COMAC and Boeing ink deal for joint center

Boeing Co and Commercial Aircraft Corp of China, or COMAC, signed an agreement on Tuesday to co-establish a Boeing 737 completion center in China, after President Xi Jinping's arrival in the Seattle area, home to the headquarters of Boeing Commercial Airplanes.

Additionally, a group of Chinese companies, including China Aviation Supplies Holding Co, ICBC Financial Leasing Co and China Development Bank Leasing, made orders in Seattle for 300 Boeing aircraft. The value of the orders has not been disclosed.

The 737 completion center, which will be a joint venture of the two aircraft manufacturers, will mark the first time for Boeing to build a production facility outside the United States. The deal also is a sign of the two countries' deeper cooperation in the civil aviation industry.

"It's more than just selling our airplanes or selling our products. It's also about developing partnerships that have depth and breadth, technical content and substance," said Dennis Muilenburg, Boeing's CEO, at an aerospace conference in Seattle on Tuesday.

He said China's State-owned COMAC is already a key part of Boeing's supply chain.

China's civil aviation industry expects to improve its position in the global industry chain, as the new center will make some Chinese manufacturers Boeing's first-tier suppliers.

Boeing will still assemble all of its 737s destined for Chinese carriers at its factory in Renton, Washington, and then will fly them to the new center in China for the installation of interiors and painting of exteriors, as well as flight tests and final delivery.

The two sides did not release more details about the completion center, such as its location or the venture's timetable.

Some Chinese cities have showed interest in the program and are trying to attract the companies.

Zhoushan, a city in Zhejiang province near Shanghai, already sent its plan for the Boeing facility to the State Council after preparing for the program for more than two years, Shanghai Securities News reported.

An official of Xi'an, Shaanxi province, told China Daily that Boeing's 737 completion center will be located in a development area of the city.

Although the inland city of Xi'an does not have a logistical advantage, some business insiders said, a port is not so important, as the center will work on assembled aircraft flown from the US.

Boeing's main rival, Airbus SAS, has been operating a final assembly line for seven years in the port city of Tianjin, and it also will set up a completion and delivery center for its A330 wide body aircraft in Tianjin.

China's rapidly growing air traffic market encourages the global giants to set up facilities here, experts said.

COMAC forecast that China will need 6,218 new aircraft in the next two decades, 4,195 of which will be narrow-body jets, such as Boeing 737s and Airbus 320s.