Boeing, Gm Deals With China Reflect Improvement In Trade Ties

Ever since Richard Nixon arrived in Beijing in 1972 aboard a Boeing 707, the U.S. aircraft maker has seen its fortunes in China rise and fall with the Sino-U.S. political climate.

Shortly after Nixon’s historic visit to reopen ties with Communist China, Boeing signed its first order, for 10 707s. Since then, the Seattle-based aerospace giant has sold more than 200 jets to China.

On Tuesday, a visit by Vice President Al Gore helped clinch Boeing’s latest sale to Beijing: an agreement worth $685 million to deliver five 777-200 passenger jets to China’s civil aviation authority.

Automaker General Motors Corp. also signed an agreement to launch a $1.3 billion joint venture with a Chinese automaker to manufacture 100,000 Buick Regal and Century sedans a year in China.

“The U.S. and Chinese governments have played an instrumental role in this venture,” said GM president and CEO John F. Smith, adding that GM appreciated Gore’s ongoing support for this joint venture.

U.S. officials hailed the deals as proof that the Clinton administration’s policy of engagement was bearing fruit in the form of jobs and exports. But it also proves China’s tendency to hold trade relations hostage to political whim.

GM and Shanghai Automotive Industry Corp. will build the Shanghai plant. GM estimates the deal will yield $1.5 billion in U.S. exports in the first five years of operation, trickling off to $100 million after new stamping, transmission and engine plants are built.

Boeing waited almost two years for its deal to come through, mainly because of tensions between Washington and Beijing last year over Taiwan, trade and human rights issues.

As relations sagged to their worst level in a decade last spring, China spurned Boeing and ordered $1.5 billion in planes from Airbus Industrie of Europe. It also delayed a $4 billion aircraft deal with Boeing and other companies and chose a consortium led by British Aerospace and Aerospatiale of France as partners to build a 100-seat jetliner.

With Tuesday’s deal with China’s national flag carrier, China Air, negotiations are moving back on track.

“It is fair to say the contracts were signed because relations are improving,” Ronald Woodard, president of Boeing Commercial Airplane Group, told reporters in Beijing after a signing ceremony attended by Gore and Chinese Premier Li Peng.

But even a visit by Gore wasn’t enough to put things entirely back to normal - China Air took only five of the 10 777s it was supposed to purchase.

Boeing officials expect China to buy 1,900 aircraft in the next 20 years, worth $120 billion.

With up to 70 percent of the Chinese aircraft market and investments of more than $200 million in joint ventures and other projects here, Boeing is anxious to ensure that political friction does not once again threaten its commercial interests.

Woodard said the aircraft maker would “take a leadership role to aggressively support long-term, stable, positive U.S.-Sino relations.”