Key Points:

  • Boeing's commercial aircraft sales in China have diminished significantly due to strained U.S.-China relations, impacting the company's market presence.

  • A recent meeting between President Biden and President Xi Jinping may signal easing tensions, potentially benefiting Boeing’s future in China.

  • Despite challenges, China remains a key market for Boeing, with a projected demand for thousands of new aircraft over the next two decades.

Diminished Sales in a Key Market

Boeing has experienced a notable decline in commercial aircraft sales to China, correlating with the recent deterioration in U.S.-Chinese relations. The American aerospace giant has seen its market presence in China diminish to minimal levels over the past years. However, there are emerging signs that the company might regain some footing in this crucial market. The recent meeting between U.S. President Joe Biden and Chinese President Xi Jinping, although not yielding explicit progress on resuming plane sales, could potentially de-escalate tensions, benefiting companies like Boeing. Eddy Pieniazek, head of advisory at Ishka, an aviation consulting firm, notes that the situation may pivot favorably for Boeing and China, given their mutual dependency in the aviation sector.

The last significant order from China for Boeing aircraft occurred six years ago, involving an agreement for 300 planes during President Donald Trump's visit to Beijing. Since then, Chinese customers and officials have halted deliveries of Boeing's 737 Max jets, the manufacturer's most popular commercial plane. Consequently, Boeing has had to redirect several jets intended for Chinese airlines to other customers. Currently, 85 Max planes designated for Chinese carriers are in storage, awaiting delivery, out of 250 aircraft in Boeing’s inventory.

China's Aviation Needs and Boeing’s Prospects

China's aviation market is crucial for Boeing. Before the pandemic, approximately one-third of Boeing's 737s were delivered to China. Over the next two decades, China is expected to account for 20% of global airplane demand, necessitating an estimated 6,500 single-aisle planes like the 737 Max and over 1,500 larger twin-aisle planes. The 737 Max faced a global ban for 20 months following two fatal crashes but has since returned to service worldwide, including in China. By early 2021, the Max had resumed passenger flights in most parts of the world, with China being the last major country to allow its operation again.

Boeing's sales and deliveries to China have significantly decreased, but the company has not been entirely shut out of the market. In 2020, Boeing sold a few aircraft to Chinese leasing company ICBC Leasing, which also took delivery of several Max jets in 2021 and 2022. The company has also sold and delivered numerous 777 freighters to Chinese customers in recent years. Despite lagging behind Airbus in orders, Boeing's global sales momentum for the Max is strong, with more than 2,100 new orders since the Max resumed flying, not including cancellations.

Airbus' Competitive Edge and Comac's Rise

Airbus has been more successful in securing orders in China, with more planes in service and on order in the country. Last year, Airbus announced an order for nearly 300 planes in China and plans to double production capacity at a factory there. However, China's growing aviation needs cannot be met solely by existing orders from Boeing, Airbus, and Comac, China's own airplane manufacturer. IBA, an aviation consultancy, estimates that China will need nearly 1,100 more planes by 2030 for replacing aging aircraft and meeting rising domestic travel demand.

The Comac C919, China’s own narrow-body jet, comparable to the Max and Airbus A320, represents a shift in the country's aviation landscape. Despite being a state-funded project with significant investment, the C919 relies on components, including engines, from American and European suppliers. While most orders for the C919 are from Chinese airlines, its future remains intertwined with Western aviation technology. Comac is also developing a long-haul, wide-body jet, potentially rivaling the Airbus A350 and Boeing 787 Dreamliner, though its readiness timeline remains undisclosed.

The Road Ahead for Boeing and Comac

Building a commercial airplane manufacturer is a complex endeavor. Experts suggest it will take many years before Comac can match the scale of production achieved by Airbus and Boeing, which have decades of experience and established global supply chains. Michel Merluzeau, director of Aerospace Intelligence & Research, emphasizes that China will continue to need Boeing and Airbus in the coming decade. The development of China's aviation industry, from just over 60 million passengers per year in 2000 to nearly 660 million in 2019, according to the World Bank, highlights the country's significant demand for air travel.