Trade war between Washington and Beijing could hurt Boeing’s prospects in China


    Boeing Co. (BA) has lifted its projection for airplane demand in China despite a growing trade war between Washington and Beijing that could hurt revenue it generates from the country.

    The company said China will need 7,690 new aircrafts worth $1.2 trillion in the next twenty years through 2037, up 6 percent from 7,240 it forecasted last year in September for the same period.

    The Chicago-based company made this projection on Tuesday in its annual report highlighting the global market scope for the next two decades.

    Vice President of marketing at Boeing, Randy Tinseth said that growth in China is a result of the country’s increasing middle class that has surged three-fold over the last decade and expected to double again over the next 10 years.  Tinseth added that the future of commercial aviation is very bright in China.

    Boeing’s latest forecast is based on economic and airline-user data, but it didn’t include the possible effects from geopolitical unrest. The trade tensions between the two biggest economies of the world could weigh on its future sales. The company is just ahead of Airbus SE in the Asian country, though that narrow lead maybe at risk if China decides to add commercial planes in its retaliatory tariff list against the U.S.

    So far, Aircraft makers have luckily escaped the equivalent retaliation actions from both U.S. and China. However, the Trump administration is planning to impose new tariffs on additional Chinese products worth $200 billion that could trigger China to add passenger jets on its list.

    China is expected to surpass U.S. as the world’s largest aviation market by 2022. This is critical for Boeing and its rivals fighting for dominance in the Asian region.

    However, Boeing won’t be able to keep up or surpass its competitors if policy maker in China preferred Airbus for future orders.

    Boeing generated 13 percent of its overall revenue from China in 2017. It delivered 202 planes to Chinese airlines last year, versus 176 delivered by Airbus.