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China welcomes French president with Airbus order

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(Globalpost/GlobalPost)

China welcomed French President Francois Hollande on Thursday with an agreement to buy 60 Airbus planes as he became the first Western leader to pay court to Beijing's new communist supremo.

Hollande came to China in the company of 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 a memorandum of understanding on the Airbus order 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 behooves 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 that "all obstacles" to Chinese investment in France would be lifted as he vies to drum up anaemic rates of growth in the eurozone's number-two economy.

Xi told Hollande: "You are working actively to promote growth and increase competitiveness.

"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."

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.

The deal will include a new order for about 40 A320 aircraft, which would amount to about a year of work for the Tianjin plant, the source said.

The remainder of the agreement concerns 18 of 45 orders for 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.

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

The two men will have a more intimate lunch on Friday along with their glamorous wives, Valerie Trierweiler and Peng Liyuan.

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

Aides to Hollande hope for progress on another cornerstone of French industrial prowess, besides planes: civilian nuclear energy.

They expect that French nuclear giant Areva and the Chinese energy group CNNC will sign letters of intent on the construction of a nuclear waste treatment facility.

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

France is also pushing for greater access to the Chinese market for its cooked pork meat producers.

Along with the United States and EU partners, France meanwhile believes the Chinese yuan is seriously undervalued and the issue of currency rates is set to be raised during the trip, albeit without much hope of significant progress.

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http://www.globalpost.com/dispatch/news/afp/130425/china-welcomes-french-president-airbus-order