The north China city of Tianjin had been identified by Airbus, the European aircraft manufacturer, as the location of their only overseas assembly plant and the first aircraft is planned for completion towards the end of 2008, the Xinhua-run China Securities Journal reported Wednesday.

Tianjin triumphed over three other Chinese cities -- Shanghai, Xi'an and Zhuhai -- in a six-month competitive bidding process for the Airbus A320 plant, said the newspaper and identified their source as an unnamed project insider.

The source said the assembly plant, with an investment of seven billion euros, was expected to start production this year and complete its first aircraft at the end of 2008.

The insider explained that China's National Development and Reform Commission (NDRC) were talking with Airbus on the company's future strategy in China.

Last week Airbus said an announcement would be made "in about 10 days" on which of the cities was to become home to the new assembly plant for the medium-range A320.

Three months ago the company announced it would build a plant in China, its first outside Europe, to assemble the first single-aisle commercial airliners to be completely produced in China.

Airbus has two assembly lines in Europe: one in Toulouse in France and the other in Hamburg in Germany.

Airbus started its selection process for a Chinese site with four candidate cities -- Shanghai, Tianjin, Xi'an and Zhuhai -- last December.

The insider said Tianjin had many advantages in location and transport facilities which were convenient for moving components around and purchasing manufacturing materials.

Tianjin is already home to 39 aviation companies and boasts more than 2,000 skilled engineers and technicians. Its annual aviation production is worth more than 2.5 billion yuan (more than US$300 million)

A neighbor of the capital, Beijing, the city was identified by the central government as a key national civil aviation base in 2004, the newspaper said.

Industry observers said the Airbus decision to locate in China was an important step for them in expanding their share of the global market.

As China itself emerges as the world's largest aircraft market the two leading aircraft manufacturers, Airbus and Boeing, are going head to head to secure a share.  

Airbus statistics show the total number of passenger aircraft in service on the Chinese mainland, Hong Kong and Macao exceeds 340 with significant potential for them to make inroads into a huge market for their aircraft. They've forecast that China will buy nearly 600 airliners in the next five years to keep pace with rising demand.

In the next 20 years the number of Airbus aircraft in China is expected to reach 1,600. This figure includes 200 A380s which are the world's largest passenger aircraft.

Analysts say the new plant would probably service the Asia-Pacific market in the main with China itself being of particular interest.  

The company is working with Chinese manufacturers on component production. Airbus plan to increase their annual expenditure in the Chinese market to US$60 million by 2007 and up to US$120 million by 2010.

(Xinhua News Agency June 1, 2006)