China Places $10 Billion Airbus Order | Business| Economy and finance news from a German perspective | DW | 05.12.2005
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China Places $10 Billion Airbus Order

Beijing placed a huge order for Airbus planes on the heels of a deal that could see some Airbus manufacturing move to China.


Airbus A320 is taking off in China

Chinese Prime Minister Wen Jiabao signed a deal to buy 150 Airbus planes after a meeting in Paris with his French counterpart, Dominique de Villepin.

Wen ordered the airliners, valued at about $10 billion (8.5 billion euros), during a visit to Paris on Monday. The deal came a day after an agreement that could see some Airbus aircraft built in China.

Wen Jiabao in Frankreich Jacques Chirac

French President Chirac welcomed Chinese Prime Minister Wen Jiabao

China is buying 150 A320 aircraft, the mid-range, 150-seat work horse of the Airbus fleet.

Rivalry with Boeing

Airbus is 80-percent owned by the European Aeronautic, Defence and Space company (EADS) and 20 percent by Britain's BAE Systems. It is very keen to improve its share of the civil aviation market in China, one of the world's fastest growing regions.

It currently has one-third of the market, with its US rival Boeing holding some 60 percent. Boeing secured a Chinese deal for 70 of its mid-range 737s last month.

Airbus and Boeing forecast China will be buying between 1,800 and 2,700 planes over the next two decades to keep up with the surge in air travel that is expected to make the country the second-biggest customer for aircraft after the United States.

Looking to manufacture

Airbus A320 Lufthansa

Lufthansa uses this 'work horse' Airbus A320 for pilot training

China, though, is not content to merely be on the buying end of the industry -- it also wants major Western companies to set up shop on its soil, with their technology, and show Chinese workers how to make their complex products.

To that end, on Sunday Wen oversaw the signing of a memorandum of understanding between Airbus chief Gustav Humbert and the National Development and Reform Commission of China as he kicked off his European tour with a visit to Airbus's headquarters in Toulouse, southwestern France.

The document called for "a further upgrade of the cooperation" between China's civil aviation industry and Airbus, and included the "possibility" of building an assembly plant for mid-range Airbus planes in China. So far, only France and Germany have such plants.

'Two-way street'

Humbert said the memorandum set the scene for the expected plane order on Monday, saying that was "the other part of this two-way street: to have more contracts, to have more aircraft flying in China."

Wen led a 70-strong delegation including his foreign and culture ministers and several Chinese business leaders to France on Monday.

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