Airbus to Double Production in China as It Moves Ahead With New Orders

PARIS — Airbus agreed on Thursday to build a second assembly line at its factory in China and was given a green light by Beijing to move ahead with 160 previously announced plane orders. The announcement was a pointed reminder of how China remains a critical market for European companies, even as American manufacturers are pulling up stakes.

The agreement was signed in Beijing by Airbus’s chief executive, Guillaume Faury, who was part of an economic delegation accompanying President Emmanuel Macron of France and President Ursula von der Leyen of the European Union on an ambitious state visit with China’s top leader, Xi Jinping.

Airbus is working to expand production of its best-selling A320 single-aisle jet, and bolster sales in China, whose leaders have taken pains recently to try to show the world that the country is open for business after it doubled down on pandemic lockdowns last year. Under the deal, the world’s largest plane maker will double production capacity of the A320 at its factory in Tianjin, in an aviation market that is the fastest growing in the world.

And after trumpeting a major agreement last year in which China promised to buy 292 new Airbus aircraft, worth nearly $40 billion before discounts, the company said the Chinese government on Thursday gave approval for Airbus to start making 160 of those planes.

The deal “underpins the positive recovery momentum and prosperous outlook for the Chinese aviation market,” Mr. Faury said in a statement. He added that Airbus was “privileged to remain a partner of choice in shaping the future of civil aviation in China.”

Europe has been under pressure from the Biden administration to isolate Beijing by imposing more trade curbs on sensitive technologies, such as semiconductors that could have military uses. Talk of economic decoupling is rife, and Apple has shifted some production to India and Vietnam, although most of its revenue still comes from Chinese-made products.

Ms. von der Leyen said in a speech ahead of the trip that E.U. countries needed to reduce risk and “rebalance” economic ties with China. But other European leaders, and Mr. Macron in particular, have sought to maintain strong economic links despite China’s increasing assertiveness and support for Russia.

Mr. Macron, who arrived in China on Wednesday, has spent the bulk of the visit trying to carve out a distinct role for Europe that avoids confrontation, while also seeking to provide a place for China in ending the war in Ukraine. Around 50 French business leaders accompanied Mr. Macron in an effort to maintain commercial links.

The Airbus deal, while more modest than expected, nonetheless underscored the continued importance of China as a major trading partner to Europe, one that Mr. Macron is reluctant to give up.

China has overtaken the United States as Europe’s biggest trading partner. Beijing was the third-biggest destination last year for European Union goods exports and the largest source of goods imported to the bloc. France is Europe’s second-biggest exporter of goods to China, behind Germany.

During a whirlwind trip to China in November, the German chancellor, Olaf Scholz, said Beijing and Berlin should work together amid a “complex and volatile” international situation. He traveled with a large German corporate delegation to send a message that business with China, the world’s second-largest economy, must continue.

But many European countries are also facing widening trade deficits with China, as Beijing ramps up a long-term drive to achieve self-reliance in science and technology. That has resulted in government subsidies for manufacturers of many goods that were once imported, eroding China’s demand for foreign goods.

Even so, the Chinese market remains critical for many European businesses. In France, many companies are eager to sign contracts to produce goods and equipment in China as Europe moves ahead with an ambitious decades-long program to transform itself into a carbon-neutral economy.

Executives from big French companies including the nuclear provider Électricité de France, the train maker Alstom and the global waste-treatment conglomerate Veolia were among those accompanying Mr. Macron this week.

In line with a sustainability strategy at Airbus, the company also signed a memorandum of understanding with the China National Aviation Fuel Group to intensify Chinese-European cooperation on the production of common standards for so-called sustainable aviation fuels, which are expected to be used increasingly to power jets.

Though China’s rapid economic growth in recent decades has slowed sharply because of the pandemic, the domestic aviation market is rebounding since the lifting of stringent “zero Covid” regulations in early December. Frequent quarantines, especially of intercity travelers, had badly crimped air travel within China for three years.

Over the next 20 years, China’s air traffic is forecast to grow much faster than that in the rest of the world, representing 20 percent of demand for new aircraft, Airbus said. Even so, China has been wary of buying large numbers of imported single-aisle jets.

With enormous subsidies, a state-owned enterprise in Shanghai, Comac, has developed a commercial jet, the C919, that is nearly identical to the Airbus A320 being built in Tianjin. Although repeatedly delayed, the C919 has been in test flights in preparation for its commercial introduction with an affiliate of the Shanghai-based China Eastern airline.

Still uncertain is whether Europe will yield to Chinese pressure to assemble wide-body jets in China.

Airbus entered the Chinese market nearly 40 years ago, in 1985. By the end of the first quarter of 2023, the Airbus fleet in China has risen to over 2,100 aircraft, representing more than half the market, the company said.

Keith Bradsher contributed reporting from Beijing.