The “phase one” trade deal signed by the U.S. and China Wednesday is expected to unblock an informal halt to Chinese orders for Boeing jets that had begun to affect the manufacturer’s long-term production plans, and it could lead to big orders in 2020 and 2021.
The last Chinese order for a Boeing jet was in November 2017. In the more than two years since, the Chinese government has blocked further transactions, reserving the prospect of large jet orders as a card to play in the trade talks.
In October, as a direct result of the China freeze, Boeing’s then-CEO Dennis Muilenburg announced a production rate cut for the 787 Dreamliner from 14 to 12 jets per month was planned for the end of 2020.
“The lack of orders from China in the past couple of years has put pressure on the production rate,” Muilenburg explained in a teleconference about third quarter earnings. “Now that we’re within lead time on our production system and those orders from China have not materialized, we need to make a decision.”
He added that Boeing would “continue to monitor and inform the U.S.-China trade discussions.”
More on the trade deal
The wording of the agreement requires China to import at least $32.9 billion more in U.S. manufactured goods than in 2017, after which trade was all but frozen. In 2021, the deal requires at least $44.8 billion more Chinese spending on manufactured goods than in 2017. The quickest way for China to rack up those big numbers is to order Boeing’s expensive aircraft.
In the midst of the trade negotiations in October, President Trump tweeted that a final agreement could mean “$16-20 Billion in Boeing Planes.”
New Boeing CEO Dave Calhoun issued a statement Wednesday welcoming the deal.
“We’re proud that Boeing airplanes will continue to be a part of this valued relationship,” Calhoun said. “Boeing applauds Presidents Trump and Xi.”
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