Smack in Midst of Trade War, Boeing to Open Its First 737 Plant in China

Boeing will inaugurate its Zhoushan 737 finishing center on Saturday in China, in a rare endeavor outside the US.

This headline seems suitable for "The Onion", Boeing to Open Its First 737 Plant in China Under Shadow of a Trade War.

The Chicago-based planemaker will inaugurate its completion and delivery center in Zhoushan, 90 miles southeast of Shanghai, on Saturday, after more than a year of construction. The facility marks a rare industrial foray outside of the U.S. for Boeing and a joint venture with state-owned planemaker Commercial Aircraft Corp. of China Ltd.

While the plant was sent in motion before U.S. President Donald Trump was elected, the ribbon-cutting risks being overshadowed by his tit-for-tat on duties with China on products ranging from cars, machinery to pork and soybeans.

About one of every four jets that Boeing builds is bound for China, while the country’s airlines are the biggest buyers of the 737, the manufacturer’s largest source of profit. China is expected to need about 7,700 commercial planes over the next two decades to connect an increasingly mobile middle class. That represents a $1 trillion market opportunity for Boeing, Airbus SE and homegrown rivals like Comac.

Boeing, the largest U.S. exporter, has urged both governments to resolve their trade differences and protect aerospace, which generates about an $80 billion annual trade surplus for the U.S.

Love Affair Ending?

On October 19, Bloomberg asked Is This Chinese Love-In With Boeing About to End?

A Chinese airline that’s been an exclusive operator of Boeing Co. jets for more than 30 years is in talks with Airbus SE on a potential plane purchase, amid growing trade tensions between Beijing and the U.S., according to people familiar with the matter.

Should it come off, an Airbus purchase would be a blow to Boeing, which secured Xiamen last year as a launch customer for the latest variant of its best-selling 737 Max plane, a direct competitor to the longest range A320. It also highlights the risks of U.S. President Donald Trump’s high-stakes effort to curtail China’s rise as a global economic rival.

Clearly the love affair did not end, but Boeing held a threat card on the US that I have mentioned on numerous occasions. And that's on top of soybeans. Playing that card would have hurt China too, but China would have done it.

Harley Davidson Should Never Be Built in Another Country

Trump Proposes Harley Davidson Boycott

So here we are. Trump cheers the demise of Harley Davidson for opening a plant in Europe but is strangely silent on a multi-billion dollar Boeing move to China.

Mike "Mish" Shedlock

Comments
No. 1-15
Six000mileyear
Six000mileyear

It doesn't matter in which country a plane is made, I won't fly.

Toro2018
Toro2018

737 Max is not affected by the tariff.

thimk
thimk

much to the chagrin of Monsanto(purveyor of the "frankenbean") USA soy bean production will never recover from the trade war. might be an opportunity to switch production to industrial hemp.

Sechel
Sechel

I wonder if China is hoping to learn about better production techniques for its military aviation sector rather than attempting to compete with Boeing and Airbus. I think the market for large commercial planes is only going to shrink over time. Seems the market to bet on is the one popularized by Embraer and Bombardier.

I haven't been on a 747 in years. Airbus' A380 was a disaster and when I do fly to Europe, California or the South East the planes feel like they keep getting smaller. The airlines seem to be focusing on offering more flights and/or assuring that the planes don't fly with empty seats

thimk
thimk

boeing sold its soul to the devil to gain china market share . however some companies are relocating their businesses out of china, but not necessarily to the USA. Additionally if you have proprietary/intellectual property on your server take it offline.