Beijing bans Boeing amid escalating trade tensions
On Tuesday, Beijing banned Chinese airlines from purchasing new Boeing aircraft and halted the import of parts. The decision is another development in the trade war between the powers. Due to the tariffs imposed, American aircraft have become too costly for Chinese companies.
Chinese authorities instructed domestic airlines to stop buying Boeing aircraft and suspend the purchase of parts and aviation equipment from American companies. The decision represents another stage in the escalating trade conflict between the world's two largest economies. Beijing is also considering support for Chinese carriers leasing Boeing aircraft as they face rising costs.
The order to halt transactions followed China's announcement of retaliatory tariffs over the past weekend. The tariffs would double the cost of American aircraft and parts, making Boeing planes economically unviable for Chinese airlines.
Boeing loses a key market
Ten Boeing 737 Max aircraft were scheduled to be delivered to China in the near future - 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 centre in Zhoushan, eastern China. It is possible that some of the planes will eventually be used if the customs formalities were completed before the new tariffs were implemented.
For Boeing, the current deadlock represents further troubles 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 proves that China still relies on foreign aircraft suppliers. Despite the growing importance of Airbus, carriers still own hundreds of Boeing aircraft, which require maintenance, repairs, and replacements.
