This content is not available in your region

Trade war, spy claims cloud horizon for China airshow

Trade war, spy claims cloud horizon for China airshow
Chinese People's Liberation Army Air Force (PLAAF)'s Bayi Aerobatic Team attends a test flight ahead of the China International Aviation and Aerospace Exhibition, or Zhuhai Airshow in Zhuhai, Guangdong province, China November 3, 2018. REUTERS/Stringer   -   Copyright  CHINA STRINGER NETWORK(Reuters)
Text size Aa Aa

By Brenda Goh and Stella Qiu

SHANGHAI/BEIJING (Reuters) – Trade frictions with the United States and accusations of industrial espionage are set to cast a cloud over China’s largest aerospace meeting this week, as suppliers consider what the country’s slowing economy could mean for booming jet demand.

The biennial Airshow China, to be held in the coastal city of Zhuhai during Nov 6-11, is traditionally an event for Beijing to parade its growing aviation prowess in front of aerospace executives, diplomats and arms buyers from over 40 countries.

But analysts say they are not expecting many headline announcements or big deals this year as a bruising trade war between Beijing and Washington and a slowing Chinese economy cause companies to be cautious.

While the tarmac will be filled with planes from the likes of Airbus SA <AIR.PA> and Embraer <EMBR3.SA>, the main symbol of China’s own commercial aviation ambitions, the Commercial Aircraft Corp of China’s (COMAC) [CMAFC.UL] C919 narrow body jet, will not be there. A senior executive said it was undergoing test flights.

Boeing Co <BA.N>, which is opening a 737 completion plant in China, will not display any of its planes but only models at its exhibition stand.

“We’re not expecting a big turnout this year,” said Chinese aviation expert Li Xiaojin. “As you know the Chinese economy is not doing great this year, so companies that would normally send 10 people will only send five instead.”

China has become a key hunting ground for foreign firms to do deals as its airlines have expanded fleets to keep up with surging travel demand, putting the country in a position to overtake the United States as the world’s top aviation market in the next decade.

But China’s economic growth has weakened to its slowest pace since the financial crisis and its relations with other countries have been tested by Beijing’s ambitions to grow its own domestic champions in industries such as aviation.

And while U.S.-made aircraft have so far escaped Beijing’s tariffs, analysts said they were still waiting to see what the trade war would spell for U.S. companies such as Boeing, Honeywell <HON.N> and Gulfstream, who face fierce competition in China from the likes of Airbus and other suppliers.

The United States exported $16.3 billion of civilian aircraft to China in 2017, the biggest category of goods it exported to China, according to a paper published by the Federal Reserve Bank of St. Louis.

“It is not unlikely that China might strategically steer future aircraft purchases to Airbus rather than Boeing,” said Marc Szepan, a China aviation expert at the University of Oxford and former industry executive.”

“In addition, there might be a re-evaluation of the relative attractiveness of industrial partners for China’s future aircraft programmes such as the CR929 which might favour European over U.S. component and structures suppliers.”


So far, Beijing has avoided showing its hand in either direction as deals by Chinese leasing firms to buy foreign aircraft are either pushed back or kept private.

Recent U.S. allegations in court filings that Chinese intelligence attempted to steal information on a French-U.S. turbofan engine developed for commercial jetliners – a clear reference to the Safran-General Electric LEAP <SAF.PA> <GE.N> – could further fray relations, analysts said.

Beijing has also criticised the U.S. decision not to send senior officials to a Shanghai import expo that takes place in the same week as the airshow and counts as one of China’s most important foreign policy events for the year.

“Right now the political winds are quite concerning,” said aerospace analyst Richard Aboulafia of the Teal Group.

U.S. President Donald Trump said on Friday that he will likely make a deal with China on trade, adding that a lot of progress had been made to resolve the two countries’ differences but warning that he still may impose more tariffs on Chinese goods.

China is expected to put on a show of strength in space and defence, with self-developed fighter training FTC-2000 aircraft, a historically high number of weapons as well as its latest unmanned aerial vehicles among the kit on display.

China’s air force said on Friday that a number of Chengdu J-20 stealth fighters would perform demo flights, after having debuted at the show two years ago with a 60-second flypast.

Kelvin Wong, senior Asia Pacific defence technology expert at IHS Markit, said this would be part of the deliberate messaging often associated with the closely watched show.

“It appears the PLA (People’s Liberation Army) is definitely showcasing its growing confidence in the latest J-20 combat aircraft,” said Wong.

(Reporting by Brenda Goh and Stella Qiu; Additional Reporting by Tim Hepher in HONGKONG; Writing by Brenda Goh; Editing by Muralikumar Anantharaman)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on for a limited time.