Boeing's Return to China: Navigating Aerospace Recovery in a New Trade Landscape

The resumption of Boeing's jet deliveries to China in June 2025 marks a pivotal moment for the aerospace sector, signaling easing geopolitical tensions and unlocking strategic opportunities for recovery. As Boeing CEO Kelly Ortberg prepares to send the first aircraft to Chinese airlines since the Trump-era trade disputes, this move underscores a recalibration of U.S.-China trade dynamics. For investors, this shift presents a compelling entry point into aerospace equities, particularly ahead of critical certification milestones for key models in the second half of 2025.

Trade Tensions Ease, Deliveries Resume

Boeing's decision to resume deliveries to China, despite lingering 125% tariffs, reflects a calculated bet on long-term market access over short-term costs. While the tariffs remain a headwind, the resumption aligns with China's growing aviation demand, projected to triple its services market to $61 billion by 2043. This aligns with Boeing's own forecast of a 9,740-aircraft fleet in China by 2043, with narrowbody jets—like the 737 Max—comprising 70% of that demand.

The geopolitical thaw is further evidenced by Boeing's ability to remarket aircraft previously held by Chinese lessors, suggesting a pragmatic approach to resolving disputes. Investors should note that while tariffs add costs, Boeing has historically absorbed similar burdens on components from Japan and Italy, often recouping expenses through export sales. This resilience hints at the company's ability to navigate trade friction without severe profit erosion.

Production Ramp-Up: A Catalyst for Cash Flow

Boeing's plan to increase 737 Max production to 47 jets per month by year-end is a linchpin for its recovery. Currently capped at 38/month due to FAA restrictions, the ramp-up hinges on resolving lingering quality issues, such as the door plug incident that delayed certification progress. With Max 7 and Max 10 variants targeting final certifications by late 2025, these models will fill critical gaps in Boeing's narrowbody lineup, directly competing with Airbus' A220 and A320neo families.

Meanwhile, the 787 program's production rate increase to seven per month—and eventual target of ten—signals confidence in demand recovery. The 777X's progress, with four test aircraft showing no major technical hurdles, adds further momentum. However, supply chain constraints, as highlighted by United Airlines CEO Scott Kirby, remain a wildcard. Boeing's 30% reduction in quality defects this year offers hope that operational discipline is improving.

Valuation Catalysts: Reduced Risk, Improved Liquidity

The resumption of deliveries directly addresses Boeing's liquidity challenges. Each aircraft delivered to China generates immediate cash flow, while reducing the backlog of 126 unfilled orders. This improves Boeing's balance sheet and reduces geopolitical risk premiums embedded in its valuation.

Investors should also monitor Boeing's progress in securing FAA approval for higher production rates. A successful ramp-up to 47/month by year-end would validate Boeing's operational turnaround, potentially unlocking a re-rating in its stock. Current multiples—trading at ~8x forward EV/EBITDA—remain depressed relative to its growth trajectory and market share prospects.

Competitive Positioning: Boeing vs. Airbus

While Airbus has historically outperformed Boeing in China, Boeing's return creates a competitive dynamic that could pressure Airbus to adjust pricing or terms. The certification of Max variants by late 2025 will be critical here, as their fuel efficiency and range could sway Chinese carriers toward Boeing. Additionally, Boeing's broader product portfolio—spanning narrowbodies to the 777X—gives it an edge in addressing China's diverse fleet needs.

Investment Thesis: Positioning for Q4 Milestones

The fourth quarter of 2025 will be pivotal for Boeing investors. Certification of the Max 7 and Max 10, alongside FAA approval for the 47/month production rate, could act as catalysts for a stock price rebound. Meanwhile, the resumption of Chinese deliveries provides a steady cash flow tailwind.

For investors seeking exposure:
1. Buy Boeing (BA): Target entry ahead of Q4 milestones, with a 12-month price target of $280–$320, assuming successful certifications and production ramp-up.
2. Aerospace ETFs: Consider the iShares U.S. Aerospace & Defense ETF (IAF) or the Global X Space Exploration & Tech ETF (ARAK) for diversified exposure to sector recovery.

Conclusion

Boeing's re-engagement with China is more than a trade deal—it's a strategic pivot toward capturing Asia's aviation boom while mitigating geopolitical risks. With production ramp-ups, certification milestones, and a resilient supply chain, Boeing is poised to reclaim its position as a global aerospace leader. For investors, the combination of reduced risks, improving cash flow, and competitive advantages makes Boeing a compelling bet as the sector emerges from post-pandemic turbulence.

Position for Q4's certification news—this could be the ignition point for Boeing's recovery.