China Makes Large Order

Wed Aug 08, 2001 7:16 pm

BEIJING (Reuters) - U.S. plane maker Boeing Co. said on Wednesday it had received no official word from China on approval of a huge order for more than 30 aircraft, but Chinese airlines said they expected the sale to go through soon.

A visit by President Bush (news - web sites) to China in October amid improved bilateral ties had cleared the way for the deal, industry executives said.

Boeing China spokesman Tom McLean said the company could only confirm an order after the industry regulator -- the General Administration of Civil Aviation of China (CAAC) -- made an announcement.

``The CAAC has not made a public announcement about any orders,'' he told Reuters.

Boeing Chairman Phil Condit said in July he was ``cautiously optimistic'' the aerospace giant would land an order for 30 to 40 new airliners from Chinese carriers this year.

The Asian Wall Street Journal reported on Wednesday that China's State Development Planning Commission approved the order for 36 Boeing 737-700 and 737-800 airliners last week in a deal valued at $2.0 billion.

Industry officials said approval by the powerful commission was a key hurdle in the process, but not the final step.

Officials from airlines which have ordered planes said they were still awaiting official notice of central government approval, but that it was only a matter of time.

``We have not seen any formal documents from the central government, but I would not be surprised if they plan to approve the deal soon because the presidents of both countries are meeting in a couple of months,'' said one executive.

Bush will travel to Shanghai in early October for a meeting of Asia Pacific Economic Cooperation (news - web sites) (APEC) leaders before moving on to Beijing for a state visit hosted by Chinese President Jiang Zemin (news - web sites).


U.S. officials lobbied for the sales in late July, when Secretary of State Colin Powell (news - web sites) visited Beijing and met Chinese leaders to lay the groundwork for the Bush visit.

After approval by the State Development Planning Commission, the State Council, or cabinet, still had to sign off on the deal after taking soundings from the Foreign Ministry and the Ministry of Foreign Trade, industry officials said.

Large orders might go all the way up to the Communist Party's politburo, they said.

Much of the Beoing order was bound for China Southern Airlines with other planes expected for China Eastern Airlines, flag carrier Air China, Shanghai Airlines and Hainan Airlines SS) , Chinese industry officials said.

Officials from CAAC and China Aviation Supplies Corp, which imports the planes, said they had received no formal notice of approval. The State Development Planning Commission declined to comment.

In May, when Sino-U.S. tensions were high, Boeing denied the tensions had delayed its plans to sell at least 30 aircraft to China.

Ties soured in April after a U.S. spy plane and a Chinese fighter collided, sparking an 11-day standoff as Washington pushed for the release of the U.S. crew after the plane made an emergency landing on China's southern island of Hainan.


Political disputes have been known to hold up big ticket corporate deals, like aircraft purchases, and China has become the battleground for Boeing and Airbus, which have been hit by a fall in orders amid the global slowdown.

China rebuffed Boeing in 1996 by buying 33 planes from rival Airbus Industrie following disputes with Washington on intellectual property and U.S. support for Taiwan when China test fired missiles across the Taiwan Strait.

Boeing says China's fleet will quadruple in size by 2019 with the addition of 1,790 aircraft. Airbus estimates China will need around 1,600 aircraft over the next 20 years, making it the second largest market after the United States.

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