NICHOLAS IONIDES / SINGAPORE
China's Government is finalising a multi-billion-dollar agreement with Boeing - after months of threatening to snub US Companies and buy high-value goods from suppliers in other countries.
Industry sources say China is seeking to mend relations with the USA, mainly after winning the right to host the 2008 Olympic Games, which will be held in Beijing. A late-July visit to China by US Secretary of State Colin Powell cleared the way for an order for between 30 and 40 Boeing 737s, the sources add. Most expect the deal to be announced in October during a visit to China by US President George Bush. The Chinese Government frequently uses political events to announce high-value purchases of goods. At least five carriers are expected to be allocated aircraft from the deal including Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines and Shanghai Airlines.
The improving relations come just months after the Chinese Government indicated it would favour Airbus over Boeing in approving new aircraft purchases for the country's airlines as a result of tensions with the USA. Official reports said at the time that the tensions were expected to "take their toll on Boeing", leaving Airbus with "tremendous business opportunities in China".
While China is also known to be considering a major purchase of A320-family aircraft from Airbus and a smaller purchase of Tupolev Tu-204s from Russia, the impending Boeing deal is the focus of the most attention as it is more politically motivated. Tensions had been high since a US spy aircraft collided with a Chinese fighter aircraft over the South China Sea on 1 April. The Chinese aircraft was lost in the collision but the damaged US aircraft managed to land safely on southern Hainan Island.
China's complicated approvals process means it takes months for the government to approve aircraft orders for Chinese airlines. As the country's economy is a planned one, airlines must first seek approval from the Civil Aviation Administration of China, after which State Development Planning Commission backing is sought.
Approvals are then required from the Ministry of Foreign Affairs, the Ministry of Foreign Trade and Economic Co-operation, the State Administration of Foreign Exchange and finally the State Council, China's de facto Cabinet.
Source: Airline Business
