Monday, December 05, 2005

Chinese 'shock & awe'

When President Bush visited China recently he was given much ‘face’ by the Chinese who timed their announcement of the purchase of 70 Boeing 737s with his trip to Beijing. Additionally China has taken an option for another 80 aircraft.

China has a lop-sided trade balance with the USA that has been causing mucho concerns for the Americans. So the announcement of the purchase was designed to mollify the Americans a wee bit. This year China is expected to show a plus of US$200 billion in the trade balance figures. This humongous sum had been preceded by plus figures of US$123 and 162 billon respectively for the last two years.

Now, China chooses to smile on Europe, particularly France and Germany. Aviation experts believe that a giant deal of 100 and maybe even 150 Airbus 320s will be ordered. The deal is worth US$10 billion or even more. That’s twice the amount for the US Boeing 737 deal.

China undoubtedly intends to reward France and Germany for proposing to lift European arms embargo against China that was imposed after the Tian An Men incident. It’s the classic reward game, but only played by those with very very deep pockets.

Airbus knows that such a deal is, to use a much hackneyed phrase, just the tip of a gargantuan Chinese honey cake. It's looking at selling some 1,500 jets to China, more than half of what Boeing has forecast for China's needs over the coming decade or so.

Then, a vast country like China without the extensive European road infrastructure will definitely require helicopters. And there's also the juicy military deals once France can work around the American insisted arms embargo. Voila, bon appetit!

To realise its dreams, Airbus has agreed with China to look into the possibility of setting up an assembly line in China. This will mean that Airbus may be building its aircraft outside Europe for the first time.

This is the sort of trade deals that Malaysian Prime Minister Ahmad Abdullah Badawi yearns for from China. Maybe a kick start US$5 billion package of palm oil, rubber, and what not with China? And don't forget the tourism, education and investment sectors!

No wonder the Prime Minister emerged from his standard stoic self and in an unprecedented action, publicly lambasted his deputy minister for Internal Security, Noh Omar, for insulting the Chinese through his recent Hang-Tuah-speak.

Money speaks more loudly than American 'shock & awe'!

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