The Dragon Takes Flight: Inside Boeing’s Up-and-Down History in China
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Early Days of Sino-American Aviation Partnership
The mutually beneficial relationship between Boeing and China stretches back to the earliest days of commercial aviation. In 1929, Boeing sold its first plane to China, one of its Model 40 mail planes. The fledgling Chinese airline industry used the Model 40 to launch the country's first airmail routes between Shanghai, Hankow, and Peiping.
In the 1930s, Pan American Airways began operating flights from the United States to China, with stopovers in Hawaii, Midway, Wake Island, Guam, and Manila. Pan Am flew Douglas DC-2 and DC-3 aircraft, bringing American pilots, technology and know-how to China. This helped spur development of China's own domestic airline industry.
During World War II, the Flying Tigers - American pilots flying Curtiss P-40 Warhawks - were hired by the Chinese government to fight Japanese forces. Their daring exploits became the stuff of legend, even starring in a 1942 Hollywood movie. The Flying Tigers shot down hundreds of Japanese aircraft over China and Burma between 1941-1942.
After the Chinese Civil War ended in 1949, CAAC - the Civil Aviation Administration of China - was formed as the national airline. CAAC began operating Ilyushin Il-14 and Tupolev Tu-104 jets on international routes during the 1950s, though their network was limited due to Cold War tensions.
Boeing re-established ties with China in 1972 following President Nixon's famous visit. That year, CAAC placed an order for 10 Boeing 707 jets, which were delivered from 1973-1975. These new Boeing jets on flagship routes like Beijing to Paris helped showcase China's modernization on the world stage.
What else is in this post?
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Early Days of Sino-American Aviation Partnership
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - China's First Boeing Jets Arrive in 1980s Economic Boom
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Tiananmen Square Chills Relations in 1990s
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Rapid Growth in 2000s as China modernizes aviation sector
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - First Chinese-built Boeing Takes Flight in 2018
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Trade Tensions Create New Headwinds in Recent Years
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Long Road to Certify China-Made 737 MAX
- The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Uncertain Skies Ahead Despite Market Potential
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - China's First Boeing Jets Arrive in 1980s Economic Boom
As China embarked on transformational economic reforms in the 1980s under Deng Xiaoping, the acquisition of modern Boeing jets took on new strategic importance. These state-of-the-art airliners would both drive and symbolize China's ascendance onto the world stage.
In 1985, CAAC placed a landmark order for six Boeing 747-200 jumbo jets along with six 767s – the first American-made aircraft purchased by China in well over a decade. The order was part of China's "consumer revolution" and marked a major milestone in the country's "open door" policy.
For Boeing, the CAAC deal enabled it to gain a valuable foothold in the potentially massive Chinese market. At the time, Boeing predicted China would require $45 billion in new aircraft over the next 15 years. "Their need for a rapid increase in domestic services means they must turn to Western suppliers for advanced technology aircraft," a Boeing executive noted in 1985.
The new Boeing 747s began arriving in 1987, allowing CAAC to launch long-haul services to New York City, San Francisco, Los Angeles, Tokyo, Singapore and more. Carrying red, yellow and blue livery, these shiny wide-body Boeings represented China's new reform era optimism and attracted intense curiosity whenever they flew into Western airports.
"The weathered faces of peasant workers gathering night soil, the yellow soil of loess plateau farm plots and the strained expressions of political leaders receded beneath us as our CAAC Boeing 747-200 entered the skies," one American passenger recalled of a 1988 flight from Beijing to New York. He marveled at the Boeing jet's smooth powerful takeoff and excellent in-flight service - signs of a promising new beginning in Sino-American ties.
The 747s' range and capacity enabled CAAC to accommodate surging demand for international travel that accompanied Deng's reforms. Chinese citizens could now explore the outside world in larger numbers after decades of Maoist isolation. Overseas visitors like students and businesspeople also arrived in higher volumes.
By 1990, CAAC would operate 27 Boeings including the new 737s and 757s - just 15 years after acquiring its very first American jets. The airline's Boeing fleet was now on par with its European Airbus planes. This remarkable expansion reflected China's skyrocketing economic growth and signaled its status as a rising tourism and commercial powerhouse.
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Tiananmen Square Chills Relations in 1990s
The optimism of the 1980s turned to disillusionment after the Tiananmen Square massacre on June 4, 1989. The Chinese government's violent crackdown on pro-democracy protesters in Beijing shocked the world and chilled relations with the West. This extended to the aviation sector as well.
In the aftermath of Tiananmen, the US and Europe imposed economic sanctions and an arms embargo on China. Fears of a broader geopolitical rift led many Western companies, including Boeing, to postpone or cancel aircraft sales to China during the early 1990s.
With foreign jet orders drying up, China's airline industry stagnated during this period. CAAC delayed delivery of 10 Boeing 767-300ER aircraft for 2 years until 1994. Chinese officials also threatened to cancel orders for Airbus planes in retaliation for European sanctions.
However, realpolitik considerations on both sides prevented a complete rupture. China remained too important a market for Boeing and Airbus to abandon over political differences. Meanwhile, China's own airline industry needed modern Western jets to continue growing.
By late 1992, the US tentatively eased some sanctions under a policy known as "constructive engagement" with China. This cleared the path for new aircraft orders, albeit at a slow pace initially.
Boeing sold 22 planes to China in 1992 and announced a $1.4 billion, 12-aircraft deal in 1994. This included the first Boeing 777s for Air China, an important milestone. The Boeing 777's extended range opened up nonstop US West Coast-China flights for the first time. Air China's 777 inaugural flight from Beijing to Los Angeles in December 1995 was considered a breakthrough in post-Tiananmen US-China business relations.
However, the rift over human rights limited Boeing's access to China's market during the 1990s. While Airbus sold over 200 planes in China that decade, Boeing sold fewer than 90. "Tiananmen put the brakes on the overall relationship for a while," reflected a Boeing vice president.
By decade's end, geopolitics began shifting again as China's economy boomed anew. In 1999, Northwest Airlines and China Southern Airlines announced the US-China air service partnership that would see both join the SkyTeam alliance a few years later.
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Rapid Growth in 2000s as China modernizes aviation sector
China's aviation industry experienced explosive growth in the 2000s as rising prosperity fueled air travel demand. Boeing was a major beneficiary and partner as Chinese airlines rapidly expanded their fleets with new jets.
The cornerstone was China's accession to the World Trade Organization in 2001, which accelerated its integration into the global economy. As international business and tourism boomed, the number of air passengers tripled from 78 million in 2000 to 240 million in 2010. Domestic travelers quintupled to 266 million over the same period.
Chinese airlines needed to add capacity quickly to meet this enormous demand surge. They turned primarily to Boeing and Airbus for state-of-the-art widebody aircraft that could serve long-haul international routes crucial for business travel.
Between 2003-2006, Air China, China Eastern and China Southern collectively ordered 118 Boeing 777s and 747s along with Airbus A330s and A340s. These new 275-400 seat jets allowed the Chinese majors to offer premium services on high-volume North American and European routes.
Boeing also nurtured China's fledgling low-cost carrier market in the 2000s. In 2005 it struck a major deal to supply 737-700/800s to start-ups Spring Airlines and Okay Airways. This positioned Boeing to benefit from surging middle-class demand for no-frills short-haul flying.
The showcase example of China's modernization was Beijing's new mega-airport completed for the 2008 Olympics. Designed by renowned British-Iraqi architect Zaha Hadid, Beijing Daxing Airport (PEK) demonstrated China's world-class infrastructure ambitions. Its sprawling Terminal 3 specifically built to handle Airbus A380s underscored the country's arrival as a global air transport powerhouse.
Boeing provided the planes filling those gates. On a single day in 2010, PEK hosted an unprecedented lineup of five Boeing 747-400s, once considered giants but now just part of the extensive new widebody fleets operated by Air China, China Southern and other flag carriers.
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - First Chinese-built Boeing Takes Flight in 2018
After decades of purchasing Boeing jets made in the United States, China reached a new milestone in 2018 when the first Chinese-assembled 737 took flight. This represented a major advancement for the country's aerospace industry.
The inaugural aircraft, operated by Air China, rolled out of Boeing's completion center in Zhoushan, China on December 15, 2018 cheered on by thousands of assembled factory workers and dignitaries. Constructed from parts shipped in kits, the China-built 737-800 then successfully conducted its maiden test flight.
For Boeing, transferring 737 production knowledge and technology to China marked a new phase in its longstanding relationship with the country's aviation sector. "This is an historic moment for Boeing and China that opens up new opportunities for mutual benefits and growth," said Kevin McAllister, Boeing Commercial Airplanes president at the time.
Chinese officials and executives were equally enthused. "The successful flight of the Boeing 737 from the completion center opens a new chapter in Boeing's partnership with China and the Chinese aviation industry," declared Chen Yingchun, president of Commercial Aircraft Corporation of China (COMAC).
Establishing a 737 completion facility in China was aimed at multiple strategic objectives for both countries. For China, having Boeing manufacture planes on Chinese soil would help nurture a domestic aerospace ecosystem through technology transfers and supply chain localization.
For Boeing, expanding its industrial footprint in the world's fastest growing aviation market was vital to remaining competitive. Airbus had already set up an A320 family completion plant in Tianjin back in 2008. "Growth in China's aviation industry is incredible and will require Boeing's significant, long-term investment," Boeing's McAllister said.
The successful inaugural flight of the China-built 737 in December 2018 seemed to usher in a new era. At the rollout celebration, Chinese Vice Premier Liu He even suggested COMAC and Boeing collaborate on developing a new long-range jetliner.
Yet barely four months after its establishment, Boeing's 737 completion center in Zhoushan faced a serious setback. The March 2019 crash of an Ethiopian Airlines 737 MAX led Chinese regulators to ground the entire MAX fleet over safety concerns. This stymied operations at the new plant where 737 MAX aircraft were slated to be a major focus going forward.
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Trade Tensions Create New Headwinds in Recent Years
As the US and China descended into a bitter trade war under the Trump administration starting in 2018, Boeing once again found itself buffeted by economic hostilities beyond its control. This represented the biggest test yet of the aerospace giant’s delicate balancing act in China.
With the US slapping tariffs on Chinese goods and China retaliating against American exports, some analysts predicted Boeing would be caught in the crossfire. Its extensive business ties in China seemed vulnerable to disruption.
Yet Boeing tried to stay above the fray, arguing that affordable air travel served the interests of both nations. CEO Dennis Muilenburg insisted China was “very important” to Boeing’s future and tried to dissociate aircraft sales from the trade war.
“The Chinese may play politics with aircraft orders, but they have to be clandestine about it,” observed Richard Aboulafia, aviation analyst at Teal Group. “Boeing is just too important to their aviation sector.”
When U.S.-China trade tensions temporarily eased in January 2020 with a “Phase One” deal, Boeing lobbyists breathed a sigh of relief. However, the global pandemic plunged worldwide aviation into crisis soon after.
With China still relying heavily on Boeing jets - its three major airlines operate over 500 between them - the strategic stakes remain high for the U.S. planemaker in navigating these turbulent political and economic crosswinds.
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Long Road to Certify China-Made 737 MAX
The Boeing 737 MAX has faced a long, turbulent road to recertification in China after being grounded globally in 2019 following two deadly crashes. This has significantly slowed Boeing’s plans to manufacture 737 MAX planes at its new completion center in Zhoushan, China.
Getting the locally finished 737 MAX approved to fly again in China is crucial for Boeing. The country was the first to ground the MAX in 2019 and will likely be among the last to clear it again. Chinese regulators have insisted they will conduct their own thorough, independent review rather than just follow the U.S. FAA’s recertification process in late 2020.
With over 1,000 MAX jets on order, China remains the largest global market for the beleaguered aircraft type. Boeing simply can’t fully ramp production back up until its China assembly line can deliver MAX planes to Chinese airlines again.
Yet the path to reapproval has been arduous thus far. Disagreements between the U.S. and China over proper 737 MAX software fixes and pilot training have frequently stalled progress. Political turbulence between Washington and Beijing makes it harder still for the regulatory agencies to find common ground.
“Boeing faces some unique hurdles in China that don’t apply elsewhere regarding the MAX,” says Michel Merluzeau, director of aerospace and defense analysis at AIR consultancy. “There are continuedcertification questions but also the wider technical cooperation issues between the U.S. and China.”
Boeing knows rebuilding trust is the paramount challenge. In late 2021, Boeing executives even personally delivered a 737 MAX plane from Seattle all the way to China on a 20 hour ferry flight. This “goodwill gesture” was aimed at demonstrating faith in the redesigned aircraft’s safety directly to Chinese aviation officials.
Such confidence-building measures reflect Boeing’s patient determination to get China’s 737 MAX back on track. The company has projected optimism that Chinese authorities will finally re-certify the MAX in 2022 following further negotiations and testing.
Industry experts caution, however, that politics could still override technical factors and delay MAX approval further. “There is no guarantee that the MAX will fly again in China this year,” says Merluzeau. “But Boeing has no choice but to just take it one step at a time.”
In the meantime, Boeing’s 737 completion plant in Zhoushan remains in limbo, unable to deliver MAX planes to Chinese airlines. The facility continues modifying previous-generation 737NG models for now. But getting the MAX recertified in China this year is crucial to unlocking the location’s full potential as a strategic Boeing outpost in the burgeoning Asian aerospace market.
Boeing will have to continue walking a political tightrope to make that a reality. Yet the gradual progress towards recertification shows that even amidst turbulent times, aviation’s technical imperatives can still rise above geopolitical differences.
The Dragon Takes Flight: Inside Boeing's Up-and-Down History in China - Uncertain Skies Ahead Despite Market Potential
China's airline industry has massive growth potential in the decades ahead as its expanding middle class fuels travel demand. Boeing estimates China will need 8,700 new jetliners through 2040 worth $1.47 trillion. That equals nearly 20% of global aircraft deliveries over that span.
Yet uncertainties swirl around Boeing's future prospects in this crucial market. From safety setbacks to political tensions, numerous headwinds could divert China’s airline expansion to rival manufacturer Airbus instead.
The Boeing 737 MAX grounding severely damaged the company’s reputation among Chinese carriers and flyers. Even once the MAX returns to service in China, lingering doubts may drive airlines and passengers toward competing Airbus A320 family models seen as safer.
Moreover, the US-China trade war rattled Boeing’s privileged ties with China cultivated over half a century. Should geopolitical frictions resurface, big Chinese orders could shift to Europe’s Airbus as an expression of aviation sovereignty and protest against US pressure.
However, China’s industry still relies heavily on Boeing’s technical expertise and supply chains capacity honed over decades. The complexities of aerospace manufacturing make it tough for Chinese plane-makers to quickly displace Boeing or Airbus as major suppliers.
Shifting procurement away from Boeing’s efficient and familiar 737 assembly infrastructure also carries costs China's state-owned airlines can ill afford. And Chinese lessors leasing Boeing 737s globally face transition burdens.
Yet Boeing must rebuild vital trust and goodwill after the MAX crisis and geopolitical tensions. "Lingering uncertainties mean Boeing will have to work doubly hard to recapture its privileged perch in this market,” says Michel Merluzeau, director of aerospace and defense analysis at AIR consultancy.
One fundamental strength Boeing retains is decades nurturing personal rapport with Chinese industry officials and engineers through frequent exchanges. This gives the company an edge in navigating opaque bureaucratic and political hurdles.
“With such an enormous volume of aircraft required, China will need both Boeing and Airbus as major partners,” says Merluzeau. “The market fundamentals mean politics can’t completely overshadow economic imperatives.”