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The Civil Aviation Administration of China (CAAC) has not yet said whether it will allow the 737 Max to fly in the country after the United States Federal Aviation Administration gave the plane the green light for carry passengers earlier this week. While the U.S. government has been a significant hurdle for Boeing to clear, it will need the approval of other aviation regulators before airlines can fly the plane between international destinations.
The European Union’s Aviation Safety Agency, which oversees flights in Europe, said it plans to take action in late December or early 2021.
The CAAC did not respond to a request for comment from CNN Business.
A vital market
China’s approval isn’t just about allowing the 737 Max to fly in Chinese airspace again. Boeing’s business in China has been badly damaged by years of fighting between Washington and Beijing over trade, technology and intellectual property rights, and getting back on track will be a tall order.
The company’s problems in China are “beyond Boeing’s control,” said Richard Aboulafia, vice president of analysis at Teal Group Corporation, an aerospace consultancy.
“In China, Boeing is a prisoner of forces beyond the mere dynamics of the aviation market,” he added. “It would be impossible for Boeing not to get caught up in this giant mess, involving trade barriers, [intellectual property] disputes and tariffs. “
“Boeing remains obligated to develop its presence in the civil aviation market in China for economic and strategic reasons only,” said Alex Capri, researcher at the Hinrich Foundation and visiting principal researcher at the National University of Singapore. “Failure to do so will cost the company [research and development] revenues and future opportunities to collaborate with strategic partners. “
Domestic competition
Boeing could face stronger competition as it seeks to get back on track in China.
Comac’s jets may be able to meet some demand in China over the next five to eight years, Aboulafia said, but analysts agree the planes lack the makings of a global competitor.
“As for [Boeing] by losing market share to Comac, there is no certainty when this could happen, ”Capri said, adding that China has been trying unsuccessfully to build advanced jet engines and other technologies for decades. decades.
Capri added that Boeing has also been able to build a strong strategy in China by isolating its operations in the country and keeping some of its most valuable intellectual property and other operations elsewhere. He pointed to a 737 factory in China’s Zhejiang Province, where the company performs low-value tasks like installing interiors.
“Competition in the Chinese market will always be a Faustian affair,” Capri said. “But civil aviation is no different from the situation in the automotive or semiconductor industry,” he said.
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