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Boeing Boosts Investment in China : Aerospace: Tail sections for 737 will be made under contract there as the company’s commitment grows.

WASHINGTON POST

Seattle-based Boeing Co. announced Monday that it is contracting with Chinese aerospace authorities to build parts of the tail section for its 737 jets in central China at Xian Aircraft Corp.

Ron Woodard, president of Boeing’s Commercial Airplane Group, also said China is a possible production site for a 100-seat passenger plane Boeing hopes to make for the Asian market.

While the work on the popular 737 is on a contract basis, Woodard said Boeing estimates it will have invested more than $600 million in various aerospace facilities in China between the early 1980s and the end of this century, underscoring the importance the American aerospace giant places on the Chinese market.

Boeing’s announcement comes less than two months after President Clinton extended most-favored-nation status to China. Business leaders had lobbied heavily for the extension, saying the move would help protect U.S. jobs and industry. Boeing was particularly active in that lobbying effort.

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Tail sections for 737s, Boeing’s most popular passenger jet, are currently made at the company’s Wichita, Kan., plant at the rate of up to 21 a month. Woodard said Xian, which already makes the end portion of Boeing fuselages, would eventually match that capacity.

Boeing spokesman Craig Martin said there will be no loss of jobs in Wichita as a result of the deal.

“Our experience has been that for every job we have placed outside the United States, we gain 13 jobs in the United States in terms of increased sales,” Martin said.

Boeing’s sales of commercial jetliners has made it one of the biggest U.S. exporters of equipment to China. Of 79 new planes China bought last year, 52 were built by Boeing.

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Boeing’s announcement is part of a broader trend of China using its buying power to persuade foreign companies to transfer part of their assembly or manufacturing operations to China.

Companies often do so to gain an edge in winning large contracts and to take advantage of the lower costs of making parts in China.

There are four major centers of the Chinese aircraft manufacturing industry: Xian, Chengdu, Shanghai and Shenyang.

Martin said the contract is for work on current models of the 737 but that “China would be a strong competitor” for similar work on a new family of 737s that will go into production soon.

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Boeing has begun a joint study with Chinese and Japanese aerospace officials on a new 80- to 100-seat aircraft.

One of Boeing’s chief rivals, McDonnell Douglas Corp., has been building parts in China since 1979. So far, it has made 800 main landing gear doors, 670 nose landing gear doors and 180 cargo doors there. It also makes other doors, inboard flap supports and horizontal stabilizers in China.

About 6,000 Chinese workers are currently working on McDonnell Douglas projects, including the assembly of passenger aircraft from kits shipped from the factory in Long Beach, for ultimate sale to Chinese airlines.

At one point, China bought a Boeing 707 plane and took it apart in an attempt to determine how to build one on its own. But the effort was not successful, and a reconstructed Boeing now sits parked outside a hangar where Chinese workers are finishing the assembly of a McDonnell Douglas plane with the help of that company’s engineers and technicians.

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