Following the 2018 China International General Aviation Expo, at which China signed deals for 20 aviation projects, Airbus looks ready to enter into a new deal to supply planes and help expand the aviation industry in the country. The potential deal could signal a shift in Beijing as it has thus far avoided placing tariffs on Boeing in the ongoing trade war with the U.S. The Chinese government has threatened to impose a 25-percent tariff on Boeing, but has not followed through as it needs to meet the demands of the growing aviation industry.
The Airbus deal eclipses the smaller agreements worth approximately $480 million (RMB 3.3 billion) that were signed on September 21 in Shijiazhuang, Hebei Province, according to China News. The new supply agreement is reportedly worth $18 billion (RMB 123.8 billion) for 180 A320 Neo narrow-body planes, Bloomberg reported. The France-based company has sent a delegation to China in a push to finalize a deal as well as commemorate 10 years since Airbus opened an assembly line in China.
The deal for 180 A320 Neo narrow-body planes is reportedly worth $18 billion
The news comes just weeks after Boeing raised its estimate for the future needs of China’s aviation industry. The company said that China will require 7,690 new planes worth $1.2 trillion over the next 20 years. The majority of those new planes will be narrow-body planes, like the A320. And while state-owned Commercial Aircraft Corp. of China (Comac) won’t deliver any of the planes necessary until 2021, the company said that is has received more than 800 domestic orders, which will cut into future deals with Boeing and Airbus. Comac is working on delivering its C919 narrow-body planes.
A finalized deal with Airbus could flip the switch on tariffs for Boeing, though China seems satisfied with delaying such actions as the government subsidizes airlines that would need to purchase planes. But, if China shifts more of its purchases to Airbus and Comac, it could affect Boeing’s business as China accounted for 13 percent of revenue in 2017.
The Chinese government may seek to finalize the deal soon as it would take center stage at the China International Import Expo in Shanghai, which opens on November 5.
Airbus and Boeing combined for 104 total aircraft orders worldwide in August, up from 45 orders in the same moth the previous year, according to Seeking Alpha. Boeing received the lion’s share of orders with 99 worth a reported $5.9 billion.