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Boeing opens first 737 plant in China amid trade war

Move is a strategic investment aimed at building a sales lead over arch-rival Airbus in a top travel market

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Boeing delivering the first 737 completed at the Zhoushan facility to state carrier Air China in a ceremony on Saturday.

Zhoushan

BOEING Co opened its first 737 completion plant in China on Saturday, a strategic investment aimed at building a sales lead over arch-rival Airbus in one of the world's top travel markets that has been overshadowed by the US-China trade war.

The world's largest planemaker also delivered the first of its top-selling 737s completed at the facility in Zhoushan, about 290 km south-east of Shanghai, to state carrier Air China during a ceremony on Saturday with top executives from both companies.

The executives, alongside representatives from China's state planner and aviation regulator, unveiled the plane at an event attended by hundreds of people. Boeing and Airbus have been expanding their footprint in China as they vie for orders in the fast-growing aviation market, which is expected to overtake the United States as the world's largest in the next decade.

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Boeing invested US$33 million last year to take a majority stake in a joint venture with state-owned Commercial Aircraft Corp of China (COMAC) to build the completion centre, which installs interiors and paints liveries. Chicago-based Boeing calls itself the top US exporter and delivered more than one out of every four jetliners that it made last year to customers in China, where it forecasts demand for 7,700 new airplanes over the next 20 years valued at US$1.2 trillion.

However, the plant's inaugural ceremony was overshadowed by tensions between the United States and China as they engage in a bruising tit-for-tat tariff war. The world's two largest economies are in a 90-day detente to negotiate a trade deal.

"Am I nervous about the situation? Yeah, of course. It's a challenging environment," John Bruns, president of Boeing China, told reporters on a conference call earlier on Saturday.

"We have to keep our eye on the long game in China. Long term, I'm optimistic we will work our way through this," he added.

While the trade frictions have hurt businesses such as US soya bean farmers and Chinese manufacturers, their impact on Boeing has been unclear. US-made aircraft have so far escaped Beijing's tariffs.

Mr Bruns said that he remained optimistic about the outcome of trade talks between the United States and China and described aviation as a "bright spot" amid tensions between the two countries.

Asked about the possibility of technology transfer agreements between Boeing and COMAC, he stressed that the purpose of the plant was for installing seats, painting vehicles and completing the planes' final delivery. "That's only a part of what we do in the production of airplanes," he said.

Officials and executives made no direct reference to the trade tensions in public remarks at the planemaker's Zhoushan facility.

Boeing aims eventually to hit a delivery target of 100 planes a year at Zhoushan, although Mr Bruns deflected a question on how quickly it would reach that level and said that Boeing had no plans to expand work to other aircraft types. Boeing also hopes that the plant will relieve pressure at the Seattle-area facility where it plans to boost production next year of its best-selling 737 narrowbody aircraft but has struggled with production delays. REUTERS