China says it is willing to cooperate with US after Boeing spat

China is willing to support normal cooperation with U.S. companies, the country’s Ministry of Commerce said, just days after Chinese airlines rejected taking delivery of any new jets from U.S. planemaker Boeing Co. Officials in Beijing acknowledged that tariff hikes implemented by U.S. President Donald Trump have disrupted the global air transport market, and both Chinese airlines and Boeing have been severely affected. As a result, China hopes the U.S. can create a stable and predictable environment for normal trade and investment activities, according to Tuesday’s statement. [caption id="attachment_57287549" align="aligncenter" width="1920"] 737 Max fuselages at the Boeing's manufacturing facility in Renton, Wash. (Courtesy/David Ryder/Bloomberg)[/caption] The move would seem to indicate an olive branch of sorts from China after officials earlier this month ordered airlines not to take any further deliveries of Boeing jets as part of the tit-for-tat trade war that’s seen Trump levy tariffs of as high as 145% on Chinese goods. The missive came after China unveiled retaliatory tariffs of 125% on American goods, levies that would have more than doubled the cost of US-made aircraft and parts, making it impractical for Chinese airlines to accept Boeing planes. “Even though this statement doesn’t seem to indicate Beijing has reversed its previous decision, it does send a reconciliatory message that China is willing to be engaged in a negotiation,” John Gong, a former consultant to China’s commerce ministry who’s now a professor at the University of International Business and Economics in Beijing, said. Being able to take delivery of Boeing jets again would certainly be a boon for Chinese airlines, many of whom had been relying on Boeing jets for their expansion plans. China is forecast to make up 20% of global aircraft demand over the next two decades. “Given the fact the U.S. has made so many exemptions in its tariffs against China, ostensibly to serve the interests of American consumers sensitive to inflation, we might see China make some exemptions for specific companies when it serves China’s interests to do so,” said Josef Gregory Mahoney, a professor of international relations at Shanghai’s East China Normal University. Indeed, people familiar with the matter last week said that China’s government is considering suspending the 125% tariffs on some U.S. imports such as medical equipment and industrial chemicals like ethane. Officials are also discussing waiving levies for plane leases, the people said. Chinese carriers don’t own all of their aircraft and hence pay leasing fees to third-party companies to use some jets — payments that would have become financially ruinous with the additional tariffs. Boeing Chief Executive Officer Kelly Ortberg confirmed last Wednesday that China has stopped taking deliveries of any planes and said the planemaker is prepared to find alternative buyers for China-bound aircraft. “We’re in close communication with our China customers and we’re actively assessing options for remarketing already built or in-process airplanes,” Ortberg said during Boeing’s earnings call. The move has left in doubt the fate of about fifty jets that were slated to go to China this year. Boeing has since begun flying 737 Max jets that were refused by Chinese airline customers back to the U.S. Among airlines that are willing recipients of the aircraft rejected by China is Air India Ltd. Through the end of last month, the Indian airline had accepted forty-one 737 Max jets originally built for Chinese airlines, and the carrier has signaled it’s eager to take more, Bloomberg has reported. “The fact Boeing can move planes slated for China immediately to Indian buyers at the expense of Chinese carriers is a clear example where some sort of exemption needs to be made by Beijing, insomuch as the policy hurts the Chinese side more than it does Boeing,” Mahoney said.

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