On May 15, construction of an assembly line for European aircraft maker Airbus A320 planes began in north China's port city Tianjin with a ceremony to mark the occasion.

The assembly plant is a joint venture between Airbus and Tianjin Zhongtian Aviation Industry Investment Co., a Chinese alliance of China Aviation Industry Corp I, China Aviation Industry Corp II and Tianjin Bonded Zone Investment Co.

Airbus will hold a majority 51 percent stake in the Tianjin assembly facility, with the rest held by Tianjin Zhongtian Aviation Industry Investment Co.

But, despite the celebrations, the joint venture contract has not yet been finalized.

"The joint venture contract has not yet been signed," said Gu Wei, a public relations worker of Airbus China. He declined to say what was holding up the signature.

The joint venture contract has so far been through 17 rounds of business talks and was expected to be signed in May, according to earlier reports quoting Zhang Jinwei, deputy director of the Tianjin Bonded Zone Administration.

Total investment in the project is estimated at 8 billion to 10billion yuan (US$1.04 to US$1.3 billion).

The plant in the Tianjin Binhai New Area, the first for Airbus outside Europe, is expected to start operating in August next year and have an annual capacity of 44 aircraft in 2011, sources with the project said.

The project includes assembly workshops, power stations, hangars and outdoor facilities. The main body of the assembly workshop will be completed at the end of this year.

Fabrice Bregier, chief operating officer of Airbus, said at the ceremony that the A320 planes to be assembled and delivered in China would be the same as those made in Europe.

Bregier said he hoped the assembly plant would be completed as early as possible.

Experts say the cooperation project is a win-win deal giving Airbus the opportunity to tap into the vast Chinese aviation market and China the chance to accumulate experience in making big jets.

The planes assembled in Tianjin will be mainly delivered to Chinese airline companies.

Airbus will deliver an average of 80 to 90 A320 planes each year from 2009 based on current orders, according to Bregier.

In 2005, Airbus delivered 56 new planes to China. The number rose to 76 last year.

"China has become one of the most important aviation markets in the world," said Laurence Barron, president of Airbus China Co. Ltd.

The Tianjin assembly line has set a target of producing four planes a month in 2011 and will decide at that point whether to raise its output or not depending on Chinese market conditions, according to Barron.

Airbus estimates that China will need more than 3,000 passenger or cargo planes from 2006 through 2025.

China's National Development and Reform Commission approved last June the Airbus A320 assembly plant in Tianjin.

Airbus began selling planes in China in 1985. The Chinese mainland now has more than 300 Airbus planes.

China's 11th five-year development plan includes a project for large aircraft manufacturing, which is seen as integral to the country's long and mid-term development plan for science and technology.

The Tianjin assembly plant plans to recruit about 500 workers, 90 percent of whom will be Chinese, according to Barron.

The plant has now recruited 150 Chinese workers, who will be trained for six months in China before being sent to Airbus assembly lines in Germany and France for further training, Barron said.

Eleven aircraft companies have elected to settle in the BNA Airport Logistics Processing Area where the Airbus assembly line is located, according to Zhang Jinwei, vice-director of the Tianjin Bonded Zone Administration.

More than 30 aviation industry programs are still under negotiation, ten of which will provide services for the assembly line, Zhang said.