IN FOCUS
By Avishka Ashok

Boeing's political challenges in China

On 01 July, Airbus announced that China’s four largest airlines had entered a USD 37 billion business deal with the company; buying 292 A320 passenger jets in the biggest single day deal. Air China, China Eastern Airlines and China Southern Airlines placed the order with the European aircraft producer. Air China has purchased 96 aircrafts for USD 12.2 billion and will receive the complete order between 2023 and 2027. The subsidiary Shenzhen Airlines will be receiving a third of this order. China Eastern Airlines purchased 100 Airbus A320neo family aircrafts for 12.8 billion which are scheduled for delivery between 2024 and 2027. China Southern Airlines purchased 96 aircrafts for USD 12.8 billion which are also due for delivery by 2027.

Airbus is aiming to increase its production to 70 aircrafts per month by 2025. The order by the Chinese airlines is a huge step towards that goal. Meanwhile, the American Boeing has suffered great losses in the new deal. Boeing had earlier announced that it would not be increasing its production rates this year. The decision could be influenced by the COVID-19 pandemic and its impact on the tourism, travel and airlines industry. Dues to strict regulations within China, flight services were at a standstill for more than a year. The Boeing 737 MAX has also been involved in numerous accidents; urging China to ground the aircraft and exerting political pressure using regulations. Although the aircraft has resumed services in the country, the production has slowed significantly.

Another major factor is the rising political tensions between China and the US. The trade-war between the two countries can be traced back to the tenure of former President Donald Trump who initiated a tariff hike and later went on to block the sale of Chinese products in the US. Boeing seems to be stuck in the continuing trade war and is unable to reach consensus on sale and production of aircrafts in China. Apart from the trade war, the role of the US in weaponizing Taiwan by selling military grade products and other equipment are also considered as a factor for China to move away from the country and the company. 

However, China is considered to have a demand over over 6,500 aircrafts in the coming two decades. The current purchase of 300 aircrafts from Airbus could be a start of many more in the coming years. But, all is not lost for Boeing as this sale only covers five per cent of China’s total capacity and the country’s decision could be reversed in the future. 

References: 
“Chinese airlines, including Air China, buy almost 300 planes from Airbus,” The Strait Times, 01 July 2022
“Airbus Deals Major Blow To Boeing With Win In China,” Seeking Alpha, 05 July 2022
 

IN BRIEF
By Avishka Ashok and Arshiya Banu

INTERNATIONAL
Ethiopia: China-built railway line helps increase profitability and exports 
On 5 July, Xinhua Net referred to the information revealed by the Ethiopian Ministry of Foreign Affairs and reported that the Chinese-built Addis Ababa-Djibouti Standard Gauge Railways was ready to boost the export and profitability of the country. According to the Ministry of Foreign Affairs, the CEO of Ethiopia-Djibouti Standard Gauge Railways S.C. Abdi Zenebe visited the Ethiopian embassy to discuss streamlining of the Ethiopian exports and reducing the logistical bottlenecks and increasing the profitability of the region. The statement by the Ministry said: “By utilizing railway wagons and setting up affordable prices to attract more clienteles, the railway company is focusing on schemes of addressing logistical issues caused by the conventional ways of transporting Ethiopian export products to Djibouti and beyond.” The company manages the 752 kilometer railway line and aims to reduce the constraints to the overall supply chain while also standardizing the export of agro-products, meat products and other live animals. The project takes credit for employing almost 4000 locals and increasing the transport revenue from USD nine million to USD 10 million in 2021. (“Chinese-built SGR set to streamline Ethiopia's export, boost profitability,” Xinhua Net, 05 July 2022)

Global Think Tank Summit: China hosts the 7th Summit and urges countries to work for a shared community 
On 5 July, China Centre for International Economic Exchanges hosted the 7th Global Think Tank Summit which was attended by over 100 attendees who were former political leaders, heads of international organizations and think tank representatives. The Head of the Publicity Department of the Communist Party of China Central Committee Huang Kunming addressed the summit and appreciated the initiative for prioritizing development and ensuring the enhancement of people’s well-being in the process of development. Huang, a member of the Political Bureau of the Communist Party of China, noted that the initiative had received support from over 100 countries and urged the attendees to actively work towards establishing a global community with a shared future. (“Senior CPC official addresses Global Think Tank Summit,” Xinhua Net, 05 July 2022)

REGIONAL
Thailand: Foreign Minister Wang Yi reaches consensus on four aspects 
On 5 July, China’s Foreign Minister Wang Yi visited Thailand and held a meeting with the Deputy Prime Minister and Foreign Minister Don Pramudwinai. At a joint press conference, Wang Yi noted the 10th anniversary of the establishment of the comprehensive strategic cooperative partnership and spoke about the in-depth strategic communication held with the Thai officials. The countries reached consensus in four aspects. First, the countries agreed to work towards building a joint community with a shared future. Second, both countries promised to launch the China-Laos-Thailand railway at the earliest and also work towards launching more cold-chain freight train services. Third,  China and Thailand signed a Memorandum of Understanding on cyber security and pledged to fight against telecom fraud. Lastly, the countries will actively work for benefits in the Asia-Pacific Economic Cooperation Economic Leaders’ Meeting which will be hosted by Thailand later this year. (“China, Thailand reach consensus on future ties, railway, cyber security,” Xinhua Net, 06 July 2022)

Indonesia: Silk Road Fund prepares to invest USD 3 billion in the country 
On 6 July, Xinhua Net reported that China’s Silk Road Fund had reached an investment framework with the Indonesia Investment Authority with an aim to pursue investment cooperation in the foreign country. The two entities will launch a long-term and win-win strategic partnership to promote socio-economic development and connectivity between the two countries. The Chinese fund has the capacity to invest close to USD 3 billion in Indonesia and other Southeast Asian countries. The statement by Silk Road Fund said: “The two sides will cooperate via various forms of investment with a focus on supporting local projects that benefit people's livelihoods and promote development in Indonesia.” (“Silk Road Fund inks investment agreement with Indonesia Investment Authority,” Xinhua Net, 06 July 2022)

INTERNAL
Cyber hack: ChinaDan threatens to sell hacked data from Shanghai Police 
On 06 July, The Asahi Shimbun reported that a database of the Shanghai police is said to have been breached by hackers, who claim to have taken a great deal of information on 1 billion Chinese. If true, this would be one of the biggest data thefts in history. Last week, a user going by the handle "ChinaDan" posted a message on the online hacking site Breach Forums offering to sell roughly 24 terabytes (TB) of data, including what they claimed to be data on 1 billion people and "several billion case records," for 10 Bitcoin, or approximately USD 200,000. Names, residences, national identity numbers, mobile phone numbers, and case information are allegedly included in the data from the Shanghai National Police database. (“Alleged Chinese police database hack leaks data of 1 billion,” The Asahi Shimbun, 06 July 2022)

Real Estate: Housing businesses take food as payment for homes
On 05 July, BBC reported that in an effort to draw consumers, some Chinese real estate developers recently stated that they would take food as payment for properties. The businesses promoted offers allowing consumers to use vegetables as down payments for new homes, including peaches, watermelons, and garlic. Some of these offers, though, have allegedly now been withdrawn. In addition to this week's default by a significant developer, home sales in China have decreased for 11 straight months. A real estate firm in the eastern city of Wuxi announced last week that it would permit peaches to be used to offset up to 188,888 Chinese yuan (USD 28,218) in down payments for residences. (“Chinese property developers accept farm produce for homes,” BBC, 05 July 2022)

National Development and Reform Commission: China considers tapping into pork reserves to control high costs
On 5 July, the Strait Times reported that after prices for the nation's staple meat increased by almost a third year over year, the National Development and Reform Commission (NDRC) indicated they could tap into the country's pork reserves, even as they ordered suppliers to slaughter more pigs to lower the price. The country's pork prices rose, forcing Beijing's chief economic planner to act. Regulators blamed suppliers for "blindly holding supply" and being unwilling to sell. The commission claimed the hesitation was an attempt to increase profits and ordered large suppliers to kill pigs at a "regular pace" and avoid stockpiling. (“China mulls dipping into pork reserves to rein in costs,” The Strait Times, 05 July 2022)

Hong Kong: John Lee refuses to accept China’s ‘living with the virus’ guidelines
On 6 July, John Lee, the new leader of Hong Kong, repeated the rejection of the "living with the virus" pandemic approach by mainland China and stressed that the city must not "lie flat" in its fight against COVID-19. In his first question-and-answer session at the city's Legislative Council since taking office, Lee said: "Regarding anti-epidemic strategies, I do not agree with lying flat, allowing infection numbers to increase arbitrarily, as there will be risks of serious and fatal case number increasing proportionally, when the base number increases." He said, while also ruling out resorting to harsher travel restrictions aimed to keep the virus out, that Hong Kong must accomplish early diagnosis, isolation, and treatment of infections to stop the daily COVID-19 cases, now at roughly 2,000 a day. (“Hong Kong leader rejects 'living with the virus' Covid-19 policy,” The Strait Times, 06 July 2022)