Boeing (BA) raised its demand outlook for China, including for freight, which could bode well for the country's e-commerce retailers such as Alibaba (BABA), JD.com (JD) and Pinduoduo (PDD).
- Boeing said Wednesday that China will likely need more than 8,000 new commercial planes by 2042 to meet growing travel demand and e-commerce needs. aircraft maker is betting on 190 cargo plane deliveries to meet the growth of e-commerce and express transportation, which could be a good sign for retailers such as Alibaba, JD.com and Pinduoduo.
- China' The domestic travel market could become the largest in the world by 2042 and account for up to 20% of global air travel demand.
Boeing is banking on Chinese freight, good news for e-commerce players ?
The aircraft manufacturer said that China The country will likely need more than 8,000 new commercial planes over the next two decades to meet growing demand for domestic travel. Of that total, about 190 would be commercial cargo planes that Boeing is betting on due to “growth in e-commerce and express transportation.”
E-commerce sales in China could exceed $3.5 trillion next year and nearly $4 trillion by 2027, according to projections from the International Trade Administration and Insider Intelligence, respectively. By 2026, online sales could account for the majority of retail sales in China.
Some of China's largest e-commerce retailers, including Alibaba, JD.com and Pinduoduo, could benefit as they make most of their revenue domestically. Alibaba, China's largest e-commerce retailer which operates popular shopping platforms Taobao and Tmall, accounts for just over half of the country's online sales and derives about 70% of its revenue from China.
China on the rise Demand of travel
China could account for up to 20 % of global aircraft demand. In addition to new jets, China will need more than 400,000 newly trained aviation personnel, including 134,000 pilots, to meet this demand, Boeing said in a press release.
“China’s domestic air traffic has already exceeded pre-pandemic levels and international traffic is steadily recovering,” he said. said Darren Hulst, Boeing vice president of commercial marketing. “As China's economy and traffic continue to grow, Boeing's full line of commercial aircraft will play a key role in helping meet this growth in a sustainable and cost-effective manner. »
Shares of Boeing and Alibaba were flat as of 1 p.m. ET Wednesday. Shares of the aircraft maker are up 7% year to date, while shares of China's largest e-commerce retailer are down 1% over the same period.
A glimmer of hope for L' Chinese economy
The outlook Boeing companies also offer a glimmer of hope for the Chinese economy amid slowing growth.
China's economy has recently faced headwinds, including a housing market crash, growing debt, high youth unemployment, a slowdown in global trade and a looming demographic crisis. This stands in stark contrast to the decades of meteoric economic growth that propelled China to become a global manufacturing and economic powerhouse.
Investors have become more pessimistic about the country's prospects. That has led global investors to reallocate their money from emerging markets – of which China accounts for the largest share – into U.S. stocks, according to Bank of America's latest fund manager survey.
A series of American companies have also decided to relocate production from China to our country, as part of an approach called “friendshoring”. Even Apple, which has long made its iPhones in China and gets about a fifth of its revenue from that country, is now making some of its smartphones in India for the first time and decided late last year to move MacBook production in Vietnam.
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