SHANGHAI: US aerospace giant Boeing has reached deals with Chinese firms to sell 300 aircraft and open a completion centre in the Asian country, China’s official Xinhua news agency reported, as President Xi Jinping began his first state visit to the United States.
The order, which was not immediately confirmed by Boeing, demonstrates the vital importance of the massive Chinese market despite a growth slowdown in the world’s second largest economy that threatens to cut into the expansion of air travel.
The state-owned Commercial Aircraft Corporation of China (COMAC) also signed an agreement with Boeing on Tuesday to set up a “completion centre” in China for its narrow-body 737 airliners, Xinhua said, as the US company lifts competition with European rival Airbus, which already has a manufacturing presence.
The Xinhua report, datelined from Seattle where Xi started his trip on Tuesday, gave no immediate details of the models of the planes bought by a group of Chinese companies or the value of the sale.
But it is likely to be one of the biggest orders of recent times.
Xi is due to visit Boeing’s main aeroplane factory in Washington state on Wednesday, as he looks to highlight the economic importance of China to US firms with the countries’ political relationship beset by tensions.
“China’s rapidly growing aviation market plays a crucial role in our current and future success,” Boeing chairman Jim McNerney said in a statement issued last week to announce the visit.
Later in his trip Xi will travel to Washington DC to meet US President Barack Obama at the White House.
China is expected to add 6,330 new aircraft worth $950 billion to its commercial fleet by 2034, Boeing said last month in its annual China Current Market Outlook.
The forecast comes despite current economic pain in China where growth slowed to 7.0 percent for both the first and second quarters, weaker than 7.3 percent for all of 2014 — the worst in 24 years.
“The emerging middle class in China is helping to boost demand,” Mohshin Aziz, an analyst at Malayan Banking Bhd. in Kuala Lumpur, told Bloomberg News. “Most of the planes ordered will be for growth, and very few will be for replacement.”
Shift for Boeing
A Boeing factory in China would represent a shift in the US giant’s strategy in the crucial market, where European rival Airbus already has a final assembly operation for medium-range Airbus 320 aircraft in the northern port city of Tianjin and plans to open a new completion and delivery centre for long-haul A-330s.
A report by the Shanghai Securities News on Tuesday said plans for a Boeing facility in the eastern Chinese province of Zhejiang have already been submitted to the central government in Beijing for approval.
Representatives of manufacturer COMAC could not be immediately reached on Wednesday.
But China wants some of the market to go to its own homegrown planes. COMAC is already developing a Chinese narrow-body, the C919, as well as a smaller regional jet, the ARJ21, in commercial hub Shanghai.
The company also plans to develop its own wide-body passenger plane over the next decade in cooperation with a Russian firm, industry officials say.
The Chinese buyers in the aircraft purchase deal include China Aviation Supplies Holding Co., ICBC Financial Leasing Co. and China Development Bank Leasing, Xinhua said.
A spokeswoman for China Development Bank Leasing in Shenzhen confirmed an order for 30 Boeing planes.
ICBC Financial Leasing Co. plans to buy 30 Boeing Next-Generation 737s, according to a newspaper under China’s aviation regulator.
In July, China Eastern Airlines—one of the country’s biggest carriers—agreed to purchase 50 of Boeing’s Next-Generation 737-800s in a deal valued at $4.6 billion based on list prices.
In the US, China’s top state planner also signed an agreement with Boeing on strategic cooperation in the civil aviation industry, Xinhua reported, without giving details.