China considers 500 Airbus order escalating trade spat with US

China appears poised to make a significant shift in its aviation strategy by potentially ordering up to 500 aircraft from the European manufacturer Airbus. This move, reported by Bloomberg, comes as trade tensions between Beijing and Washington continue to escalate. The deal, which would include both narrow-bodied and wide-bodied aircraft, would mark a substantial increase from earlier discussions involving 300 planes. The final agreement is expected to be announced during a forthcoming visit by European leaders to Beijing.

Talks over the aircraft order reportedly began during Chinese President Xi Jinping’s visit to France last year. Historically, China has used large announcements of jet purchases as a diplomatic tool, aligning such deals with state visits. The proposed move would deliver a major blow to the American aerospace giant Boeing, which has already been grappling with setbacks related to production and safety issues.

Boeing’s troubles deepened earlier this year when China sent back two planes in protest against US-imposed tariffs. This measure was part of a broader trade spat that saw restrictions on aircraft parts and equipment from US firms. Although some barriers were lifted temporarily in May, the relationship between the two nations remains strained. Boeing’s chief executive, Kelly Ortberg, confirmed that 50 more planes were scheduled for delivery to China this year, but customers have signalled reluctance amid ongoing diplomatic tensions.

This prospective move by China to strengthen ties with Airbus reflects a broader strategy to diversify its aviation suppliers and reduce reliance on US firms. Airbus, which also declined to comment on the potential order, saw its shares rise 2.4 per cent in Paris to €170.44 following the news. The company is already experiencing strong demand globally, with consolidated first-quarter revenues climbing to €13.5 billion, a 6 per cent rise compared to last year. The European aerospace giant delivered 136 commercial planes during the quarter and had an order backlog of 8,726 aircraft by the end of March.

The scale of this potential order, should it materialise, would eclipse previous records for Airbus in the Chinese market. It would far exceed the landmark 2022 deal for 300 single-aisle Airbus jets, valued at around $37 billion at the time. It also underlines China’s growing focus on aviation as a strategic sector, further amplified by increasing demand for planes in neighbouring markets like India.

With India’s Air India negotiating an order of 200 planes and budget carrier IndiGo recently expanding its Airbus commitments, the stage is set for a highly competitive landscape in global aviation manufacturing. The evolving dynamics underscore how geopolitical factors are increasingly influencing corporate decisions in the aerospace industry.

If confirmed, the Chinese order would not only represent one of the largest single transactions in the history of Airbus but also highlight China’s intent to use its economic clout to sidestep US influence in key sectors. This development will likely add further tension to trade negotiations between Beijing and Washington, which appear to be on a rocky path.