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Alstom, China to Cooperate on Railway Infrastructure

Dec. 7 (Bloomberg) -- Alstom SA, the world’s second-largest trainmaker by revenue, signed a long-term cooperation agreement with China’s Railway Ministry to develop infrastructure in the country and abroad.

Alstom, the ministry and unidentified Chinese industrial partners “will accelerate new areas of the cooperation on a wide spectrum,” including intercity rolling stock, high-speed trains, locomotives and signaling, the Levallois-Perret, France-based company said today in a statement. The company didn’t specify which markets besides China will be targeted.

The French manufacturer, which is also the world’s third-largest maker of power equipment and power-transmission gear, is looking to grow in China, the world’s biggest market for rail infrastructure, to make up for a lack of contracts in other markets. Orders at Alstom’s transport division fell 16 percent from a year earlier in the six months through September.

Alstom rose as much as 5.3 percent to 34.34 euros and was up 4.8 percent as of 3:08 p.m. in Paris trading. That pared the stock’s drop this year to 30 percent, valuing the manufacturer at 10 billion euros ($13.5 billion).

The French company’s expansion outside its home country includes teaming up with Russian railway-equipment maker Transmashholding to tap markets in the former Soviet Union. Both Alstom, whose products include France’s high-speed TGV train models, and the Chinese ministry have separately expressed interest in the past three years in a railway project to link Los Angeles and San Francisco.

Alstom has held off from some Chinese orders because it has refused to transfer bullet-train technology to Chinese manufacturers. Contracts won by competitors include a $4 billion order for 80 high-speed trains awarded in September 2009 to Montreal-based Bombardier Inc. and a 750 million-euro, 100-train purchase from Siemens AG.

Alstom is the second-largest maker of rolling stock by sales after Munich-based Siemens, according to Bloomberg data.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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