Trade turbulence to slow Chinese airlines’ growth, add to Boeing delays: analysts
Millions of US dollars could be added to cost of a plane imported from US, with production of home-grown passenger jets to also be affected
Despite recent tariff cuts, remaining duties on imports from the US could force Chinese buyers of Boeing jets to pay millions of US dollars more than before and, along with worldwide delivery delays, contribute to a sharp slowdown in the growth of China’s aviation capacity, analysts said.
Held back by tariffs and global supply chain constraints, China’s civil aviation passenger capacity is likely to grow by an average of 3.1 per cent a year until 2028, analysts at China International Capital Corporation (CICC) said in a note released on Wednesday.
That capacity grew at an average annual rate of 15.4 per cent in the decade to 2019.
“Despite lower tariff rates, Chinese airlines remain reluctant to import Boeing aircraft in the short term,” the analysts said, citing remaining duties on imports from the United States that “could add several million to over 10 million US dollars” to the cost of each plane.
“Deliveries may be delayed, and we expect some orders may even be cancelled by Chinese airlines,” they said.
Amid this year’s trade upheaval, some Chinese airlines refused to accept deliveries of Boeing planes, the US aerospace giant’s CEO, Kelly Ortberg, confirmed last month. However, deliveries of US-made aircraft reportedly resumed after the bilateral tit-for-tat tariff war cooled off earlier this month.