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Sarkozy Touts for Deals in China Debut

French President Nicolas Sarkozy visits China next week, hoping to capture billions of dollars in energy and aviation deals while taking a tough stand on global currency turmoil.

Travelling with a posse of 270 business leaders, officials and journalists, Sarkozy will receive a lavish welcome on one of the grandest foreign trips by a French leader in recent years, highlighting the lure of the world's fourth largest economy.

Once ostracized by China for selling arms to Taiwan in the 1990s, France's ties with China have warmed as it has tried to steer the European Union towards lifting an arms embargo imposed after the massacre of protesters in Beijing in 1989.

The three-day state visit on Nov. 25-27 has lifted French hopes for a slew of business deals just as Beijing slams the door on Germany over Chancellor Angela Merkel's recent decision to receive Tibet's exiled spiritual leader, the Dalai Lama.

Sarkozy's visit, his first to Asia as president, will produce signatures on several "significant contracts", his spokesman David Martinon said.

But he will not shy away from tackling divisive issues such as trade, currencies and the environment, French officials said.

State-owned nuclear reactor maker Areva is expected to sell China two modern EPR power reactors, easing its disappointment over the loss of a contract for four similar plants to U.S. Westinghouse this year. State power firm EDF could also benefit.

Planemaker Airbus, based in France but controlled by both French and German interests, is negotiating a multi-billion euro deal to sell aircraft to China during Sarkozy's visit, sources involved in the talks said earlier this week.

China bought 150 aircraft during a visit by former French President Jacques Chirac in October 2006 but tends to balance purchases between Airbus and its American rival Boeing .

Such deals have so far failed to trim record trade deficits between France or Europe and China. The trade gap is a growing bone of contention in Europe, after years of frustration in the United States over the impact of China's weak yuan currency.

The French president will call in private for an "equitable and fair" balance between top currencies, a Paris official said.

Retracing Chirac's Footsteps

Sarkozy's visit has been carefully stage-managed to begin where his domestic rival left off, with a visit to an imperial tomb in Xian where Chirac showed off his knowledge of Chinese history but departed for France without the mega-deal for Areva.

Sarkozy, who bounded onto the world stage with a hyperactive agenda in May, will view China's Terracotta Army before flying to Beijing for talks with President Hu Jintao and Prime Minister Wen Jiabao capped by an expected 5-billion-euro deal for Areva.

Chen Xiaohe, a Europe expert at the People's University of China in Beijing, said that while Chinese relations with Germany had turned "cold", Sarkozy would aim to duplicate Chirac's popularity with Beijing, and China seemed ready to oblige.

The likely Areva deal is seen partly as a diplomatic gift to Sarkozy coupled with a hard-nosed reminder for the West that China is willing to play off its partners against each other to win the best deals and secure the transfer of technology.

"By giving the (earlier) four reactors to Westinghouse, China put a partner into the market so as not to get stuck between France and Russia on costs and technology," China expert Valerie Niquet of France's IFRI foreign relations institute said.

"For Beijing, the United States is a strategic partner. Sometimes you have to please them. But the Chinese will want to be in a position to give something to the new French president."

At the same time, Chinese leaders will be probing Sarkozy to gauge whether foreign policy pronouncements, such as a tougher line on Iran over its nuclear enrichment plans, signal a deeper realignment of French strategy with Washington, Niquet said.

French officials said Sarkozy would himself raise human rights during the visit, though his delegation list does not for the time being include Human Rights Minister Rama Yade.

Also on the agenda will be European concerns over the environment, with some developed nations reluctant to impose costly curbs on emissions only to continue sucking in imports of cheaper Chinese goods produced from more polluting technology.

China however wants forthcoming international talks on global warming to focus on future greenhouse gas cuts by rich countries and moving more "clean" technology to poor countries.