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China welcomes French president with Airbus deal

Friday, April 26, 2013, 08:15 GMT+7

BEIJING – China welcomed French President Francois Hollande on Thursday with a deal potentially worth billions for 60 Airbus planes as he became the first Western leader to pay court to Beijing's new supremo.

Hollande came to China accompanied by a planeload of business executives, earning a brief respite from economic woes at home and the aftermath of a corruption scandal that has forced his budget minister to resign.

He was the first Western leader to be received in Beijing by China's new president, Xi Jinping, who accorded military honours to his fellow head of state on an inspection of People's Liberation Army personnel in Tiananmen Square.

In the Great Hall of the People adjoining the square, the leaders attended a signing ceremony for an outline agreement on the Airbus deal as Hollande pressed Xi to help rebalance China's trade surplus over France.

France accounts for just 1.3 percent of China's foreign trade compared with around five percent for Germany, and a trade deficit with China of 26 billion euros ($34 billion) last year is seen in Paris as unsustainable.

"Today there is a trade imbalance and it behoves us to fix it, not to reduce our investments and our exports but to increase them," Hollande said while exchanging greetings with Xi in front of reporters.

The French president later vowed to remove obstacles to Chinese investment in France as he vies to drum up anaemic rates of growth in the eurozone's number-two economy.

"We are ready to welcome more Chinese investment in France," he said, insisting that protectionism was not the answer to redressing the trade deficit.

Xi told Hollande that he welcomed efforts to facilitate investment by Chinese firms in France, which lags far behind the same investment in Germany.

"I look forward to the future of our global strategic partnership and look forward to working with you to make our bilateral relationship closer, healthier and more vibrant," the Communist Party chief said.

Hollande later told a press conference that during his talks with Chinese leaders he also raised the issue of Tibet and human rights, with all topics discussed in a "frank and respectful manner".

He said such discussions were not the only purpose of his trip, and that they wanted to talk about political partnership, the Chinese presence in Europe and economic growth.

The aircraft agreement was signed by Airbus and a state-controlled holding company that imports planes into China. It includes a new order for 42 medium-range A320 aircraft, Airbus said.

The rest of the agreement concerns 18 of 45 orders for long-haul A330 aircraft that were frozen last year by Beijing in response to the European Union's plans to impose an airline carbon tax.

All airlines including Chinese carriers were supposed to begin receiving bills for the scheme at the start of this year but in March the EU deferred the plan until April 2014.

China's pact with Airbus could be worth at least $7.7 billion at list prices, although customers generally negotiate discounts from plane manufacturers.

A significant portion of the planes will be manufactured in China at an Airbus factory in Tianjin, 150 kilometres (95 miles) from the capital, an industry source told AFP on condition on anonymity.

France also secured progress on another cornerstone of its industrial prowess, nuclear energy, with China signing a letter of intent on the construction of a nuclear waste treatment facility by the Areva company.

Carmaker Renault meanwhile hopes to advance negotiations on a proposed factory at Wuhan in central China that would produce 150,000 vehicles per year.

Hollande was due to have three meetings with Xi, including a state banquet on Thursday.

The two men will have a more intimate lunch on Friday along with their glamorous partners, Hollande's girlfriend Valerie Trierweiler and Xi's wife Peng Liyuan.

The French president will then travel to China's commercial hub of Shanghai before heading home late Friday.


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