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US$2b deals signed on Hu's Italian trip

CHINESE President Hu Jintao's visit to Italy generated more than US$2 billion worth of deals between the two countries on Monday, including a Fiat SpA joint venture to produce cars and engines in China.

Italian Prime Minister Silvio Berlusconi said Italy aimed to become the third-largest foreign investor in China within three years as the two countries signed 38 business agreements.

Among the biggest of those is car maker Fiat's 50-50 venture with China's Guangzhou Automobile Industry Group to produce cars and engines in China from the second half of 2011, with a total investment of 400 million euros (US$560 million).

Fiat, which has just taken a 20-percent stake in United States auto maker Chrysler, said the plant would produce 140,000 cars a year and about 220,000 engines after a first phase of development.

Other agreements include a Finmeccanica memorandum of understanding with Chinese company Chongqing Rail Transit General Corp on sales in the Chinese market of electronics and components in a deal worth US$42 million and an MOU between Italian bank Mediobanca and China Development Bank to support cross-border investments.

Fiat also signed an additional seven deals worth US$225 million with Chinese companies.

Fiat has long sought a strong partner in China, where car sales are booming in contrast to slack demand in Europe and the US. China's car sales soared 47 percent year-on-year in May to 829,100 units.

Fiat and Chrysler combined produce about 4.2 million cars a year and together rank fifth equal to South Korea's Hyundai Motor Co among world car makers.

Fiat said the new plant would be built in Changsha, capital of central China's Hunan Province.


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