Taiwan’s China Airlines have announced they will be purchasing 16 Boeing 787 planes during the midst of regional tensions.
The government-backed airline released a statement on Tuesday confirming that they had secured the deal with the US-based manufacturer, worth potentially $4.6 billion, to replace their current fleet of 22 older Airbus A330 models.
This deal comes just weeks after U.S. House of Representatives Speaker Nancy Pelosi’s diplomatic visit to Taipei, which caused a fleet of anger among officials in Beijing, leading to China conducting live-fire military drills off the coast of Taiwan in response (with airlines cancelling routes to the island as a percussion).
How will China potentially respond?
It is unknown at this stage, with rising diplomatic tensions between the US and China, what the mainland response will be to the deal with the Chinese government having a track record of preventing or postponing high-profile business deals with the U.S. or European arms sellers to self-ruled Taiwan.
It is to be said that any interference in commercial agreements on China’s part is usually pretty unlikely, with a Western aerospace industry source telling Reuters that “commercial business is more below the political radar.”
However, given the timing of the deal tied in with current political complexities, it is a bit more difficult to predict the outcome.
“Beijing has a long history of punishing Boeing and rewarding Airbus, and vice-versa, for perceived political sins. These can be committed by either the companies themselves, or the countries in which theyâ€™re based,” said Isaac Stone Fish, founder of Strategy Risks, which studies corporate risk in China.
“For Boeing to sell planes to Taiwan, and just weeks after Speaker Pelosiâ€™s trip to Taiwan drew a strong response from Beijing, definitely checks both those boxes.”
Boeing seemed to be unphased by the potential political backlash, with the US aerospace company reportedly careful to distance themselves from Speaker Pelosi’s visit in the interest of existing economic ventures in China. Their official media release stated that they were looking forward to working with the Taiwanese airline.
â€śWe are pleased that China Airlines has selected the 787 Dreamliner to modernize their world-class fleet and look forward to working with the airline to finalize the order,” Boeing said in a statement.