Nonstopdrivel
15 years ago

February 1, 2010

Will Taiwan Arms Sale Ground Boeing?
 


By Jason Simpkins, Managing Editor, Money Morning

Roughly $400 billion in revenue would be a heavy price to pay for selling 12 missiles to Taiwan, but that potentially is what The Boeing Co. (NYSE: BA) is facing as China continues to fume over U.S. arms sales to the renegade island.

The Obama administration last week approved a $6.4 billion weapons deal with Taiwan. The deal, which was brokered by the administration of George W. Bush in 2001, included UH-60 Black Hawk military helicopters and additional Patriot PAC-3 missile defenses, but not additional F-16 jets, which the government deemed "too provocative."

The sale infuriated China, which considers Taiwan its territory. Beijing has vowed to unify the region peacefully if possible and forcefully if necessary, but the 1979 Taiwan Relations Act obligates the United States to "provide Taiwan with arms of a defensive character." That makes Taiwan the most sensitive issue in bilateral relations between the two nations.

The United States has a history of following through on that promise, but this deal in particular agitated Beijing, which in the past few years has attempted to assert itself as a true global superpower. For the first time ever, China's government has publicly threatened U.S. companies that took part in such an arms deal with economic sanctions.

"Due to the serious damage the U.S. arms sale to Taiwan has inflicted upon Sino-U.S. relations," announced the Chinese Foreign Ministry, "China has decided to postpone part of the Sino-U.S. military exchange programs, as also vice-ministerial level consultation on strategic security, arms control and non-proliferation, etc.; China will also impose related sanctions on those U.S. companies which participate in the arms sales to Taiwan," read an article in the People's Daily Online, the official mouthpiece for the Communist Party of China.

The companies involved in the arms sale include The Boeing Co., Lockheed Martin Corp. (NYSE: LMT), United Technologies Corp. (NYSE: UTX), and Raytheon Co. (NYSE: RTN).

The least affected of that group would be Lockheed Martin, which hasn't done business with China since 2002. The sum of Lockheed's Beijing operations consists of one part-time receptionist. However, Boeing and United Technologies stand to lose much more.

United Technologies, through its Sikorsky Aircraft subsidiary, sells Otis elevators and Carrier brand heating and air-conditioning systems in China. There are 160 Boeing employees in China, and more than 5,800 employees at Boeing subsidiaries and joint ventures, while UTC employs about 16,000 people in China.

In September 2009, Boeing forecast China would need 3,770 new airplanes valued at $400 billion over the next 20 years. Over the past three years, Boeing has derived about 4% of its total revenue from China. Worse, the launch of the company's vaunted 787 Dreamliner has been obscured by repeated delays.

"If there is an embargo, it would hit Boeing very, very badly," Tom Ballantyne, chief correspondent for Orient Aviation Magazine, told the BBC. "It could be horrifying news for Boeing."

Of course, there is still a chance that Boeing and others will be able to emerge from the row relatively unscathed. Companies like Boeing are protected under the rules of the World Trade Organization (WTO), which prohibit open discrimination against foreign suppliers of civilian equipment. The United States would no doubt challenge in international court any measures taken by China to penalize its aerospace juggernaut.

Additionally, China needs Boeing's technology and support to build its own global aerospace competitor.

It's more likely that China will simply reallocate its aircraft purchases to favor Boeing's European rival Airbus SAS.

"I don't think they'd discard Boeing completely because they want to have something to wield over the Europeans," Peter K.N. Lok, Hong Kong's former director of civil aviation and a former board member of Air China and China Eastern, told The Financial Times. "What could happen is what they've done before - tilting the sales of aircraft slightly more in favor of Airbus."

Airbus has won slightly more orders from China than Boeing in recent years, but its aircraft make up just 36% of China's total commercial fleet, compared with 53% for Boeing.

As of today (Monday) Boeing had not been notified of any sanctions by the Chinese government.


UserPostedImage
Cheesey
15 years ago
Oh geez......does that mean we won't be able to get any more toys at "The Dollar Store" with LEAD in them for our kids???
UserPostedImage
Dulak
15 years ago
I heard china can bring up a 20 million man army and they are buddy buddy with russia. Not be a pretty picture if we came to blows ...
digsthepack
15 years ago
Amateur hour in Washington. Let's face it, Dulak....if that scenario reared its ugly head, the world gets lit up.
State Motto: "Wisconsin, our serial murderers eat their kill!"
Nonstopdrivel
15 years ago
People love to laugh at China's military, saying it doesn't have the logistical capabilities to prosecute a sustained campaign. My response is simple: I would rather have overwhelming numbers than superior technology. Watch the movie Zulu Dawn for a real-life example of how primitive technology with superior numbers overwhelmed superior technology and inferior numbers. I would far rather have 10,000 cheap bombers than 21 berexpensive stealth bombers (the current number we have in our inventory). One downed stealth bomber is a devastating loss. One downed cheap bomber and you keep flying.
UserPostedImage
Cheesey
15 years ago
You can NEVER trust communism.
That's something we SHOULD have learned by now.
UserPostedImage
Nonstopdrivel
15 years ago
I imagine there are quite a few countries that could justifiably say, after their bad experiences with the West, that you can never trust capitalism either. I think the real message to take away is that you can never trust human nature.
UserPostedImage
Wade
  • Wade
  • Veteran Member
15 years ago
Market capitalism's biggest strength: it increases wealth better than any alternative out there. (Well, other than anarchism, but we won't go there, out of politeness and the fact that all my syllabi still aren't done, so I can't linger. 🙂 )

Capitalism's biggest weakness: see strength.

Communism's [strike]greatest[/strike] only strength: it can say it's not capitalism.
And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God.
Romans 12:2 (NKJV)
zombieslayer
15 years ago
Well, we dug ourselves into this hole. I've been saying since I started blogging that we need to stop trading with China. Immediately.

Now it's come back to bite us in the ass. Just wait until they threaten us with the debt we owe them.
My man Donald Driver
UserPostedImage
(thanks to Pack93z for the pic)
2010 will be seen as the beginning of the new Packers dynasty. 🇹🇹 🇲🇲 🇦🇷
Fan Shout
Zero2Cool (11m) : Savion concussion ... not good.
packerfanoutwest (16h) : Aaron Rodgers’s first pass of first team period was picked off
Mucky Tundra (22h) : tbh I didn't hear of his passing
Zero2Cool (22h) : Cosby Show. Malcom Jamal Warner I think is real name
Mucky Tundra (22h) : I was thinking of Ozzy and Hulk
Mucky Tundra (22h) : Who's Theo?
Zero2Cool (22h) : How is Theo alliteration?
Mucky Tundra (23h) : Bad week for people whose names are alliterations
Zero2Cool (24-Jul) : Hulk Hogan gone too.
Zero2Cool (24-Jul) : Oh, it's toe injury
Zero2Cool (24-Jul) : Hope it's not serious. that would stink
dfosterf (24-Jul) : Sounds like an ankle not a knee for Fields
dfosterf (24-Jul) : Ya Flaccp on Browns
Zero2Cool (24-Jul) : Maybe Tyrod Taylor instead
Zero2Cool (24-Jul) : He's on Browns, right?
dfosterf (24-Jul) : They would probably go with Flacco is my guess if Fields out
dfosterf (24-Jul) : Fleece 'em again!
Zero2Cool (24-Jul) : Malik Willis might be someone Jets come after
packerfanoutwest (24-Jul) : Packers introduce 1923-inspired classic uniform, leather-look helmet
Zero2Cool (23-Jul) : Both LB Quay Walker and Rookie DB Micah Robinson have passed their physicals
Zero2Cool (23-Jul) : Happy to see site feels more snappy snappy
Zero2Cool (23-Jul) : No sir. I did not.
dfosterf (23-Jul) : You didn't get free childcare when you were at work?
wpr (23-Jul) : These guys make hundreds of thousands of dollars a year. Pay for their own childcare.
dfosterf (23-Jul) : 2nd issue. Number 1 issue was no gameday childcare. 1 of 3 teams not providing it
Zero2Cool (23-Jul) : Suppose if locker room is main issue, we sitting pretty
wpr (23-Jul) : I thought so Mucky. In those useless player polls GB always rates high overall. Locker is a part of it.
Mucky Tundra (23-Jul) : Wasn't the locker room just updated like 6 or 7 years ago?
Zero2Cool (23-Jul) : I have forum updated on different site. We'll see how this one goes before going to that
Zero2Cool (23-Jul) : Elgton Jenkins has a back injury, is expect to end contract dispute
wpr (23-Jul) : It's funny the PA complained about the locker room. It wasn't that long ago it was top shelf. Things change in a hurry.
wpr (23-Jul) : The site is much more better.
Zero2Cool (23-Jul) : NFLPA report said Packers lockerroom needed upgrade. Whining bout where you change?
Zero2Cool (23-Jul) : I saw that and thought it was kind of lame.
dfosterf (23-Jul) : Packers new locker room is pretty awesome. Great for morale, imo
Zero2Cool (23-Jul) : Shuffled things on the web server. Hope it makes it faster.
Zero2Cool (23-Jul) : Other times, it's turtle ass
Zero2Cool (23-Jul) : Sometimes it's snappy, like now.
beast (23-Jul) : I feel like it's loading at the top of the next minute, or something like that.
beast (23-Jul) : Also the thanks/heart takes FOREVER to load, and posting in the shout box takes three times FOREVER!
beast (23-Jul) : Thanks for saying something, I thought it was slow, but assumed it was on my end
beast (23-Jul) : Thanks for saying something, I thought it was slow, but assumed it was on my end
Zero2Cool (23-Jul) : Yeah, I noticed that too. Is it slow for PackerPeople.com too?
wpr (23-Jul) : I don't know what you IT guys call it but the page loading is very slow for me today.
Zero2Cool (23-Jul) : SSL might be settled now.
Zero2Cool (23-Jul) : Still working through SSL cert issues
wpr (23-Jul) : Glad to be back
Zero2Cool (23-Jul) : I think PH original finally working.
dfosterf (22-Jul) : Can tell you are having a fun day Kev
Zero2Cool (22-Jul) : Yep, I had to manually move them. It'll fix itself after more posts.
Please sign in to use Fan Shout
2025 Packers Schedule
Sunday, Sep 7 @ 3:25 PM
LIONS
Thursday, Sep 11 @ 7:15 PM
COMMANDERS
Sunday, Sep 21 @ 12:00 PM
Browns
Sunday, Sep 28 @ 7:20 PM
Cowboys
Sunday, Oct 12 @ 3:25 PM
BENGALS
Sunday, Oct 19 @ 3:25 PM
Cardinals
Sunday, Oct 26 @ 7:20 PM
Steelers
Sunday, Nov 2 @ 12:00 PM
PANTHERS
Monday, Nov 10 @ 7:15 PM
EAGLES
Sunday, Nov 16 @ 12:00 PM
Giants
Sunday, Nov 23 @ 12:00 PM
VIKINGS
Thursday, Nov 27 @ 12:00 PM
Lions
Sunday, Dec 7 @ 12:00 PM
BEARS
Sunday, Dec 14 @ 3:25 PM
Broncos
Friday, Dec 19 @ 11:00 PM
Bears
Friday, Dec 26 @ 11:00 PM
RAVENS
Saturday, Jan 3 @ 11:00 PM
Vikings
Recent Topics
2h / Green Bay Packers Talk / TheKanataThrilla

5h / Green Bay Packers Talk / dfosterf

11h / Around The NFL / beast

21h / Around The NFL / Zero2Cool

21h / Green Bay Packers Talk / Martha Careful

24-Jul / Around The NFL / beast

24-Jul / Green Bay Packers Talk / Mucky Tundra

23-Jul / Green Bay Packers Talk / beast

23-Jul / Green Bay Packers Talk / wpr

22-Jul / Random Babble / Zero2Cool

22-Jul / Green Bay Packers Talk / Zero2Cool

22-Jul / Green Bay Packers Talk / Zero2Cool

20-Jul / Green Bay Packers Talk / Mucky Tundra

20-Jul / Green Bay Packers Talk / Mucky Tundra

18-Jul / Green Bay Packers Talk / Zero2Cool

Headlines
Copyright © 2006 - 2025 PackersHome.com™. All Rights Reserved.