What happens when 1 billion Chinese start to fly?
Economic mobility often translates into literal mobility.
Case in point: While Chinese President Xi Jinping visited a Boeing factory in Washington on Wednesday, he announced three Chinese companies have placed an order for 300 Boeing planes.
“Tourism, domestic tourism, is one of the fastest-growing areas of the Chinese economy,” said Nicholas Lardy, a China specialist at the Peterson Institute for International Economics. “The vast majority of the population is already very well fed, very well clothed. People are now spending their money on entertainment, recreation, tourism, healthcare and education.”
The more Chinese travel, the more planes the country needs.
“It’s the most important individual market in the world,” said Cai von Rumohr, who covers aerospace for Cowen and Company. “It’s about 20 percent of Boeing’s production.”
In addition to the order for 300 planes, Boeing is also building a completion center in China. Boeing’s competitor Airbus already has facilities there.
“They’re taking advantage of lower-cost labor, that’s good for them,” said Richard Aboulafia, an aviation analyst with the Teal Group. “But more importantly, they’re staying in the good graces of the Chinese Communist Party.”
He cautions that, in the past, building plants in China hasn’t necessarily paid off with orders for planes, but it would be a visible sign of Boeing’s commitment to the Chinese market, even if much of the actual construction doesn’t take place there.
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