The Truth Needle | The big Boeing order from China trumpeted during Chinese President Hu Jintao's state visit to the White House is actually a re-announcement of previous orders.
The claim: A White House fact sheet released Wednesday to coincide with the state visit of Chinese President Hu Jintao said: “In preparation for this visit, several large purchases have been approved including for 200 Boeing airplanes. … The approval, the final step in a $19 billion package of aircraft, will help Boeing maintain and expand its market share in the world’s fastest growing commercial aircraft market.”
What we found:
The deal President Hu signed does not include any new jet orders.
Delivering the formal approval during Hu’s visit is designed to make the Chinese government appear responsive to U.S. concerns about the balance of trade.
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However, all of the airplanes in the sale were announced and booked by Boeing as firm orders over the past four years. Chinese airlines had already paid nonrefundable deposits and signed contracts for the jets, most of them as far back as 2007.
“The only thing new is (Chinese) government approval,” said Boeing spokesman Miles Kotay.
Chinese airlines decide on orders somewhat independently, but the final deals must always be formally approved by the government.
Boeing vice president of communications Mary Foerster insisted this Chinese government signoff is important.
“The deal isn’t done until the approval is given,” she said.
When Hu visited France in November, a similar announcement was issued about the final approval of 102 Airbus jets.
Boeing said the 200 jets — 185 Renton-built 737s and 15 Everett-built 777s — were all originally ordered between 2007 and 2010, and are set for delivery by 2013. The total of 200 airplanes includes some sales to “unidentified customers,” namely Chinese airlines that don’t want their jet orders made public.
The White House announcement said the total value of the orders was $19 billion.
But that’s the list price, which airline customers never pay.
Based on market data from aircraft-valuation consultancy Avitas, the actual price for those 200 planes is about $11 billion.
And does this “maintain and expand” Boeing’s position in China, expected to be the world’s largest airplane market over the next two decades?
President Obama’s deal for 200 jets sure sounds better than French President Nicolas Sarkozy’s deal for 102. Seems like the U.S. is on top when it comes to aviation in China. Right?
Certainly, China remains a vital Boeing customer.
The Boeing order website shows unfilled orders from China for 256 jets: 57 mid-size wide-body Dreamliners, 38 large wide-body 777s, 10 747-8 jumbo freighters and 151 single-aisle 737s.
Then there’s the additional jets going to unidentified customers in China. But even with those, the tally is unlikely to climb much higher than about 300.
But while that’s a handsome chunk of business that will help maintain jobs here in the Puget Sound region, Airbus appears even better positioned in China.
Airbus has courted China assiduously to displace Boeing’s former dominance there, even setting up an assembly line in Tianjin that in 2010 built and delivered 26 single-aisle A320 jets.
China has unfilled orders for 416 Airbus airplanes: five A380 superjumbos, 55 new A350 mid-size wide-bodies, 81 current A330 mid-sized wide-bodies, and 275 single-aisle A320 family jets.
Boeing was left rather embarrassed Wednesday as its public-relations team faced skeptical press questioning of an announcement the company had little to do with, one that was merely political window dressing for President Hu’s state visit.
Alan Tonelson, a research analyst with a foundation attached to the U.S. Business & Industry Council, which represents small to medium-sized U.S. manufacturers critical of Chinese trade policies, called the announcement political “fakery.”
“The president should get out of the business of trumpeting phony export deals that won’t create a single new job, and get serious about combating the Chinese predatory trade policies,” said Tonelson.
Our verdict: The Chinese orders are real and will help keep Boeing workers busy here through 2013. Still, the White House announcement, while technically true, left a completely false impression.
The orders weren’t new. They weren’t really worth $19 billion. And Boeing isn’t soaring ahead of its big global rival with this deal.
An accurate headline for the news might have said: Hu finally signs off on old orders for U.S. jets, but Boeing still lags Airbus in China.
Dominic Gates: 206-464-2963 or email@example.com