U.S. – China trade war doesn’t deter Boeing from opening first 737 plant in China

Despite a 90-day relaxation in which it is hoped the U.S. and China will be able to negotiate a mutually agreeable trade deal, Bowing has opened its first 737 completion plant in Zhoushan, the result of a joint venture between the American plane giant and the state-owned Commercial Aircraft Corp of China (COMAC). The opening ceremony also included the delivery of the first 737 completed at the facility to state carrier Air China.

Boeing invested US$33 million in 2017 in the acquisition of a majority stake in the joint venture, a facility which installs interiors and paint liveries. It is understood the target for deliveries from the Zhoushan plant will be 100 jets per year, which will take considerable pressure off Boeing’s Seattle-area facility which is struggling with production delays. Currently, one in every four jets sold by Boeing is to a Chinese operator and the company sees this investment in the Zhoushan facility as giving the company a competitive edge over its long-standing rival, Airbus. Boeing has forecast demand in China for new airplanes over the next 20 years will reach 7,700 units at an estimated value of US$1.2 trillion.

Discussing trade tensions between the two major economies, according to Reuters, John Bruns, President of Boeing China, told reporters on a conference call earlier on Saturday: “Am I nervous about the situation? Yeah, of course. It’s a challenging environment,” adding, “We have to keep our eye on the long game in China. Long term, I’m optimistic we will work our way through this.” Though the trade problem has negatively impacted businesses such as U.S. soy bean farmers and Chinese manufacturers, its impact on Boeing is unclear. U.S.-made aircraft have thus far escaped Beijing’s tariffs.

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