Underscoring its position as a global player in aircraft manufacture, China has delivered it’s first Boeing 737 aircraft at its completion and delivery centre in Zhoushan.
The joint venture between Boeing and Commercial Aircraft Corporation of China (COMAC) saw a new 737 MAX 8 delivered for Air China, under registration number B-1178. The aircraft was built by Boeing in their Renton plant, but finished at the new Chinese factory.
The new plant was finished less than two years ago and covers 100 acres in total. The factory is designed to undertake interior work for the Boeing aircraft destined for the Chinese market and is planned to expand into other work including painting.
Capable of handling the entire 737 MAX family, the Chinese facility is a strategic move by Boeing. With one third of all 737’s destined for China, the US plane maker clearly has their sights set on expansion in this emerging market. China is expected to need around 7,400 aircraft over the next two decades, which represents a $1 trillion opportunity for Boeing.
The shadow of a trade war
The Chicago based manufacturer’s partnership with COMAC couldn’t have come at a worse time. In the midst of the trade war between China and the US, Boeings decision to move a multibillion dollar operation to the Far East raises a few questions (and eyebrows) in the States.
However, the Trump administration has been curiously quiet on the topic. When Harley Davidson opened a plant in Europe, he suggested a boycott of the brand. But in terms of Boeing in China, nothing has been said at all.
Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better.
— Donald J. Trump (@realDonaldTrump) August 12, 2018
Is Boeing losing its grip on China?
In light of the trade war and tensions between China and the US, Boeing’s vice-like grip on the nation seems to be slipping slightly. Earlier this year, China fired a warning shot at Trump, threatening to charge a 25% tariff on imports of the 737 to the finishing factory. Although they haven’t been implemented yet, it could affect the production speed of the 737 MAX family if they did.
And while the US and China are fighting among themselves, Boeing’s biggest rival is quietly negotiating a huge order with Chinese based Xiamen Airlines. The order involves the A320neo aircraft, which is said to be the Airbus answer to the successful 737 aircraft.
Although no firm order has been successfully negotiated yet, a purchase from Airbus would be a huge blow to Boeing who secured Xiamen as the launch customer for their 737 MAX last year. Xiamen has been using Boeing aircraft since their launch in the 1980s, and currently has more than 170 Boeing jets in their fleet. Reports have also been cited of other deals between Airbus and Chinese carriers, with a figure of $18bn floated by Bloomberg.
For the immediate future at least, China will remain a battleground for Airbus and Boeing as the plane makers fight it out to secure their share of what will become the world’s biggest aviation market. Ultimately the Toulouse based Airbus simply doesn’t have the capacity to displace its rival without seriously hampering the expansion plans of Chinese carriers.