Boeing’s customers in China have “indicated that they will not take delivery” of up to 50 planes that were earmarked for the Chinese market this year, according to Boeing CEO Kelly Ortberg. The executive’s acknowledged that the trade war will accelerate Boeing’s steep decline in the Chinese market after years of struggle. With China’s retaliatory tariffs on American imports considered cost-prohibitive, Chinese airlines would pay unprecedented prices for Boeing planes imported from the U.S. Chinese airlines will also face higher maintenance costs for their Boeing fleets in service, analysts added. Meanwhile, the state-run Commercial Aircraft Corporation of China (Comac) would pay tariffs on parts it normally imports from the United States, such as engines made by General Electric or Pratt & Whitney, analysts said. Comac builds the regional C909 and narrow-body C919 aircraft, which are flown mostly within China.
“China is a major importer of Boeing passenger aircraft, as well as of U.S.-manufactured aircraft parts for its commercial aviation industry,” said Rajiv Biswas, CEO of Singapore-based research company Asia-Pacific Economics. “China’s commercial aviation industry faces tremendous disruption unless an exemption from China’s 125% tariffs on U.S. imports is given by the Chinese government for U.S. commercial aircraft and parts imports,” Biswas said.
Three Boeing jets set for delivery to a Chinese airline have been returned to the U.S. Boeing last year called China a “significant market”. The Boeing CEO said that his company was “assessing options for remarketing already-built or in-process airplanes” originally made for Chinese customers. Boeing orders from China began slowing down, and eventually halted, amid trade tensions during the first Trump Administration, Goldman Sachs said in research note. And as of March, 130 of Boeing’s 6,319 unfilled commercial plane orders were slated for China.
China’s Comac, which aims to compete with the global Boeing and Airbus duopoly, is trying to source more parts domestically but lacks those components for now, analysts said. Its C919 began flying commercially about two years ago. “Comac, while insulated from direct sales tariffs as a domestic manufacturer, relies on U.S. components subject to China’s 125% tariffs, threatening C919 production timelines,” a Comac representative said. The C919 relies on American and other Western suppliers for 90% of its components, including CFM LEAP engines and Honeywell avionics. Full domestic sourcing of parts for the C909 or C919 is unlikely to happen before 2035. Meanwhile, an estimated 10,000 Boeing commercial jets use components from China, according a Boeing press release, the South China Morning Post reports.
