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Boeing benefits as China grows in affluence
(Seattle Times)
Updated: 2005-09-08 06:50

As the nation's largest manufacturing exporter, Boeing is the single biggest contributor to the U.S. balance of trade. Its fortunes in China are important to the U.S. economy.

But after years of dominance, Boeing has lost ground to Airbus in China — and is scrambling to make it up.

As China's affluence grows, the nation's 1.3 billion people may become the biggest market for airplanes in the next 20 years. And Boeing's orders are growing.

China Southern Airlines last week finalized an order for 10 Boeing 787 jets for about $1.2 billion, part of a 60-plane deal for 787s announced in January.

Four other carriers — China Eastern, Air China, Shanghai Airlines and Xiamen Airlines — have ordered 42 of the planes.

A sixth carrier, Hainan Airlines, is supposed to order jets but has yet to come to terms with Boeing. It would need to buy eight 787s to complete the 60-plane deal.

It's expected that those orders would be announced during Hu's visit to the U.S. Hu is scheduled to visit Boeing on Tuesday.

"I would be shocked if on a trip like this there aren't any deals signed," said Joe Borich, executive director of the Washington State China Relations Council.

The trade-off is jobs. Like many companies, Boeing is moving work to China, too.

A third of all Boeing planes have parts and assemblies built in China, and contracts worth $600 million in 787 parts will have been awarded there, Boeing says.

The support infrastructure for the airline industry is enormous.

"As China grows and Boeing sells more airplanes there, China is going to need things like airport design, construction, control systems and related training," said Larry Williams, director of international trade at the state Department of Community, Trade and Economic Development.

"This is an area where we see growth."

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