China walks political tightrope for 160-plane deal with Airbus

Airbus clinched an agreement to sell 160 planes to China on Monday after high-level political intervention rescued Beijing talks that had become stuck on a Chinese offer to buy just 30 jets, French officials said.

During a state visit to China by French President Nicolas Sarkozy, the sale of 30 planes, one-fifth the number sold by Sarkozy's predecessor, Jacques Chirac, would have been seen as a flop.

In Beijing, Sarkozy and Chinese President Hu Jintao looked on as Airbus and China's state buying agency signed a "framework" deal that could lead to an order for Airbus jets worth $16.7 billion.

The framework deal covered 150 planes, while a separate deal involved a further 10 Airbus A330-200s for China Southern airline.

Aides said French companies had negotiated deals worth 20 billion euros ($29.72 billion), a record for a state visit from France.

The figure of 160 planes is a sensitive matter to both China and visiting leaders who vie to oversee the best deals.

China has twice bought 150 planes from Airbus or Boeing to mark similar visits by Chirac, a bitter rival to Sarkozy, and President Bush.

Airbus is owned by the multinational European Aeronautic Defense & Space Co. (EADS) and based in France. Its main competitor is U.S.-based Boeing.

Until now, China has been careful to split purchases evenly between the two industrial giants, whose fortunes are often linked to the status of national economic interests in China.

Framework deals are put together by China's state buying agency and become firm only when allotted to individual airlines.

EADS Chief Executive Louis Gallois said the main provisional order was expected to result in firm entries on the Airbus order book before the end of the year.

The China Southern deal is already firm, meaning Airbus has received a deposit.


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