Home News Wang He: Why did the CCP invest heavily in the purchase of Airbus passenger planes? | Sino-European Relations | Trading Partners |

Wang He: Why did the CCP invest heavily in the purchase of Airbus passenger planes? | Sino-European Relations | Trading Partners |

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Wang He: Why did the CCP invest heavily in the purchase of Airbus passenger planes? | Sino-European Relations | Trading Partners |

[Epoch Times, July 5, 2022]The day after the new NATO strategic concept first identified the CCP as a “systemic challenge”, the CCP conducted “aircraft diplomacy” again. On the evening of July 1, China Southern Airlines, Air China and China Eastern Airlines announced super orders for the purchase of European Airbus passenger aircraft, a total of 292 A320NEO passenger aircraft, with a list price of 37.257 billion US dollars (because Airbus gave a large price discount, the actual price will drop significantly ). This is not only the largest single aircraft order in the history of the three major aviation central enterprises, but also China‘s first large jet passenger aircraft order in three years. Today, China‘s economy is ups and downs, and airlines have suffered heavy losses. What is the intention of the CCP? This article makes three interpretations.

First, hold the EU

NATO’s 30 member states are mostly European countries. Although European and American policies towards China are consistent, the pace is still inconsistent. During the introduction of the NATO Strategic Concept 2022, there were differences in the China strategy. Because of the “unanimous agreement” decision-making mechanism, the CCP had to be regarded as a “challenge” rather than a “threat”, and a “constructive engagement” strategy was implemented. The CCP saw the gap between the US and Europe, and wanted to widen it greatly. How to widen it? Two ways.

One is showing weakness to Europe. At the end of 2020, China and Europe reached an investment agreement before Biden took office and approached for a time. However, the CCP misjudged the situation and launched a sanctions war with the EU over the Xinjiang issue in March next year, which resulted in the European Parliament freezing the agreement; coupled with bullying Lithuania, especially in the Russian-Ukrainian war, it supported Russia overtly and secretly, causing China and Europe to drift further apart. The CCP also felt that the situation was not good and tried to salvage it. First, it sent Huo Yuzhen, the Special Representative of the Ministry of Foreign Affairs for Central and Eastern European Cooperation, to visit eight countries in Central and Eastern Europe. , the Czech Republic, France, Hungary, Germany and Italy, etc., lowered their stance in an attempt to repair Sino-European relations. Wu said Beijing “made mistakes” in many things, from its handling of the COVID-19 outbreak to Wolf Warrior diplomacy to economic mismanagement; while not directly addressing the Ukraine war, he also had a message – aimed at sending European People assure that they are the partner of choice in Europe relative to the US.

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Another is economic temptation. The order with Airbus this time, although there has been long-term communication and negotiation, it was announced immediately after the NATO summit, and its intention could not be more obvious. The CCP judges that the difference in resource endowments between China and the EU determines the complementarity of China-EU economic and trade relations, which will not change in the short term. Since the beginning of 2020, China has surpassed the United States to become the EU’s largest trading partner. In the past six years, China has always been Germany’s largest trading partner. China‘s trading partners; besides, with the current soaring prices, Europe is even more inseparable from Chinese goods.

Second, beat the United States

This order directly hit Airbus’s “old rival” – Boeing of the United States (the two monopolize the global large passenger aircraft market).

Bloomberg said that it “has had a great impact on Boeing’s dominance in the Chinese civil aircraft sector.” In response, Boeing stated, “As the largest U.S. exporter with a 50-year relationship with the Chinese aviation industry, it is disappointing that geopolitical differences continue to restrict U.S. aircraft exports.” Boeing said it “will continue to urge the governments of China and the United States to Productive conversations to help orders and deliveries resume quickly because Boeing aircraft sales to China have historically helped tens of thousands of American jobs.” And that’s exactly what the CCP expects.

For a long time, the CCP has played the “commercial card” to contain the US government’s China policy. Take Boeing for example. In 1972, Nixon visited China and US-China relations thawed. One of the CCP’s gestures to show favor to the United States was to order 10 Boeing 707s. In November 2018, Boeing delivered its 2,000th aircraft to China. According to a report by “New Fortune Magazine” in March this year, from 2012 to 2020, Boeing’s sales revenue from mainland China totaled 83.7 billion US dollars, accounting for 10.74% of Boeing’s total revenue of 779 billion US dollars in the same period. In 2015, 2017 and 2018, mainland China even surpassed Europe to become Boeing’s second largest revenue contributor outside the United States. It’s not hard to imagine that for 50 years, Boeing has been one of the main proponents of improving U.S.-China relations.

However, Boeing is just a pawn in the hands of the CCP. Boeing’s last passenger plane order from China was in October 2017 (including 260 737 series, 40 787 series and 777 series aircraft). Since then, the Sino-U.S. trade war has started, and Boeing passenger planes have failed in China.

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Not only that, after two crashes of the Boeing 737MAX model (competing with Airbus A320NEO), the CCP was the first to announce the grounding of this type of aircraft in March 2019; now, it has been more than a year since the 737MAX returned to service around the world. The CCP is only “close to approving the return of the 737MAX” (Boeing CFO Brian West in Japanese on May 11 this year). Boeing’s biggest Chinese customer, China Southern Airlines, has removed more than 100 737 MAX planes from its fleet purchase plans, Bloomberg reported.

The CCP’s attempt is to hurt Boeing and force it to put pressure on the U.S. government. Experts from the CCP openly said: If Boeing really wants to profit from the Chinese market, it is better to make full use of its powerful government relations department and do more to build political trust between China and the United States.

Third, cannibalize Airbus

This latest large order helps to consolidate Airbus’ position in the Chinese market. Airbus said that as of the end of 2018, the number of Airbus civil aircraft in service in China had exceeded 1,700, and the total number of aircraft delivered to China accounted for nearly a quarter of the total number of Airbus deliveries; as of the end of May 2022, the number of Chinese airlines owned The total number of Airbus fleets in service exceeds 2,070, including jetliners and helicopters.

In fact, by the end of 2020, the number of active Airbus aircraft in China accounted for 51% of the domestic civil aviation market, and China has surpassed the United States to become the largest market for Airbus in a single country. You know, at the end of the 20th century, Airbus’ global market share was close to 50%, and its market share in China was only 30%. The Chinese market has long been a weak link in Airbus’ global market. How did Airbus “counterattack”? In addition to inter-state politics, Airbus itself has also paid a huge price – trading technology for the market.

For example. In October 2006, when French President Chirac visited China, China and Airbus signed a framework agreement to order 150 A320 series aircraft and a letter of intent to order 20 A350 wide-body aircraft, which became the largest aircraft order in the history of China‘s civil aviation at that time. As part of the price, Airbus signed an agreement with relevant Chinese parties to jointly build an A320 series aircraft final assembly line in Tianjin, which was Airbus’ first production line outside Europe at that time. According to statistics, from the delivery of the first A320 in 2009 to the end of 2021, the Tianjin General Assembly Manufacturing Base has delivered a total of 555 A320 series aircraft, an average of almost 50 per year.

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On June 24, one week before the signing of the latest major order, Airbus and Suzhou Industrial Park signed a framework agreement online to establish the Airbus Suzhou R&D Center.

The CCP induces Airbus to do this in order to build its own “big plane” industry. In the Mao era, he wanted to build a jet airliner, launched the Y-10, and quit after ten years. In March 2007, China announced the launch of the large aircraft project. Established COMAC, aiming at Boeing 737MAX and Airbus A320 to develop C919 passenger aircraft. The first prototype of the C919 was scheduled to fly in 2014 and be delivered to airlines in 2016. However, the CCP-related industrial foundation and technology are too poor, and they have been repeatedly postponed. On May 14 this year, the first delivered C919 large aircraft made its maiden flight successfully. This makes the CCP rely heavily on the extraction of Airbus technology to support the continuous improvement of the C919.

Epilogue

It is not that all parties do not understand the CCP’s attempt to purchase Airbus passenger planes with huge sums of money. For all relevant parties, the key is how to recognize the essence of the CCP. If there is an illusion about coexistence, and even want to dance with wolves, instead of finding an effective way to prevent it, the result is predictable.

For example, putting aside inter-state politics, even from Airbus’s own interests, it is risky to succumb to the CCP’s “technology-for-market” strategy. According to Airbus’ official website, as of May 2022, the A320NEO series has received more than 8,000 orders from more than 130 customers. From this point of view, the CCP’s latest big order is just the icing on the cake. However, if the CCP’s large aircraft is fully fledged, what will be the market position of Airbus? The previous high-speed rail case has already played the trick.

The Epoch Times premieres

Responsible editor: Gao Yi#

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