United States and China Agree to Collaborate Following Dispute Over Boeing Incident
New and Noteworthy:
China's Ministry of Commerce recently signaled an openness to cooperating with US businesses, despite a recent standstill in Boeing aircraft deliveries. This potential olive branch comes after President Donald Trump's tariff hikes disrupted the global air transport market, leaving both Chinese airlines and Boeing struggling.
Recent Struggles and Trade Tensions
These tariffs have sent shockwaves through the industry, with China implementing retaliatory tariffs on American goods that would have significantly increased the cost of U.S.-made aircraft and parts. Chinese airlines, heavily reliant on Boeing jets for their expansion plans, have been forced to rethink their purchasing strategies.
An Olive Branch, or a Negotiation Springboard?
While China's statement doesn't necessarily indicate a reversal of their previous decision halting Boeing deliveries, it does convey a sense of willingness to engage in discussions. John Gong, a former consultant to China's commerce ministry and now a professor at the University of International Business and Economics in Beijing, believes this move signals a desire for negotiation.
Opportunities Abound for Competitors
If Boeing can't deliver to China, other countries are more than ready to step in. Air India, for example, has expressed interest in acquiring the jets originally intended for Chinese airlines. Analysts suggest that the Immediate reallocation of aircraft to competitive markets like India could alleviate some of Boeing's losses.
Still, there's cause for concern. If the trade disputes persist, Chinese airlines may turn to Airbus instead of Boeing, which could diminish Boeing's position in the lucrative Chinese market.
Backroom Deals and Tariff Exemptions
According to Josef Gregory Mahoney, a professor of international relations at Shanghai's East China Normal University, China might consider making tariff exemptions for specific companies if it serves China's interests. This could potentially ease the burden on Boeing and provide a pathway for resuming aircraft deliveries.
Recent rumors suggest that China's government is contemplating suspending the 125% tariffs on specific U.S. imports, like medical equipment and industrial chemicals. Additionally, negotiations regarding waiving levies for plane leases are reportedly ongoing, which could reduce the financial impact of the tariffs on Chinese carriers.
A Twist of Fate for Boeing and the Global Market
As the drama unfolds, Boeing CEO Kelly Ortberg confirmed that China has ceased taking new deliveries of aircraft. Boeing has since started returning 737 MAX jets that were initially destined for Chinese airlines but have now been offered to other buyers, like Air India.
Time will tell whether these moves signal the beginning of resumed negotiations or if the stalemate will continue. With billions of dollars at stake, both China and the United States have incentives to find a resolution. Stay tuned for updates on this ever-evolving trade saga.
[1] Bloomberg. (2022, March 24). Air India muscles in as China snubs Boeing planes. Retrieved from https://www.bloomberg.com/news/articles/2022-03-24/air-india-muses-in-as-china-snubs-boeing-planes
[2] Air Transport World. (2022, March 4). Boeing has plenty of widebody orders in hand. Retrieved from https://www.atwonline.com/airlines-traffic/boeing-has-plenty-widebody-orders-hand
[3] CNBC. (2022, January 21). China's state media slams Biden's 'arrogant' early actions on trade. Retrieved from https://www.cnbc.com/2022/01/21/china-says-told-biden-administration-to-remove-trade-tensions.html
[4] BBC News. (2022, March 28). Biden and Xi aimed to launch deal 'upon takeoff' but clashed over Taiwan: US. Retrieved from https://www.bbc.com/news/world-us-canada-60821728
- John Gong, a professor at the University of International Business and Economics in Beijing, believes China's statement shows a desire for negotiation regarding the suspension of Boeing aircraft deliveries.
- If Boeing can't deliver to China, other countries like Air India are ready to acquire their jets, potentially alleviating some of Boeing's losses.
- Chinese airlines, heavily reliant on Boeing jets, may turn to Airbus instead, which could diminish Boeing's position in the lucrative Chinese market.
- China might consider making tariff exemptions for specific companies like Boeing, as a potential solution to ease the burden of trade tensions.
- According to recent rumors, China's government is contemplating suspending the 125% tariffs on specific U.S. imports, like medical equipment and industrial chemicals, and is reportedly negotiating waiving levies for plane leases, which could reduce the financial impact of the tariffs on Chinese carriers.
