China’s Boeing purchases seen as ‘weakness’ in US trade deal probe, hurt by ‘sour’ relations

Name: Boeing 737 MAX resumes passenger flights in the US after 2-year suspension
Uploaded: 2021-11-11T14:00:23.000Z
Duration: 1 min 57 s
Description: Boeing 737 MAX resumes passenger flights in the US after 2-year suspension

US Trade Representative Katherine Tai says the United States is exploring all weaknesses in China’s performance under the phase-one trade deal

China is running far behind in its promises in the deal to boost purchases of US goods by US$200 billion during 2020 and 2021

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US Trade Representative Katherine Tai said the Biden administration is getting traction with China in talks over Beijing’s compliance with a Trump-era trade deal, but she declined to predict an outcome while discussions continue. Photo: Bloomberg

Amanda Lee

Published: 10:00pm, 11 Nov 2021Updated: 9:58am, 12 Nov 2021

As the administration of US President Joe Biden edges closer to discussions with Beijing over the progress of the phase-one trade deal, China’s failure to purchase commercial aircraft from Boeing is likely to be one of the “weaknesses” identified by US Trade Representative Katherine Tai.

Tai on Wednesday said the administration aims to hold Beijing accountable to the two-year trade deal which was signed in January last year, with China seen to be running far behind in its promises in the Trump-era agreement to boost purchases of US goods by US$200 billion during 2020 and 2021.

“If you’re looking at where the weaknesses might be, in terms of phase one, you should expect that we are talking through it and exploring all of it,” Tai told reporters in Washington, according to Reuters, when asked if she was pushing for China to take steps to allow for purchases of Boeing commercial aircraft which is listed as a purchase category in the agreement.

Boeing’s biggest offering of planes to China, the 737 MAX, has been grounded since 2019 following two fatal crashes, while its business has also been caught up in the trade war between the United States and China that started the previous year.

In the aviation business, other factors are at play, especially the current political schism between the two countries

Shukor Yusof

Analysts believe Boeing’s fate in China hinges on better relations between Beijing and Washington, meaning unless there is significant improvement, it is unlikely to receive approval from the Civil Aviation Administration of China (CAAC).

“There’s no doubt the MAX has been fully fixed and is one of the safest aircraft to fly today. But in the aviation business, other factors are at play, especially the current political schism between the two countries. It weakens the secondary market [and residual value] of the MAX if China indefinitely delays its return,” said Shukor Yusof, founder of aviation consultancy firm Endau Analytics.

“My sense is the Chinese won’t be returning the MAX to service this year. Or perhaps not even in the first quarter of 2022. Maybe never at all if relations continue to sour.”

Data from Ascend by Cirium, the consultancy arm of global aviation data company Cirium, showed that 113 aircraft in Boeing’s inventory of 335, defined as aircraft which have flown but not yet been delivered, are scheduled for delivery to customers in China.

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Boeing 737 MAX resumes passenger flights in the US after 2-year suspension