Red Falcon, an aerobatic team of Chinese People's Liberation Army (PLA) Air Force, rehearses ahead of the China International Aviation and Aerospace Exhibition, or Zhuhai Airshow in Zhuhai, Guangdong province, China October 30, 2018.
Trade frictions with the United States and accusations of industrial espionage are set to cast a cloud over China's largest aerospace meeting this week, as suppliers consider what the country's slowing economy could mean for booming jet demand.
The biennial Airshow China, to be held in the coastal city of Zhuhai during Nov 6-11, is traditionally an event for Beijing to parade its growing aviation prowess in front of aerospace executives, diplomats and arms buyers from over 40 countries.
But analysts say they are not expecting many headline announcements or big deals this year as a bruising trade war between Beijing and Washington and a slowing Chinese economy cause companies to be cautious.
While the tarmac will be filled with planes from the likes of Airbus SA and Embraer, the main symbol of China's own commercial aviation ambitions, the Commercial Aircraft Corp of China's (COMAC) C919 narrowbody jet, will not be there. A senior executive said it was undergoing test flights.
Boeing Co, which is opening a 737 completion plant in China, will not display any of its planes but only models at its exhibition stand.
"We're not expecting a big turnout this year," said Chinese aviation expert Li Xiaojin. "As you know the Chinese economy is not doing great this year, so companies that would normally send 10 people will only send five instead."
China has become a key hunting ground for foreign firms to do deals as its airlines have expanded fleets to keep up with surging travel demand, putting the country in a position to overtake the United States as the world's top aviation market in the next decade.
But China's economic growth has weakened to its slowest pace since the financial crisis and its relations with other countries have been tested by Beijing's ambitions to grow its own domestic champions in industries such as aviation.
And while U.S.-made aircraft have so far escaped Beijing's tariffs, analysts said they were still waiting to see what the trade war would spell for U.S. companies such as Boeing, Honeywell and Gulfstream, who face fierce competition in China from the likes of Airbus and other suppliers.
The United States exported $16.3 billion of civilian aircraft to China in 2017, the biggest category of goods it exported to China, according to a paper published by the Federal Reserve Bank of St. Louis.
"It is not unlikely that China might strategically steer future aircraft purchases to Airbus rather than Boeing," said Marc Szepan, a China aviation expert at the University of Oxford and former industry executive."
"In addition, there might be a re-evaluation of the relative attractiveness of industrial partners for China's future aircraft programmes such as the CR929 which might favour European over U.S. component and structures suppliers."
A senior Trump administration official on Friday dismissed as untrue a media report that U.S. President Donald Trump was readying a possible trade deal with China, a CNBC reporter said in a post on Twitter."There is a long way to go," on negotiations, the unnamed official told CNBC's Eamon Javers, according to his tweet.NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.— Eamon Javers (@EamonJavers) 2 Kasım 2018 Earlier on Friday, Bloomberg, citing people familiar with the matter, reported that Trump wanted to reach an agreement with Chinese President Xi Jinping and had asked key U.S. officials to begin drafting potential terms for a deal.Reuters could not immediately confirm either report, and White House officials did not immediately reply to a request for comment on the Bloomberg report.Still, world share markets soared on Friday amid growing hopes that the world's two largest economies are starting to repair their badly damaged trade relations following a conversation held by Trump and Xi on Thursday.The two spoke by telephone in what both sides described as an positive call, their first known direct discussion in several months. Trump, in a tweet after their talk, said he planned for the two leaders to meet at the G20 summit in Argentina later this month.Neither leader gave any details about possible progress.The Bloomberg News report said it was unclear if Trump was easing up on demands that China has resisted, and it cited one person as saying intellectual property theft was a sticking point on a possible deal.Hours after the call, the U.S. Justice Department accused another Chinese company of unfair practices, part of an across-the-board pressure campaign by the Trump administration targeting China.Trump administration officials have said U.S.-China trade talks cannot resume until Beijing outlines specific actions it would take to meet U.S. demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.The two countries have imposed tariffs on hundreds of billions of dollars of each other's goods and Trump has threatened to extend the tariffs to the remainder of China's $500 billion-plus exports to the United States if the disputes cannot be resolved. Tesla seeks to reduce tariff impact for Model 3 by making cars in ChinaChina promises Pakistan support as Khan tells of 'very difficult' economyChina says Xi-Trump call was quite positive
US official denies report of possible China trade deal
Tesla Inc said on Friday that is developing plans to start producing about 3,000 Model 3 vehicles per week in Shanghai in the initial phase of its Gigafactory 3 to reduce the impact of tariffs.The company also said in a filing that Model S and Model X sales in China have been, and will likely continue to be, hurt by recently increased tariffs imposed by the Chinese government on U.S.-manufactured vehicles.The electric carmaker said it continues to push to increase Model 3 production to about 10,000 units per week.Tesla also expects to continue to increase its Model 3 production rate to about 7,000 units per week at its Fremont, California factory.China is the largest market for electric vehicles, and most forecasters predict that electric vehicle sales in the country will accelerate rapidly as government regulation drives toward a goal of 100-percent electric vehicles by 2030. US oil sanctions on Iran threaten 'paralyzed' economyChina promises Pakistan support as Khan tells of 'very difficult' economyChina says Xi-Trump call was quite positive
Tesla seeks to reduce tariff impact for Model 3 by making cars in China
China promised to support Pakistan's economy on Friday as new Pakistani Prime Minister Imran Khan told of his country's "very difficult" economic situation amid a burgeoning financial crisis.Pakistan's foreign reserves have plunged 42 percent since the start of the year and now stand at about $8 billion, or less than two months of import cover.Last month, Pakistan received a $6 billion rescue package from Saudi Arabia, but officials say it is not enough and the country still plans to seek a bailout from the International Monetary Fund (IMF) to avert a balance of payments crisis.It would be Pakistan's 13th rescue package from the multilateral lender since the late 1980s.Pakistan: Talks falter, more Aasia Bibi protests loomMeeting Chinese President Xi Jinping in Beijing's Great Hall of the People, Khan said he'd come to China to learn."My party has only been in power for two months. Unfortunately we have inherited a very difficult economic situation," Khan said."Countries go in cycles. They have their high points, they have their low points. Unfortunately, our country is going through a low point at the moment with two very big deficits, a fiscal deficit and a current account deficit. And so we, as I’ve said, have come to learn."Xi told Khan that he highly valued the two country's relations, reaffirming they were "all-weather" friends.Video: Imran Khan meets China's Xi in first official visit to Beijing"I attach great importance to China-Pakistan relations and am willing to work together with the prime minister to strengthen the China-Pakistan all-weather strategic partnership and build a new era of China-Pakistan destiny," Xi said.Neither man mentioned any economic aid in comments made in front of reporters.However, the Chinese government's top diplomat, State Councillor Wang Yi, told Pakistani Foreign Minister Shah Mahmood Qureshi in a separate meeting that China would not let Pakistan down."The Chinese side will continue to provide support and help to the best of its ability for Pakistan's economic and social development and national construction," China's Foreign Ministry cited Wang as saying, without giving details.Khan will meet Chinese Premier Li Keqiang on Saturday, when the two countries are expected to sign a series of agreements.Though China is Pakistan's closest ally, Khan's newly elected government has sought to re-think the two countries' signature project, the $60 billion China-Pakistan Economic Corridor (CPEC), which Beijing touts as the flagship infrastructure programme in its vast Belt and Road Initiative.Pakistan has sought to amend CPEC to put greater emphasis on projects that focus on social development, rather than purely on infrastructure.After visiting Beijing, Khan is set to be a key note speaker at a major import fair in Shanghai, an event being touted by China as an opportunity to show the world the country welcomes foreign companies and their products.Khan is in China amid unrest at home over the acquittal of a Pakistani Christian woman on death row for blasphemy, which has prompted an ultra-Islamist party to block roads in protest. 
China promises Pakistan support as Khan tells of 'very difficult' economy
Show Of Strength
So far, Beijing has avoided showing its hand in either direction as deals by Chinese leasing firms to buy foreign aircraft are either pushed back or kept private.
Recent U.S. allegations in court filings that Chinese intelligence attempted to steal information on a French-U.S. turbofan engine developed for commercial jetliners - a clear reference to the Safran-General Electric LEAP - could further fray relations, analysts said.
Beijing has also criticised the U.S. decision not to send senior officials to a Shanghai import expo that takes place in the same week as the airshow and counts as one of China's most important foreign policy events for the year.
"Right now the political winds are quite concerning," said aerospace analyst Richard Aboulafia of the Teal Group.
U.S. President Donald Trump said on Friday that he will likely make a deal with China on trade, adding that a lot of progress had been made to resolve the two countries' differences but warning that he still may impose more tariffs on Chinese goods.
China is expected to put on a show of strength in space and defence, with self-developed fighter training FTC-2000 aircraft, a historically high number of weapons as well as its latest unmanned aerial vehicles among the kit on display.
China's air force said on Friday that a number of Chengdu J-20 stealth fighters would perform demo flights, after having debuted at the show two years ago with a 60-second flypast.
Kelvin Wong, senior Asia Pacific defence technology expert at IHS Markit, said this would be part of the deliberate messaging often associated with the closely watched show.
"It appears the PLA (People's Liberation Army) is definitely showcasing its growing confidence in the latest J-20 combat aircraft," said Wong.
Chinese chipmaker Fujian Jinhua Integrated Circuit Co Ltd said on Saturday it has not stolen any technology, after the U.S. Justice Department indicted the state-back firm for stealing trade secrets.The U.S. Justice Department on Thursday indicted Fujian Jinhua, Taiwan's United Microelectronics Corp and three individuals for conspiring to steal trade secrets from U.S. semiconductor company Micron Technology Inc relating to its research and development of memory storage devices.Earlier in the week, U.S. President Donald Trump's administration took action to cut Fujian Jinhua off from U.S. suppliers.Trump says 'I think we'll make a deal with China' on tradeChina says more talks needed on economic aid for Pakistan"Behaviour to steal another firm's technology does not exist," Fujian Jinhua said in a statement posted on its official website."Micron regards the development of Fujian Jinhua as a threat and adopts various means to hamper and destroy the development of Fujian Jinhua," the statement said.The company "always attaches great importance to the protection of intellectual property rights," Fujian Jinhua added.The move to block Fujian Jinhua escalated what until now had been a business dispute into the realm of an international trade conflict between the United States and China.The world's top two economies are already waging a tariff war over their trade disputes, with U.S. duties in place on $250 billion worth of Chinese goods and Chinese duties on $110 billion of U.S. goods.The U.S. moves could seriously damage the ambitions of Fujian Jinhua, a firm of strategic importance to China.US official denies report of possible China trade dealTesla seeks to reduce tariff impact for Model 3 by making cars in ChinaChina promises Pakistan support as Khan tells of 'very difficult' economy
Chinese chip firm Fujian Jinhua denies stealing IP from Micron
Australia's trade minister will travel to China on Sunday, in a sign that political tensions between the two countries may be easing.Simon Birmingham, the first senior Australian government official to visit China in a year, will attend the China International Import Expo, or CIIE, seen as an attempt by Beijing to allay foreign concern about its trade practices.Relations between Australia and the world's No.2 economy have been at low ebb over accusations of China's influence in Australia's media, universities and politics and its use of loans to build leverage over poorer South Pacific island nations.Australia to help PNG build a navy base to fend-off ChinaIn August, Australia banned Huawei Technologies Co Ltd from supplying equipment for a 5G mobile network citing national security risks, a move the Chinese telecoms gear maker criticised as being "politically motivated".China, however, remains Australia's top goods and services trading partner, accounting for 24 percent, or A$183.4 billion ($132 billion), of total trade in 2017, according to data from the Department of Foreign Affairs and Trade.Birmingham said in a statement on Saturday that Australia's "high-level" delegation, which includes representation from state and territory governments, "reflects our ongoing commitment to our relationship with China".TPP to take effect following Australia’s ratificationThe minister's press office said the hope is that Birmingham will meet with his Chinese counterpart, Commerce Minister Zhong Shan while in Shanghai.Later in the week, Birmingham will visit Hong Kong where he is expected to meet with Secretary for Commerce and Economic Development Edward Yau, "to move forward negotiations on the Australia-Hong Kong Free Trade Agreement".Chinese President Xi Jinping is expected to open the CIIE with a speech on Monday. No officials from the United States, China's top trading partner, will attend, although leaders from 18 countries and thousands of foreign companies will be present.Australia must assess security threats in 5G network: spy chief
Australia trade minister to visit China in sign of thaw
U.S. President Donald Trump said on Friday that he will likely make a deal with China on trade, adding that a lot of progress had been made to resolve the two countries' differences but warning that he still may impose more tariffs on Chinese goods."China very much wants to make a deal," Trump told reporters in Washington just hours after his top economic adviser expressed caution about talk of a possible U.S.-China trade agreement."We've had a very good discussions with China, we're getting much closer to doing something," Trump said before departing the White House for a campaign event."I spoke with President Xi (Jinping) yesterday. They very much want to make a deal," Trump said.US official denies report of possible China trade deal"I think we'll make a deal with China, and I think it will be a very fair deal for everybody, but it will be a good deal for the United States."Trump said he will discuss trade with Xi when the two meet for dinner on the sidelines of the G20 leaders' summit at the end of November in Buenos Aires, Argentina.His administration has demanded that Beijing make sweeping changes to its policies on intellectual property protections, technology transfers, industrial subsidies and domestic market access, along with steps to reduce a $375 billion U.S. goods trade deficit with China.Trump said a deal with China would also be good for Beijing.Russia and Cuba urge US to rethink exit from nuclear arms pact"If we can open up China and make it fair, for the first time ever -- this should have done years ago by other presidents but it wasn't -- I am very much willing to do it. But China very much wants to make a deal," he said.Trump's comments came a day after a phone call with Xi that he described as "very good.".The president's remarks helped U.S. stocks to trim their losses on a day that started with market optimism over a Bloomberg report quoting unnamed sources as saying that Trump had ordered his cabinet to draw up terms for a China trade deal.But by midday, shares had turned negative, weighed down by Apple Inc.'s disappointing earnings forecast and comments from White House economic adviser Larry Kudlow that he was less optimistic than previously about a deal between Washington and Beijing.Trump supporters’ election test: a movement or a momentKudlow, speaking on CNBC, contradicted the Bloomberg report and added: "There's no mass movement, there's no huge thing. We're not on the cusp of a deal."One of China's vice commerce ministers Wang Bingnan said on Saturday the country is willing to resolve trade issues with the United States through mutually respectful talks and on an equal footing, similar to past comments from Beijing.Trump administration officials have said U.S.-China trade talks cannot resume until Beijing outlines specific actions it would take to meet U.S. demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.Trump said that if a deal is not made with China, he could impose tariffs on another $267 billion in Chinese imports into the United States, adding that China's economy had "been hit very hard" by previous U.S. tariffs.The United States has imposed tariffs on $250 billion worth of Chinese goods so far, while China has retaliated with $110 billion worth of tariffs on U.S. goods.The Trump administration also has taken action to hit the Chinese semiconductor industry, indicting two companies accused of stealing trade secrets and banning U.S. software and equipment exports to one of them. 
Trump says 'I think we'll make a deal with China' on trade