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France signs €18 billion in deals on Chinese leader's state visit

© Photo: AFP

Text by FRANCE 24

Latest update : 2014-03-27

China’s President Xi Jinping and French President François Hollande presided over the signing of €18 billion in contracts, industrial co-operation deals and aircraft sales Wednesday in Paris on Xi's state visit to France.

“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.

Hollande’s government, hit by losses in last weekend’s municipal elections and deeply unpopular for its failure to tackle record unemployment, hopes to link France’s economic recovery to the stronger growth seen in the world’s second-largest economy.

At a signing ceremony at the Elysée Palace, Chinese carmaker Dongfeng and PSA Peugeot Citroen formalised a deal agreed last month for the Chinese firm to buy a 14 percent stake as part of a recapitalisation plan for the struggling French automaker.

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

Flanked by their respective delegations in a room decorated throughout in red, the two leaders also watched as Chinese delegates signed a new 10-year agreement allowing Airbus 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 worth $10.2 billion at list prices, that had been ordered last year but which stalled because of a trade dispute. Beijing also agreed to co-produce French EC-175 helicopters along with Airbus and to co-operate on manufacturing turbo-prop engines with France’s Safran.

The aerospace industry accounts for 29 percent of French exports to China.

'Picture not so rosy close up'

The other highlights were a set of nuclear energy and liquefied natural gas agreements involving French national utility EDF, nuclear engineering firm Areva, China General Nuclear, Total energy and CNOOC – all of which are already working on partnerships in China.

France trails far behind neighbouring Germany – also on Xi’s European itinerary this trip – in trade with China, accounting for just 1.2 percent of Chinese imports compared with Germany's 4.8 percent.

Foreign direct investment (FDI) between France and China is modest, but France is behind on that score too. French investment in China totalled €16.7 billion at the end of 2012, just 1.83 percent of China’s total FDI but still dwarfing the €4.2 billion of Chinese investment in France, which is just 0.9 percent of its FDI total, according to figures from the Bank of France.

Dongfeng’s Peugeot stake purchase alone, at €800 million, is equivalent to a fifth of that FDI.

Xi’s visit marks 50 years of diplomatic relations between the two countries. China has lauded France's recognition of the People’s Republic of China in 1964 in the face of anti-Communist hostility elsewhere in the West during that era, a recognition that still forms a cornerstone of the relationship between France and Beijing.

"It established for the international community an example of peaceful co-existence and win-win cooperation between two countries with different social systems," Xi wrote in an article published on Tuesday in the French daily Le Figaro.

(FRANCE 24 with REUTERS)

Date created : 2014-03-26

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