The plant in the eastern city of Tianjin is expected to deliver its first aircraft in early 2009, Airbus said.

The assembly line will be able to produce four A320s a month by 2011 and a total of about 300 A320 planes by 2016, the company said.

Plans for the assembly line were announced in October during a visit to Beijing by then-French President Jacques Chirac. Airbus had said the plant would use sub-assemblies imported from Europe.

Airbus is to own 51 percent of the joint venture, with the rest held by a Chinese consortium including China Aviation Industry Corp. I, China Aviation Industry Corp. II and the Tianjin Free Trade Zone.

Also Thursday, Airbus announced it signed a contract to sell 86 A320s to Chinese airlines including mid-size carriers Shenzhen Airlines and Hainan Airlines Co., a China Airbus spokesman told Dow Jones Newswires.

The deal follows a preliminary agreement between China and Airbus in October to purchase 150 A320 planes, which didn't represent a firm order but was rather a commitment to buy the planes.

The spokesman declined to comment on when the planes will be delivered or their price, the report said.

Demand for airplanes in China is expected to surge in coming years as the economy grows.

The Aviation Industry Development Research Center affiliated with AVIC I puts China's demand for civilian aircraft at 2,230 by 2025, similar to estimates by foreign makers.