China and France Pledge More Cooperation on Plane Sales, 5G

China and France promised to work more closely in areas ranging from aircraft sales to 5G networks in a video meeting that highlighted some of the countries’ biggest economic concerns during the pandemic-driven slump and an intensifying rivalry with the U.S.

The two sides “strongly value active discussions” between planemaker Airbus SE and Chinese airlines on jet deliveries this year, as well as deeper ties in the future, they said in a statement published Tuesday by China’s Ministry of Finance. The document summarized the meeting, co-chaired by Vice Premier Hu Chunhua and French Finance Minister Bruno Le Maire.

Handing over planes on schedule to Chinese customers would be a boon for Airbus over the coming months. The Toulouse, France-based planemaker has had to scale back production after the coronavirus outbreak halted travel, forcing aircraft customers to seek delivery delays and cancellations.

Airbus competes fiercely with U.S. rival Boeing Co. over business in China, the world’s second-largest aviation market, and the deals often get shaped by broader trade priorities. Without naming Chinese telecom giant Huawei Technologies Co., the joint statement also hinted at another U.S. sensitivity -- Beijing’s sales pitch for Chinese 5G technology.

“Geopolitics has an unpleasant way of intruding in China jetliner purchases,” said Richard Aboulafia, an analyst with Teal Group. “Still, this is less of an opportunity to score orders and more about protecting against cancellations and deferrals, as China has been hit by the virus as badly as anybody.”

While the statement reflects a sense of cooperation with Europe, China’s relations with the U.S. have been worsening amid growing tensions over issues including trade, concern about spying with Huawei networks, and the new security laws Beijing has imposed on Hong Kong.

The standoff with Washington could hand Airbus an advantage as it seeks to hold on to orders while airlines slash their capacity.

Airbus has a final assembly line in China for its aircraft as well as a completion and delivery center for its widebody A330 aircraft, both of which have helped the planemaker continue to make deliveries to Chinese customers despite the pandemic. Still, the manufacturer only made 36 aircraft deliveries last month, so additional pressure on Chinese airlines to meet commitments would be welcome.

Airbus couldn’t immediately be reached for comment.

No Blanket Ban

The talks between China and France also covered 5G wireless networks, another hot-button topic as the U.S. seeks to freeze Huawei out of building 5G networks in western countries to slow China’s pursuit of advanced technologies.

The U.K. has already announced it will ban Huawei from its next-generation mobile networks, with any equipment already installed in 5G infrastructure to be removed by 2027.

Le Maire said on Tuesday that France doesn’t plan a blanket ban on Huawei, but will protect sensitive locations. The statement Tuesday said “both sides will join efforts to secure a fair and non-discriminatory market environment, and encourage businesses from all countries to participate in the 5G network construction in line with market principles and security principles.”

China started talks with Airbus last year on buying more planes as part of its next five-year economic plan that begins in 2021. Boeing has also sought to capitalize on a trade deal the U.S. and China reached earlier this year that offered the potential for more sales in the Asian nation.

That task may be made more difficult by the cooling in trans-Pacific trade relations between the world’s two largest economies. The latest punitive action saw China impose sanctions on defense contractor Lockheed Martin Corp. after the U.S. approved a possible $620 million deal to supply missile parts to Taiwan.

©2020 Bloomberg L.P.

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