Beijing blocks Boeing deals, escalating trade tensions
On Tuesday, Beijing prohibited Chinese airlines from purchasing new Boeing aircraft and halted the import of parts. This decision marks another development in the ongoing trade war between the two powers. Due to the imposed tariffs, American aircraft have become prohibitively expensive for Chinese companies.
Chinese authorities have instructed domestic airlines to cease buying Boeing aircraft and suspend the purchase of parts and aviation equipment from American companies. This decision represents another stage in the escalating trade conflict between the world's two largest economies. Beijing is also considering supporting Chinese carriers leasing Boeing aircraft as they face rising costs.
The order to stop transactions followed China's announcement of retaliatory tariffs this past weekend. The tariffs would double the cost of American aircraft and parts, making Boeing planes economically unfeasible for Chinese airlines.
Boeing loses a key market
Ten Boeing 737 Max aircraft were scheduled for delivery to China soon—two each for China Southern, Air China, and Xiamen Airlines. Some of these planes are already "ready for delivery" near Boeing's factory in Seattle, while others are at the completion center in Zhoushan, eastern China. It is possible that some of the planes will eventually be used if customs formalities were completed before the new tariffs took effect.
For Boeing, the current impasse presents further challenges in one of the world's largest markets. According to forecasts, China will account for 20% of global demand for aircraft over the next two decades. In 2018, nearly a quarter of Boeing's production went to China. However, there have been almost no orders for several years.
The current impasse demonstrates that China still relies on foreign aircraft suppliers. Despite the growing significance of Airbus, carriers still own hundreds of Boeing aircraft, which require maintenance, repairs, and replacements.
