“Blowback” refers the dangerous backfiring of policies and other decisions that involve aiding dubious partners. Major recent examples include U.S. arms aid to anti-Soviet Muslim extremists who later became anti-American Muslim extremists, and voluntary technology transfers to China by American businesses that inevitably wound up teaching cyberhacking skills to the Chinese and helped create Chinese commercial rivals.
Now you can add to the list Boeing’s decision decades ago to start building aircraft parts and components in China, and training Chinese aerospace engineers. This offshoring strategy is finally enabling China to start building a jetliner that Boeing views as a formidable competitor.
Speaking at a conference last week, Boeing CEO Jim McNerney said that the company would launch a new narrow-body plane to preserve its position in this market both from longtime rival Airbus, and from a new prospective state-owned rival from China. Boeing’s entry in single-aisle jets is the 737, which as is typical for many commercial aircraft models, is already being updated.
But McNerney noted that Commercial Aircraft Corp. of China (Comac), is on track to deliver a single-aisle jet of its own by 2018, and that as a result, Boeing can’t count even on a revamped 737 to measure up. Therefore, the company will be aiming to build a wholly new aircraft for delivery before 2030 to remain competitive.
What Boeing failed to mention is how difficult it is to imagine China getting to this point anywhere near this fast without Boeing’s own help. As the company itself reports on its website, Boeing has been used Chinese-made parts and components on every one of its jets currently in service – including its newest and most innovative model, the 787 Dreamliner, for which the Chinese build the rudder, panels that reduce drag between the advanced carbon-fiber-constructed fuselage and the equally advanced carbon wings, vertical fin panels, and other composite parts.
Moreover, the Chinese are not manufacturing these parts in Boeing wholly-owned factories in China or in Boeing factories in China affiliated with private sector partners from the PRC or from any other country. These Made in China parts are manufactured either by factories in China owned and operated completely by China’s government-dominated aerospace industry, or by joint ventures between Boeing and these Chinese government facilities.
In addition, Boeing has provided “enhanced professional training to almost 50,000 Chinese aviation professionals” in fields including manufacturing and industrial engineering, and is conducting research with the Chinese Academy of Sciences and various Chinese universities. Projects worked on with these government-run or controlled institutions include “advanced materials and advanced computing technology for aviation and industry design.” The company is also working with four Chinese universities by providing, scholarships, funding programs, training faculty, and developing courses – all with an aerospace focus.
So far, Boeing – and the United States – have enjoyed a hefty payoff for all this cooperation. The company currently controls half the huge Chinese aviation market, and there can be no doubt that the offshoring and tech transfer price it has paid for these sales have resulted in major payoffs for U.S.-based workers both at Boeing itself and at its vast domestic supply chain.
And the company is unmistakably counting on such policies guaranteeing it and its U.S. Employees and suppliers, a big share of China’s future aviation market, which it believes will needs $870 billion worth of new aircraft (more than 6,000 planes) over the next 20 years.
The trouble is that China’s game plan doesn’t include granting non-Chinese players even a single percent of its market for anything a moment longer than it needs to. Given its still-wide edge over Chinese aircraft manufacturers, Boeing’s strategy looks like a winner for the U.S. economy for the foreseeable future. (The short-term impact on U.S. security of all this aerospace tech transfer and training could well be very different.) But with each bit of aviation knowhow it imparts to China – typically for reasons having nothing to do with free market practices, and everything to do with Beijing’s success at extorting these gains in exchange for pieces of the China market – Boeing brings the potential tipping point, and its own demise, a little closer.