China may join BAe and Taiwan in aircraft venture: Parties prepared to resume negotiations on short-haul jet

BRITISH Aerospace said yesterday that China could become an integral part of any renewed talks with Taiwan over forming a joint venture for its regional aircraft business.

But as speculation grows that the company may soon restart talks with Taiwan Aerospace Corporation, BAe stopped short of saying that China might become a partner in a tripartite agreement.

The English-language China News yesterday quoted an unnamed TAC source as saying negotiations would resume on 10 September during the Farnborough Air Show. The aim would be to draw up a detailed plan for the development of a jetliner by the end of the year.

BAe and TAC signed a draft joint-venture agreement in January to produce a short-haul passenger aircraft for regional services. Talks ended after disagreements over investment and attempts by TAC to renegotiate the deal.

BAe refused to confirm that negotiations with TAC could be re- opened because it had found, in China, a partner willing to help develop a new aircraft.

Most of China's aerospace industry is highly centralised and bringing the country into any deal would create political hurdles. However, free-market reforms have created some semi-autonomous businesses and it may be acceptable to include one of these.

A BAe spokesman admitted the company was in discussions with TAC but said there were no formal negotiations. China already supplies components to BAe, and the spokesman said the company wanted to develop much broader co-operation.

Meanwhile, BAe is selling its space systems division to Matra Marconi for pounds 56m. The operation had a turnover of pounds 151m last year and assets of pounds 56m, including pounds 20m of cash, property and investments.

Airbus Industrie, of which BAe is a partner, has won firm orders for 69 new aircraft in the first six months of 1994, giving it 55 per cent of all sales in the 100-plus seat airliner market.