In a recent announcement, U.S. President Donald Trump revealed that China has committed to purchasing 200 Boeing jets, a figure that fell short of analyst expectations and subsequently led to a decline in Boeing’s stock value. The specifics of this agreement, such as the timeline and model of the jets to be delivered, remain undisclosed. The deal’s size is notably smaller than the roughly 500-plane order that insiders suggested was being negotiated prior to a meeting between Trump and Chinese President Xi Jinping.
Trump shared this development during an appearance on Fox News’ Hannity, stating that the agreement involves “200 big ones,” referring to the aircraft. Following this news, Boeing saw a 4.1% dip in its shares during Thursday’s market session. Anticipation was high for significant business deals to emerge from the summit, including an extension of the trade truce from the previous October, when Trump had put a hold on substantial tariffs on Chinese imports, and Xi had refrained from restricting global access to critical rare earth elements.
Sources familiar with the situation had indicated that discussions were centered around a substantial order of 500 Boeing 737 MAX jets, with the potential for additional orders of more costly widebody aircraft. China is also reportedly in talks with Airbus for a similarly large order. The rivalry between Boeing and Airbus is intense as both companies vie for market share in China, the world’s second-largest aviation market. Airbus had previously gained an upper hand in the 2010s by exceeding Boeing’s market presence, highlighted by the establishment of an A320 assembly facility in Tianjin.
China’s booming travel demand requires it to procure a large number of new airplanes, with projections indicating a need for approximately 1,000 aircraft in the near term and at least 9,000 new jetliners by 2045, according to both Boeing and Airbus. The last significant order from China for Boeing aircraft was in November 2017 during Trump’s visit to Beijing, which involved 300 jets. Since diplomatic tensions between the two countries have increased, Boeing has only secured 51 orders, predominantly for freighters.
Analysts note that China often uses diplomatic events to make large aircraft order announcements, which can be indicative of the political climate as much as actual contractual commitments. Aircraft orders by Chinese airlines typically require central government approval and are often coordinated around diplomatic engagements. There remains a possibility for additional orders during the summit, yet current investor sentiment reflects disappointment. Boeing CEO Kelly Ortberg and GE Aerospace CEO Larry Culp were among the business leaders accompanying Trump to China, aiming to finalize agreements or resolve trade issues. Ortberg recently expressed optimism about the Trump administration’s ability to facilitate a significant deal with China during these trade discussions.