China Mulls Ending Commercial Hold On Boeing's 737 Max: Report

China is reportedly considering ending its commercial freeze on Boeing Co. (NYSE:BA) with a potential 737 Max aircraft deal as the APEC Summit approaches.

What Happened: Improvement in relations between China and the United States may result in a breakthrough for Boeing’s 737 Max sales in China, Bloomberg reported, citing unnamed people familiar with the matter. The Chinese government is purportedly pondering announcing a commitment for the 737 jetliner during the APEC Summit in San Francisco. However, the specifics of the possible agreement are still under negotiation and could alter or collapse before the meeting of Presidents Joe Biden and Xi Jinping scheduled for Wednesday, the report said.

The upcoming summit could also be a chance for the two nations to reestablish trade on the aerospace front in addition to other priorities. A 737 Max deal would be a substantial breakthrough for Boeing, which has not made any considerable sales of its narrowbody jets in China since at least 2018, the report said. In 2019, two Boeing 737 Max crashes led to a worldwide grounding of the model, and since then, no deals have been made owing to U.S.-China tensions.

Why It Matters: The 737 Max is Boeing’s largest revenue source. China grounded all Boeing 737 MAX jets in the country following the crash of a 737 MAX jet operated by Ethiopian Airlines in March 2019, the second deadly accident of the model in five months. The grounded flights have resumed flight but Boeing is yet to resume deliveries in China.

This deal, if realized, comes at a crucial time when the recovery of the travel industry from the pandemic is in full swing and demand for aircraft is rising. China, being a significant part of the world’s aircraft demand, can ensure a constant supply of Boeing’s 737s and help the company bounce back from its past challenges.

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