In a bold escalation of the ongoing US-China trade war, Chinese authorities have ordered domestic airlines to suspend deliveries of Boeing aircraft as a retaliatory measure against steep US tariffs on Chinese goods. Sources familiar with the matter, as reported by Bloomberg, indicate that Beijing has also prohibited the purchase of aircraft-related equipment and parts from US companies, citing the prohibitive costs imposed by a 125% Chinese retaliatory tariff on American-made planes and components. This follows the US imposition of 145% tariffs on Chinese products, further straining bilateral trade relations.
Boeing Ban and Airbus Opportunities
The suspension of Boeing deliveries has sparked speculation that China may pivot toward European manufacturer Airbus to meet its growing aviation needs. Airbus, already a dominant player in China with an estimated 55% market share as of 2023, could see a surge in orders for models like the A320neo and A350, which are favored for their fuel efficiency and adaptability. The company’s long-standing partnership with China, including a final assembly line in Tianjin—the only one in Asia—positions it well to capitalize on the gap left by Boeing. In 2023, Airbus secured a deal for 160 aircraft with Chinese carriers and has plans to expand its Tianjin facility, signaling strong confidence in the market.
China’s aviation sector is poised for significant growth, with Airbus forecasting a demand for 8,420 new aircraft over the next 20 years, driven by a 5.3% annual growth rate—outpacing the global average. The Boeing ban could accelerate orders for Airbus, especially as Chinese airlines seek reliable alternatives. Historical precedent supports this shift: in 2022, China’s three major airlines ordered 292 A320-series jets worth $37 billion, a move seen as balancing geopolitical ties with Europe. However, Airbus faces challenges, including global supply chain constraints and a reduced delivery target for 2024 due to parts shortages, which could limit its ability to fully meet a sudden spike in Chinese demand.
C919’s Role and Supply Chain Vulnerabilities
Amid the trade spat, China’s homegrown C919, developed by the Commercial Aircraft Corporation of China (COMAC), is being positioned as a long-term solution to reduce reliance on foreign manufacturers. The narrow-body jet, designed to compete with the Boeing 737 MAX and Airbus A320neo, has secured over 1,000 orders, primarily from China’s big three carriers—China Eastern, Air China, and China Southern. Priced at approximately $99 million, the C919 offers a cost advantage over its rivals ($121 million for the 737 MAX and $111 million for the A320neo).
However, the C919’s production faces significant hurdles due to its dependence on Western suppliers. About 60% of its key components come from US firms, including CFM International’s LEAP-1C engines (a GE-Safran joint venture) and avionics from Collins Aerospace and Honeywell. An additional 30% are sourced from Europe, leaving only 10% from Chinese or joint-venture suppliers. The US has already tightened export controls on COMAC, adding it to an “entity list” in 2021, which requires special licenses for American firms to supply parts. Further restrictions could disrupt C919 production, as evidenced by delays in certification and delivery caused by earlier sanctions.
If the trade war intensifies, a full US export ban could halt C919 assembly lines, as China lacks immediate alternatives for critical systems like engines and flight controls. European suppliers, while not currently restricted, could also face pressure if EU-China relations sour over issues like electric vehicle tariffs. COMAC’s current output is modest—about one aircraft per month—far from its 2025 target of 75 jets annually or the 150 planned by 2028.
China’s Push for Self-Reliance
To counter these risks, China is accelerating efforts to localize C919’s supply chain. The Aero Engine Corporation of China (AECC) is developing the CJ-1000A turbofan engine, aiming for certification by late 2025 to replace the LEAP-1C. However, the engine remains in testing, and its reliability is unproven, posing challenges for near-term substitution. Domestic firms like AVIC are also working to produce avionics and landing gear, but bridging the technological gap with Western systems will take years. Diversifying suppliers beyond the West, such as exploring partnerships with Russia or Indonesia, is another strategy, though their aerospace industries lack the capacity to deliver high-quality substitutes.
Despite these hurdles, the C919 remains a national priority, backed by Beijing’s ambition to capture 10-25% of the domestic market and eventually compete in Asia and Africa. Its success hinges on achieving economies of scale and securing domestic trust, as international certifications from regulators like EASA or the FAA remain elusive.
Balancing Act in a Tense Market
China’s suspension of Boeing deliveries underscores its willingness to wield economic leverage in the trade war, but it also highlights vulnerabilities in its aviation strategy. While Airbus stands to gain in the short term, its capacity constraints and the broader geopolitical landscape could complicate matters. The C919, though promising, is not yet ready to fill the void, with production risks tied to Western sanctions. As China navigates these challenges, its aviation industry faces a delicate balancing act: leveraging global partnerships while racing toward self-reliance.
For now, the skies over China may see more Airbus jets, but the C919’s ascent—and its ability to weather the trade storm—will shape the future of the country’s aerospace ambitions.
