Plane, car deals mark Chinese state visit to France

Wed Mar 26, 2014 3:01pm EDT
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By Andrew Callus and Elizabeth Pineau

PARIS (Reuters) - China's President Xi Jinping and French counterpart Francois Hollande oversaw the signing of a series of industrial co-operation deals and multi-billion dollar aircraft sales in Paris on Wednesday, the business highlights of a Chinese state visit.

Much of what was signed had only ceremonial significance.

However, Hollande's government, bruised by losses in last weekend's municipal elections and deeply unpopular for its failure to tackle record unemployment, hopes to encourage more deals and harness France's patchy economic recovery more tightly to the growth of the world's second-largest economy.

"Eighteen billion euros' worth of contracts. That means jobs, growth, and above all the prospect of more to come in the years ahead," Hollande said.

At the signing ceremony at the president's residence, the Elysee Palace, Dongfeng (0489.HK: Quote) and PSA Peugeot Citroen (PEUP.PA: Quote), signed a deal in which the Chinese car maker will buy a 14 percent stake as part of a recapitalization deal for the struggling French carmaker.

Peugeot and Dongfeng plan to extend an existing joint venture and Chinese production to enter new Southeast Asian markets and to jointly develop new vehicles and technologies.

At the same ceremony, and flanked by their respective delegations in a room decorated throughout in red, the two men also watched China sign a new 10-year agreement allowing Airbus (AIR.PA: Quote) to extend a deal to assemble A320 planes in Tianjin to 2025.

China also signed up to buy 70 new aircraft including 27 Airbus A330s which had been previously ordered but frozen because of a trade dispute - all worth $10.2 billion at list prices, and to co-produce French EC-175 helicopters with Airbus and co-operate on turbo-prop engines with France's Safran (SAF.PA: Quote). Aerospace accounts for 29 percent of French exports to China.   Continued...

Fabrice Bregier (R), Airbus President and Chief Executive Officer, and Li Hai, President of CASC shake hands at a signing ceremony at the Elysee Palace in Paris March 26, 2014. REUTERS/Benoit Tessier