BEIJING • China inked a giant aircraft contract worth US$17 billion (S$24 billion) with European manufacturer Airbus yesterday as German Chancellor Angela Merkel began a visit, with European leaders increasingly competing for market share in the world's second largest economy.

Dr Merkel's trip follows a high-profile visit to Britain by Chinese President Xi Jinping earlier this month, when he stayed at Buckingham Palace in London, and comes ahead of a trip to China by French President Francois Hollande next week.

China is the European Union's largest trading partner, and several major EU countries, including Germany, Britain and France, are wooing the country in the hope of winning business and becoming hubs for the growing overseas trade of China's yuan currency.

The competition has made for awkward moments between the countries and their ally the United States, China's greatest geopolitical rival, including their decisions to join Beijing's Asian Infrastructure Investment Bank despite Washington's opposition.

The agreement for 30 twin-aisle A-330 and 100 single-aisle A-320 planes was signed yesterday during a meeting between Chinese Premier Li Keqiang and Dr Merkel, Airbus said in a statement. The purchase was among a number of deals signed at the meeting.

Airbus and Boeing are competing to carve up the Chinese aircraft market, expected to become the world's largest over the next two decades.

Chinese airlines will need 6,330 new planes in the next 20 years, worth some US$950 billion, according to a Boeing forecast.

Dr Merkel's visit comes in the middle of a whirl of diplomatic activity involving China, and she said she was "very happy" to know that Mr Xi had paid such a fruitful visit to Britain, stating: "We welcome competition that is conducive to the promotion of business.

"In Germany, we don't have a Queen," she added, to laughter.

Today, the German leader will go with Mr Li to his home province of Anhui, where she will visit a village and a school, echoing President Xi's escorting of Indian Prime Minister Narendra Modi to his ancestral province of Shaanxi when Mr Modi visited in May.

"This is the first time since I've become Premier that I've accompanied a foreign leader outside Beijing," Mr Li said. It "clearly indicates" the good relations between the two leaders and their countries, he added, which have continued despite Dr Merkel's sometimes tough language on China's human rights record.

AGENCE FRANCE-PRESSE, BLOOMBERG