US President Donald Trump’s visit to China brought news of a major trade deal. In an interview given to the Fox News Channel on Thursday, Trump said that China has agreed to buy 200 Boeing jet aircraft. However, as the number is much lower than the expectations of the analysts, the aircraft manufacturer Boeing has suffered a major shock in the stock market.
Ahead of the high-profile meeting between Trump and Chinese President Xi Jinping, sources told Reuters news agency that the sale of about 500 aircraft was under discussion. These included 500 ‘737 Max’ jets as well as several expensive ‘widebody’ aircraft. In comparison, the announcement of 200 aircraft disappointed investors. As a result, Boeing’s share price fell by about 4.1 percent during the market on Thursday.
Trump told Fox News, “Today he (Xi Chin Ping) agreed on one thing, he is going to order 200 large aircraft.” However, there is still no clear information about when these aircraft will be delivered or what are the detailed conditions.
Both Boeing and Airbus predict that China will need at least 9,000 new passenger planes by 2045 to meet growing demand for airspace. Analysts believe that it is necessary for China to order at least 1,000 new aircraft.
Boeing has been in a long-standing battle with European giant Airbus for control of China’s huge air transport market. In the last decade, Airbus overtook Boeing to capture a large share of the market by setting up its own assembly plant in Tianjin, China. Earlier, during Trump’s visit to Beijing in 2017, China had signed a deal to buy 300 Boeing aircraft. But later, as trade relations between the two countries deteriorated, Boeing’s order numbers have stagnated in the past few years.
According to analysts, Beijing often uses its diplomatic visits as a platform to announce major trade deals. Matt Akers, aerospace investment analyst at BNP Paribas, said: ‘There may be a few more orders this trip, but for now investors see it as lower than expected.’
Notably, Boeing CEO Kelly Ortberg and GE Aerospace CEO Larry Culp accompanied President Trump on this trip. Ortberg expressed hope last month that the Trump administration would give them full support in reaching a major deal with China. While the Dow and S&P 500 indices improved in the US stock market as a result of Trump’s announcement, the day was not very pleasant for Boeing.
