China inks deal with Airbus for 50 aircraft

China signed an agreement with Germany for 50 Airbus planes worth up to USD$4 billion during Chancellor Angela Merkel's visit to Beijing on Thursday.

It was the first significant order since a dispute between Beijing and Europe over emissions trading. The dispute had interrupted earlier deals worth up to USD$14 billion.

China's ICBC Leasing and Airbus signed the deal for 50 Airbus A320-family planes and another agreement about Airbus plane assembling in China, state news agency Xinhua said.

Xinhua put the value of the deal at USD$3.5 billion but at published list prices, the deal could be worth more than USD$4 billion.

China regularly orders aircraft in large batches timed to coincide with high-level contacts with US or European leaders, but the deal fell short of European expectations of a 100-plane order circulating on the eve of Merkel's trip.

Airbus insisted it was satisfied with the deal.

"In the current economic environment every deal is a good deal. What counts is: aviation is and remains a growth industry, with Asia and China being significant drivers," a company spokesman said.

Officials said Airbus and Chinese authorities had also signed a USD$1.6 billion framework deal to extend an Airbus A320 assembly line at Tianjin near Beijing.

Merkel is due to visit Tianjin where Airbus has just finished assembling the 100th passenger jet from parts shipped from Europe, under an agreement that runs out in 2016.

Short-range aircraft such as the A320 have been spared any fallout from a recent row between China and the European Union over airline emissions as China seeks to meet domestic demand and promote skills required for its own fledgling aircraft industry.

China continues however to block the purchase of about 35 larger Airbus aircraft to protest against EU plans to enforce a carbon reduction scheme that opposing nations deem unfair.

Airbus estimates China will need 4,270 new passenger and cargo aircraft in the next 20 years, dominated by narrow-body aircraft like the A320 or its rival Boeing's 737.

China aims to enter the jet market's largest segment with its Comac C919 airliner from 2016, but is expected to remain a significant importer of Western aircraft for decades.

(Reuters)