Making News: CNBC Interview on China Trade Talks Set for this Afternoon, New Podcasts…& More!

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aerospace, Boeing, China, CNBC, IndustryToday.com, Making News, manufacturing, manufacturing recession, Market Wrap with Moe Ansari, recession, The John Batchelor Show, Trade, trade talks, trade war

I’m pleased to announce that I’m scheduled to appear this afternoon on CNBC’s “Power Lunch” program in a segment focusing on the latest U.S.-China trade talks underway in Washington, D.C.  The interview is slated for 2 PM EST and, as usual, I’ll post a link to the video as soon as one’s available.

Speaking of podcast-like items, here’s a link to the one featuring my China trade policy interview on Moe Ansari’s nationally syndicated “Market Wrap with Moe” radio program.  Our discussion begins at about the 27:30 mark.

And this link will take you to my segment on the same subject last night on John Batchelor’s nationally syndicated radio show.

Finally, on Tuesday, IndustryToday.com re-posted (with permission, of course!) my RealityChek piece from earlier this week on how Boeing’s safety-related woes have helped drag U.S. domestic manufacturing into (a very shallow) recession for reasons having nothing to do with President Trump’s trade policies.  Click here to read.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

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(What’s Left of) Our Economy: A Boeing Drag on US Manufacturing Unrelated to Trump’s Trade War

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737 Max, aerospace, aviation, Boeing, exports, manufacturing, manufacturing recession, safety, tariffs, Trade, trade wars, {What's Left of) Our Economy

Ever since Boeing ran into safety problems that early this year resulting in the widespread grounding of one of its most successful airliners, authoritative (as opposed to anecdotal) signs have been elusive that the aerospace giant’s woes have been contributing to the slowdown being experienced by domestic manufacturing. This matter matters because a sizable Boeing Factor would rebut claims that President Trump’s tariff-heavy trade policies deserve nearly all the blame for industry’s recent troubles.

Boeing’s commercial jets, after all, haven’t been subjected to any retaliatory duties from tariff-ed foreign economies – largely because the company is half of a practical duopoly (along with Europe’s Airbus) in large passenger aircraft production. As a result, no countries (including China) want to be left with a single supplier. (Possible European responses to American levies on Airbus products authorized by a U.S. win at the World Trade Organization in a trade dispute long predating Mr. Trump’s inauguration could change that situation.)

Moreover, Boeing uses enormous amounts of manufactured intermediates to assemble its planes (which also include military aircraft), and especially durable goods ranging from fabricated metals products to machine tools. So hard times for Boeing will clearly mean hard times for all these suppliers if they haven’t already.

Last Thursday, however, a Boeing Factor finally became clear in official U.S. economic data – specifically in the monthly trade report (which contained figures through August). These statistics reveal that U.S. exports of civilian aircraft began falling sharply on a year-to-date basis beginning in May – just two months after national aviation authorities and airlines around the world began grounding the 737 Max 8 model or banning it from their airspaces.

Skeptics could still contend that a tariff-induced slump in global economic activity has reduced demand for Boeing’s jets, but the trade data also show significant strengthening of civilian aircraft imports, meaning that, at least in the United States, demand remains healthy.

The most important comparison entails the April-through-August results for civil aircraft exports and imports over the last few years. These ensure the best apples-to-apples findings over respectable periods of time.

According to the trade statistics, the U.S. civil aircraft industry dominated by Boeing hasn’t been killing it recently. From April-through-August, 2017 to April-through-August, 2018, its exports declined by 13.94 percent. And then between the same 2018-19 stretch, the rate of deterioration sped up markedly – to 24.51 percent.

Meanwhile, imports of civil aircraft performed a u-turn. From April-through-August 2017 to April-through-August, 2018, they fell by 7.95 percent. But then between the same 2018-19 period, they actually rose – and by a strong 18.37 percent.

Also pointing to a Boeing/civil aircraft-specific problem – the major difference between civil aircraft’s trade performance in recent years and that of domestic manufacturing as a whole. Between the April-through-August 2017 and 2018 periods, while civil aircraft exports were dropping, overall manufacturing exports rose by 6.76 percent. Between the following April-through-August periods, both kinds of exports decreased, but overall manufacturing exports were down only 3.44 percent versus aircraft’s 24.51 percent. And while civilian aircraft imports were surging, overall manufacturing imports edged up only 0.60 percent.

Could this great recent disparity between civil aircraft’s trade performance and overall manufacturing’s trade performance caused the manufacturing slowdown all by itself? Probably not. Current figures aren’t available for civil aircraft as such, much less for aircraft-specific supply chain output. But a 2016 study from the Federal Aviation Administration reported that in 2014, civilian aircraft and parts manufacturing totaled a little more than $100 billion (in 2012 dollars), and that inputs from the supply chain brought the figure up to just under $258 billion.

Since the Commerce Department pegged total American manufacturing output that year at just under $6 trillion (in those same 2012 dollars), civil aircraft production would have represented 4.27 percent of domestic industry’s total. It’s true that that share isn’t overwhelming. But given that the Federal Reserve’s (inflation-adjusted) manufacturing data show that the sector’s after-inflation output has edged down from only +0.90 percent to +0.89 percent between the April-through-August 2018 and 2019 stretches, civil aircraft’s seriously worsening trade situation may bear noteworthy responsibility. And it certainly could be behind a comparable share of the slight (just 0.36 percent) real output decline over the past year that represents manufacturing’s latest technical recession.

A big complication could still put the spotlight back on the trade wars: Although safety problems have plainly hurt Boeing orders and production, and therefore new business throughout its supply chain, civil aircraft production and sales both feature long time lags between orders and deliveries. Indeed, the company says that its backlog is still considerable – and growing.

Nonetheless, it’s also true that the company’s progress toward regaining its reputation has lagged far behind its initial predictions, and new problems keep emerging with the 737s and other planes . In addition, a leading aerospace industry consultancy reported in August that Boeing-related concerns were depressing civil aircraft production globally. And within Boeing, the damage hasn’t been confined to 737 Max production. The safety crisis is affecting output of other airliners, too.

Moreover, other non-trade-related problems obviously have been weighing lately on U.S.-based manufacturing, too – notably the confusion in Europe created by the ongoing Brexit mess and the long-time abject failures of the European Union and Japan to generate respectable growth. For now, there’s little evidence that Mr. Trump’s trade policies have been a net plus for domestic industry (although the counter-factual needs to be mulled, too – i.e., how would manufacturing be faring under a pre-Trump policy regime?). But the same, at very best, can be said for the Boeing Factor.

Our So-Called Foreign Policy: At the WTO, Europe Claims a Right to Free Ride

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Airbus, alliances, Boeing, Charles Dickens, Defense Department, EU, European Union, foreign policy establishment, free-riding, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, subsidies, Trade, trade law, Trump, World Trade Organization, WTO

Charles Dickens famously observed that the law can be an idiot. Last week’s World Trade Organization (WTO) ruling on U.S. and European Union (EU) aerospace subsidies reminds that American alliance policy can be idiotic – and in a key respect has been for decades. The fault here lies not with the WTO – which is hardly beyond criticism. Instead, the problem entails an American approach to international security relationships that continues a decades-long record of enabling brazen free-riding even under the current U.S. administration – which so far has decried this practice only rhetorically.

Interestingly, the WTO decision last Friday looks like a big win for American aerospace giant Boeing and a big loss for its EU rival Airbus. The trade body ruled as still illegal only one of the original 28 subsidies provided Boeing by Washington state and the federal government that were challenged by Airbus. According to Airbus, the WTO agreed with its allegation that some of the other 27 means of Boeing support were subsidies, but Boeing says that since the ruling determined that these payments had not harmed Airbus, they can remain in place. Airbus disagrees, so expect more litigation.

But here’s what’s completely outrageous. Some of the subsidies Airbus successfully challenged – at least on paper so far – were U.S. Defense Department subsidies. It’s jaw-dropping enough to recognize that Airbus gets military support, too. What’s worse is that so much of the Pentagon money handed over to Boeing (and other defense contractors) has been spent on weapons and other military systems that the United States would not need at all or in such quantity either if Washington hadn’t taken on any role in protecting Europe for decades, or if the Europeans bore anything like an appropriate burden for the own defense.

And don’t forget: For decades, even most U.S. Presidents and other foreign policy establishmentarians who have assign supreme value to continuing current transatlantic security arrangements agree that too many European members of the North Atlantic Treaty Organization (NATO) have been shirking. Talk about biting the hand that shields you.

It’s important, however, to keep in mind who’s mainly to blame. It’s clear that the Europeans deserve no high marks for either gratitude or loyalty. But it’s also clear that their actions can be reasonably portrayed as legitimate efforts to maximize their own self interests – reflecting the equally reasonable judgment that these gambits long have been good bets to succeed.

What the American public needs to ask is (a) why their leaders have handled alliance relationships so ineptly as to have created expectations of free-riding that the WTO case shows are now seen as nothing less than a right to free-ride; and (b) whether the avowedly transactional Trump administration will view the EU defense subsidy charges as a long overdue opportunity to say enough’s enough.

Making News: Newsmax TV Interview on China’s Threat to Boeing…& More!

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aerospace, BBC, Boeing, China, Lifezette.com, Making News, Newsmax TV, Ozy.com, ports

I’m pleased to announce that an interview I did this afternoon on Newsmax TV has just gone on-line. The subject: my Lifezette.com article Tuesday on how China’s new domestically produced commercial jet could become a major threat to America’s Boeing and to the nation’s longstanding aerospace predominance.  Click on this link to watch.

Also, it was great to be quoted yesterday in this Ozy.com article on how President Trump’s trade policies could affect the ports in the southeast part of the country.

Finally, I’ve got an interview coming up Sunday with the BBC on China’s “One Belt One Road” initiative, which many observers fear (or hope?) will make the People’s Republic the globe’s economic leader in the twenty first century. Check in with RealityChek for the details on broadcast time, and for news of other upcoming media appearances and other developments.

Making News: Lifezette Op-Ed on the Real Meaning of China’s New Jet

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aviation, Boeing, China, Lifezette.com, Making News, Trade

I’m pleased to announce that my latest op-ed has just been posted by Lifezette.com – an article explaining why China’s test flight of its first domestically produced jet is both terrible news for U.S. aviation giant Boeing (which sold China much of the aviation technology rope), and a clear sign that America’s longstanding approach to the People’s Republic failing disastrously. Click on this link to read it.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

Making News: A New NYC Radio Podcast, an In-Depth Look at that Border Adjustment Tax – & More!

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AM970 "The Answer", Boeing, border adjustment tax, China, Donimic Gates, Frank Morano, Lifezette.com, Making News, manufacturing, Populism, Seattle Times, summit, supply chains, Trade, Trump, Trump administration, Xi JInPing

I’m pleased to report that a podcast is now on-line of an interview I just gave to Frank Morano of New York City’s AM970 “The Answer”radio station. To listen to a great discussion of trade and other areas of economic policy in the Age of Trump, click on this link, scroll down to the April 9, “FiveAM” episode, and press the play button. My segment starts at about the 10-minute mark. And special thanks to Frank for a very generous introduction!

In addition, it was great to be quoted in a new Seattle Times article by Dominic Gates on the US aircraft industry and the proposed border adjustment tax. The subject could not be more important, as the tax could provide American domestic manufacturing across-the-board with the kind of intelligent protection that it’s long needed.

Moreover, Dominic, who has covered aerospace giant Boeing for years, is one of the nation’s very best manufacturing reporters. His article provides an impressively informative look at the politics and economics of a major industry’s supply chain, as well as at the border adjustment proposal. So it’s a must-read for anyone interested in the future of the American economy’s productive core.

Finally, my views were featured in two new posts at Lifezette.com.  The first, which can be read at this link, previewed last week’s summit between President Trump and his Chinese counterpart, Xi Jinping. The second, found at this link, explored the rumors swirling about here in Washington that Mr. Trump is about to replace many of his more populist advisers with figures from the establishment.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

 

 

(What’s Left of) Our Economy: Don’t Forget America’s Non-China Trade Problems!

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Bill Clinton, Boeing, Chad Broughton, China, Export-Import Bank, General Electric, Jeffrey Immelt, Jobs, manufacturing, Mexico, NAFTA, North American Free Trade Agreement, Ross Perot, subsidies, tariffs, The Atlantic, Trade, trade finance, {What's Left of) Our Economy

Hats off to the unlikely duo of General Electric and The Atlantic magazine for recent reminders that, for all their importance, China-related trade issues aren’t the only important trade issues facing the U.S. economy – and requiring outside-the-box thinking.

General Electric’s contribution owes to its heavy-handed response to Congress’ decision to shut down the Export-Import Bank. Like most U.S.-owned multinational manufacturers, GE claims that the Bank has been crucial to its hopes for overseas sales – and for the whole country’s. I recently showed that the share of U.S. exports aided by Exim financing has been trivial (in the context of depicting its closure as a minor Washington mistake), but GE CEO Jeffrey Immelt seems determined to make American lawmakers and the country at large pay the piper.

On September 15, the company announced that it would create 400 manufacturing jobs in France rather than in the United States to enable it to benefit from France’s version of Exim support, and that it would move 100 such existing American positions to China and Hungary for similar reasons. Just today, the company reported that it had secured access to export financing of up to $12 billion from Britain, and would create up to 1,000 jobs in the UK if this credit led to contracts.

Lots of the conservatives who favored Exim’s demise have responded by fulminating about GE “bullying.” (Boeing, the biggest recipient of Exim financing, has played this game, too, but more subtly.) They also, however, insist that these corporate arguments are phony, and that the threatened and actual job moves either would have been made anyway, or represent shifty numbers-shuffling – which logically weakens the basis of their ire. But these avowed corporate welfare foes can hit back at corporate blackmail, and support valuable domestic jobs and production if the companies aren’t bluffing or fudging, by intelligently using trade policy.

For example, they could support tariffs on any GE or Boeing products built overseas thanks to foreign government financial subsidies to ensure that those products can’t be imported back into the United States – the world’s most important single national market. They could also back tariffs on many or all foreign-made goods by these companies if the foreign government subsidies enable the blackmail-happy firms beat out domestic goods for sales in third countries. Alternatively (or in addition to these measures), Exim opponents could tell the world’s GE’s and Boeing’s that their possibilities for selling to the U.S. government – a huge customer – will look pretty dim unless their behavior improves.

As must be clear to anyone following business and economic new these days, foreign governments like China’s discipline other countries’ businesses like this as a matter of course. It seems high time for Washington to get a clue.

The Atlantic magazine spotlighted non-China trade issues less directly. It’s just published a long article about an American manufacturing company moving high-value jobs to Mexico without once mentioning the North American Free Trade Agreement (NAFTA), or even trade policy. (“Globalization” was referred to once.) This is like publishing a long article about the civil rights movement without mentioning segregation. Here’s why.

NAFTA’s creation (which technically resulted from Mexico being added to an existing U.S.-Canada free trade agreement) created decisive incentives for American manufacturers to shift factories and employment across the Rio Grande. Mexico’s workers had always been very cheap compared with their U.S. counterparts. Moreover, Mexico’s environmental and worker safety regulations had always been lightly enforced – when they were enforced at all – which further reduced production costs. So in principle, boosting profits while supplying the high price U.S. market from Mexico was long an appealing option for American industry.

But NAFTA made such arrangements an out-and-out no-brainer by offering U.S.-based companies a guarantee that neither American presidents nor Congresses could slap tariffs on Mexico-origin imports in the future, and thereby reduce and even destroy all the benefits of Mexico offshoring. This guarantee in turn was the product of NAFTA’s dispute-resolution mechanism, which gave Mexico an equal say with the United States (and Canada) in dealing with charges of treaty violations and authorized retaliation, even though the U.S. economy represents some 90 percent of the newly integrated North American economy.

This Atlantic article makes some valuable points – noting, for example, that the offshored product it examined wasn’t the kind of labor-intensive good that NAFTA’s supporters promised would dominate any job and production losses resulting from the agreement. Author Chad Broughton also usefully highlights how lax and often indulgent U.S. regulation of private equity firms – one of which owned the factory in question – can create its own significant spurs to offshoring. But that financial issue would have meant little had American trade policy decisions not made such employment and output shifts a practically irresistible option for so much of U.S.-based industry.

But if NAFTA did indeed generate such a “giant sucking sound” (as Ross Perot so memorably predicted during his 1992 independent presidential campaign) of jobs moving south, why hasn’t Mexico become an even more important manufacturing power and exporter to the United States? Actually, trade policy provides the main answer to that question, too. Almost immediately after practically inviting domestic manufacturers to move to Mexico, the U.S. government decided to make many other third world offshoring opportunities available as well, via trade deals with Central America, South America’s Andean countries, and sub-Saharan Africa. Most important, Bill Clinton and his successors have worked overtime to expand U.S. trade with China dramatically.

The offshoring companies have thus been able to play different low-income countries off against each other in a worldwide investment competition that’s been great for business (although it also contributed to the global imbalances that helped set off the financial crisis from which even many of them didn’t escape). But the losers – which have included much of Mexico – have hardly been confined to America.

Making News: Talking China Tonight on John Batchelor’s Nationally Syndicated Radio Show…& More!

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aerospace, Boeing, China, Dominic Gates, Gordon Chang, Making News, manufacturing, The John Batchelor Show, The Seattle Times, Xi JInPing

I’m pleased to announce that I’m scheduled to appear on John Batchelor’s nationally syndicated radio show tonight to discuss U.S.-China relations in light of Chinese President Xi Jinping’s visit to the United States.  Click on this link to listen live at 10 PM EST to what I’m sure will be a timely discussion with John, co-host Gordon Chang, and me.  And if you can’t tune in, I’ll post a link to the podcast as soon as one is available.

Also, it was great to be quoted today in Dominic Gates’ Seattle Times article on Boeing’s decision to build its first overseas factory in China.  In fact, it was my conversation with Dominic about U.S. policy options to fight China’s investment and technology blackmail that inspired today’s post on new American approaches to the China economic challenge.

(What’s Left of) Our Economy: If Washington Was Serious About the China Economic Challenge….

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aerospace, allies, Boeing, China, Cisco, cyber-security, Edward Snowden, forced technology transfer, imports, investment, lobbying, manufacturing, multinational companies, national security, offsets, offshoring, South China Sea, subsidies, telecommunications, Trade, Xi JInPing, {What's Left of) Our Economy

However understandable, the intense administration and media focus during Chinese leader Xi Jinping’s U.S. visit on Beijing’s cyber-hacking has overshadowed several other major Chinese threats to American national security and economic well-being – and the need to fix U.S. strategies that are failing badly to cope with them. High on the list is China’s widespread practice of extorting corporate investment and technology transfer by threatening to shut uncooperative companies out of its large and potentially bigger market. And this blackmail deserves special attention this week because two big examples of it have made it into the news recently.

The first involves Boeing, which apparently will build its first foreign factory in China – a move that not so coincidentally coincided with China’s announcement that it would buy 300 Boeing jets. The second was Cisco Systems’ decision to start cooperating with a Chinese server company on projects that reportedly could include developing new telecommunications hardware products. This deal has followed several years in which Cisco has encountered big trouble in China due to fall-out from Edward Snowden’s techno-spying revelations and charges, and to Beijing’s policy of punishing American companies after Congress in effect froze China’s version of Cisco out of the U.S. market due to espionage concerns.

Since aerospace and telecommunications are clearly central to military strength, these American corporate cave-ins could easily endanger national security – unless you believe that they’ll forever remain in their current limited form. So more effective responses are urgently needed – unless Washington wants to face ever more harmful Chinese cyber-hacking (see this article of mine on how American firms have undoubtedly shared advanced cyber-war-related technologies with China), or ever better armed Chinese forces in possible future military showdowns in the South China Sea and other disputed Asian waters.

The companies themselves explain their agreement to China’s trade and investment conditions with the “half-a-loaf” argument, and it’s not completely unreasonable. They’re obviously not thrilled to be helping create likely new competitors (whether they care about American security is another matter entirely), but they point out that any China business they preserve or gain via their cooperation is more than they’d have without the China market. In fact, Beijing has used its leverage to string them along effectively enough that they’re reluctant even to complain about their China troubles to Washington – for fear of becoming targets for Chinese retaliation, and of excessively rocking the boat of bilateral economic relations generally.

But although the companies’ behavior may be justifiable from their own individual standpoints, their unavoidably narrow, self-interested perspectives make clear why they can’t be relied to protect or advance broader U.S. interests. Washington needs to take the lead. But can it do so without imposing heavy costs on these firms? To me, the answer clearly is “Yes” – and not just because China’s economy is slowing down. The key to success is understanding that a case-by-case approach inevitably leaves China in the driver’s seat, and that the United States can and should capitalize on position as an export market desperately needed by China to ensure adequate growth.

Severely restricting China’s access to this American market would grab Beijing’s attention not only for economic reasons. Chinese leaders would begin worrying about their political futures – and their own personal well-being – since their hold on power depends so strongly on delivering jobs and rising incomes to the country’s increasingly restive population. Moreover, even keeping in mind that short-term costs for the U.S. economy are inevitable – because policy shifts of this magnitude are always disruptive, and because it may take Beijing a while to get the message – the most obvious objections are surprisingly easy to dismiss.

Where will affected companies find customers to replace those they may temporarily lose in China? In many cases, in the American market, because the smaller U.S. trade deficit with China that would result from import curbs would spur more American growth overall. Moreover, so much U.S.-China trade nowadays is “head-to-head,” (in which the same goods compete with each other), that many American firms could fill the gap left by missing Chinese imports. And when it comes to U.S. companies that can’t make up China losses this way, government compensation seems appropriate.

Given Washington’s willingness to bail out Wall Street and auto-makers for blunders largely of their own making, subsidies look defensible for firms in the line of fire of whatever trade conflict develops. (One possible caveat: Many larger, multinational companies rely on China business heavily because they lobbied so effectively for the U.S. China trade policies that have created their vulnerabilities – and other major damage to the American economy – in the first place. So there’s also a case for letting them take their lumps, at least to some extent.)

If such subsidies don’t pass muster politically in the United States, another alternative is available to Washington: using the power of the American market to dissuade non-Chinese competitors to U.S. firms from seizing the opportunities created by these new American policies to boost their own China sales. Although the American firms’ China sales would remain lost, they at least wouldn’t lose competitve ground to foreign rivals.

Further, giving these third-party companies and countries the choice of doing business with China, or with the far bigger – and more reliable – United States would have the added benefit of adding international support to American efforts to fight Chinese protectionism and economic predation.  Working with Washington would also aid foreign governments and companies by reducing China’s scope to play trade partners off against one another. 

Finally, it’s true that the kind of jobs and even technology extortion used by China are standard operating procedures – especially in aerospace and in military aerospace – for many foreign governments, including those of U.S. allies. So how could Washington justify singling out China for counter-measures? Yet when it comes to allies and their policies (called offsets), the answer couldn’t be more evident: They’re allies and China manifestly is not. It makes no sense whatever to treat all foreign governments and economies the same when their relationships with the United States are so dramatically different, and this kind of foolish consistency certainly shouldn’t hamstring America’s approach to China’s economic transgressions.

There is, however, one obstacle to this kind of revamp of U.S.-China economic relations that I don’t see being overcome anytime soon – the continued domination of China policy-making in Washington by those aforementioned multinational, offshoring-happy business interests. The China policy status quo has undermined the American economy’s productive core, and increasingly threatens national security. But the offshoring lobby believes it’s worked well enough for its members. So until a critical mass of national political leaders decides to reject their lavish campaign contributions, expect China to keep taking America to the cleaners. And when Chinese actions sting enough, expect a few grumbles from the multinationals – no doubt mainly for show.

(What’s Left of) Our Economy: Boeing Hands China the Aerospace Rope

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aerospace, Boeing, forced technology transfer, manufacturing, technology transfer, training, {What's Left of) Our Economy

“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.