Airbus and the Chinese government appear close to announcing an extension of the narrowbody final assembly line at the Tianjin facility beyond the 2016 end of the original manufacturing agreement.

According to industry sources, an official confirmation of the deal and its details is imminent and is expected as soon as Aug. 31, when German Chancellor Angela Merkel and Chinese Prime Minister Wen Jiabao are scheduled to visit the Tianjin plant.

Chinese state news agency Xinhua already is reporting that a new deal was signed today during Merkel’s first day in Beijing.

Airbus has been assembling A320-family aircraft in Tianjin since 2009. The contract for the joint venture includes the delivery of 284 aircraft through to 2016; close to 90 have been delivered.

Tianjin is currently producing three aircraft a month, but later this year that rate is scheduled to increase to four aircraft.

The timing of the Tianjin extension is a surprise, but talks about a possible deal had begun earlier this year ahead of a previously set timetable, according to Airbus China President Laurence Barron.

For Airbus, Tianjin is not about lowering cost but improving market access and building an industrial base in what is expected to remain the world’s biggest aviation growth market.

The latest agreement also likely means that the A320NEO will be produced in China as well as Airbus’s European facilities. The manufacturer already has a Chinese NEO order from ICBC Leasing, the leasing arm of the Industrial and Commercial Bank of China, which purchased 30 A320s and 20 A320NEOs.

Airbus is not the only EADS unit deepening ties with China. Eurocopter is understood to be looking at an assembly line adjacent to the Airbus facility, although no firm decision has been made.