts can be made with the stroke of the pen by the planemaker and Chinese carriers – given it has been more than two years since China last bought planes during Trump’s visit to China in November 2017, and the pent-up demand is there with the global expansion spree of Chinese airlines as well as Airbus’ production bottleneck.
The news website estimates that China may splurge to the tune of $60 billion on no less than 300 Boeing planes in the next two years, subject to the recertification of the 737Max and the development of the 777X, the latest series of the long-range, wide-body, dual-engine family.
Boeing also runs a 737 delivery center in Zhoushan, in eastern Zhejiang province close to Shanghai.
Air China, China Southern, Xiamen Air and Sichuan Airlines, in the process of retiring their aging jets for a younger, more fuel-efficient fleet as well as more diversified matrixes, are likely to place orders for narrow- and wide-body jets including the 777 and 787 models from Boeing.
These carriers aim to fly more passengers on trunk routes at home and abroad to cater to the still buoyant demand as China is tipped to soar past the US as the world’s largest aviation market in the next three to five years, according to the IATA.
Meanwhile, business at General Electric and its jet engine unit CFM may also take off when China revs up the flight testing, certification and the ultimate commercial launch of its C919 passenger jets, which rely on CFM engines.
Airlines that operate routes between the two countries can also expect a turnaround, in particular in the cargo sector, when more exports will be hauled to China.
FedEx, which runs a sprawling logistics and trans-shipment hub at Guangzhou’s airport, and UPS, with bases in Shanghai and Shenzhen, are among the key couriers to benefit from the spike in trade.
More US exports headed for China can also balance the usual one-way flow of goods from China to the US, when in the past cargo jets operated by Chinese carriers were usually half-empty when they returned from the US.