Time for plane speaking

It’s livid with the EU over carbon tax. So why is Beijing buying Airbus planes?

Time for plane speaking

“We need to talk” Merkel tells Wen

Remember Alec Baldwin being ‘deplaned’ last December, when he refused to switch off his iPad? The actor was escorted off the aircraft after a stormy altercation with a flight attendant from American Airlines.

This week China had its own high-profile in-flight bust-up, although on this occasion all the sympathy was with the cabin crew. The incident took place on a China Southern flight and the culprits were a drunken military official and his equally inebriated wife. Unable to stow their hand luggage, the two first berated the crew member (“Aren’t you just a flight attendant? I know your boss!” was one threat) before she was scratched and punched. She later posted images of her bruises on Sina Weibo.

Soon enough, news of the incident stirred an online storm, especially when the man’s wife seemed to have taken the blame in a local probe. The netizen response was furious enough for the story to find its way into the mainstream press. The military official – a political commissar from Guangdong – has now been suspended.

But another aviation row – this one of a more geopolitical kind – has been festering for a while between Beijing and Brussels. The disagrement is over the EU’s new carbon tax on aviation (see WiC155 for more details on how it works), which the Chinese government sees as unfair and a slight to its sovereignty. As a result it has ordered the nation’s airlines not to pay the levy. Things look like coming to a head next April when airlines will start facing EU fines if they fail to comply.

Meanwhile the Chinese have been searching for alternative means to force Brussels into a compromise. According to media reports earlier this year, Chinese airlines were also told to hold back on ordering Airbus planes or switch to buying Boeings instead as a means of punishing the Europeans.

That made Angela Merkel’s visit to Beijing all the more intriguing last week. During the German leader’s trip, the Chinese signed an agreement to buy 50 Airbus aircraft for $3.5 billion. That raises the question: with the carbon tax issue still not settled, why would Beijing throw away one of its strongest cards? Starving Airbus of orders looked like one of China’s most powerful negotiating ploys.

Either China’s leaders are playing an inexplicably poor hand of political poker, or some sort of compromise is afoot. So it was perhaps important that Merkel also made a statement in Beijing about solving Sino-European disputes through talks (although in this case, the German Chancellor mentioned a potential anti-dumping case about solar panels). Interestingly, the Financial Times thought that this was putting Merkel on a “collision course” with the EU trade commissioner Karel De Gucht. It indicated that Europe’s most powerful leader was going over the head of the EU bureaucracy.

The carbon tax didn’t get a specific mention during Merkel’s visit. But the combination of the Airbus order and her emphasis on dispute resolution may suggest that she is ready to push for talks to solve this rancorous problem too (serious enough that The Economist magazine has forecast a trade war with the EU next year). If that’s right, the Chinese will be pushing hard for the carbon tax to be levied on airlines only when they fly through EU airspace, and not in other sovereign jurisdictions.

Presumably if the EU refuses to give ground, the Chinese will find a way of cancelling their Airbus order at a later date…

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