Sinomania!

Beijing made tourism a "pillar" of the Chinese economy in the 11th 5-year plan that ends next year. At the recent central government Work Conference on the economy, support for developing the tourism industry was stressed. It is expected that 40 million Chinese will travel outside the confines of the People's Republic in 2010 and head for Asia first followed by Europe and America. By 2020 100 million Chinese tourists are predicted to travel outside China.

The Pacific island nation Fiji just opened a travel bureau in Shanghai and Fiji is banking on more Chinese tourists coming to the island paradise via new air service from Hong Kong on Air Pacific and partner Cathay Pacific Airlines. For the year Fiji is hoping for 11,000 visitors from China.

In the USA Chinese tourists spent an average $7,200 per person according the US Commerce Department. The Chinese rep for the New York Travel Bureau said the agency was expecting an increase in Chinese visitors who often come to shop. In Beijing today, Canadian Prime Minister announced that Canada was declared an "approved" outbound destination for Chinese travelers, a designation that will make it easier for Chinese to get visas and arrange outbound travel....

China solidified its conquest of Pipelineistan energy resources on Monday when Kazakh President Nursultan Nazarbayev signed into law the 2007 agreement to jointly develop pipelines to bring gas into China from Kazakhstan and Turkmenistan. Around 50 million cubic meters of gas will move annually into the Chinese pipeline network also under construction. The estimated cost of the projects is $20 billion (US dollars). Work will be done in Kazakhstan by China National Petroleum Corp.'s subsidiary China Petroleum Pipeline Engineering and local firm KazStroyService. There are two "west-east" pipelines through China (see map) that bring Caspian Sea region resources through Xinjiang all the way to Shanghai and Guangdong Province. A third such pipeline is now in development.

Beijing will loosen the infamous hukou system in a bid to hasten urbanization and get Chinese to consume more. The Central Economic Work Conference of China's central government met over the weekend and announced reforms of the hukou or household registration system to allow migrants from small and medium size cities to gain citizen's rights (access to eduction & housing mostly) in big cities. The expansion of hukou rights may allow many migrants to settle in the cities where they find work.

The Work Conference embraced the concept, mostly imposed on China by Western partners, that consumption must be a driving (if not the driving) force in the Chinese economy. The conference said the goal was for consumption to replace public spending. Yet a more rapid settlement of migrants to China's growing mega cities will only increase the need for more infrastructure - roads, railroads, subways, housing, electricity, etc., which is reflected in the dominance of investment as a major force in China's economy. Stocks in property companies rose today, some analysts say on the news. But rural migrants are at the bottom of the elaborate class structure in China and usually too poor and too conservative to quickly become materialistic consumers.

The hukou system began in the early 1950s as a way to prevent Chinese cities from becoming overrun by poor rural migrants and end up like the major cities of the so-called developing world, that is overwhelmed by slums and unplanned development. The system became a major component of the centrally planned economy at the height of Mao's dictatorship and ultimately held back China's great cities. Since 2001 it has been relaxed to varying degrees at the Provincial level and in national policy. Also as with so many laws in China it is often completely ignored....

There are around ten (10) Chinese companies listed at the Australian Securities Exchange (ASX) and two more may soon be added: Rongtai Logistics, an e-commerce logisitics business in steel trading and Gansu Biotech will pursue backdoor listings. Both businesses will set up shop in Adelaide capital of South Australia and home to a growing Chinese expat community....

Coming this week to NYSE and NASDAQ three new Chinese initial public offerings. CCM is Concord Medical Services that leases radiology equipment to cancer centers throughout China. CCM will trade on NYSE and was originally priced between $9-$11 per share. Also at NYSE is TRO, Trony Solar Holdings, the leading Chinese maker of thin film solar modules. In a crowded market, ShenZhen based TRO hopes to raise up to $200 million. And on NASDAQ NKBP is the symbol for China Nuokang BioPharma offering shares between $10-$12. NKBP derives much of its revenue from hemocoagulent drug Baquting. (All prices quoted are US dollar.) So far this year, Chinese IPOs are among the best performers in the world (see chart).

In related news, the shares of AsiaInfo Holdings (NASDAQ:ASIA) are soaring today on news that it will acquire its chief competitor Linkage Technologies. Linkage, a developer of core operating systems used by China's telecom giants, was set to IPO this week in New York....

A mystery is deepening at the Port of Vancouver. A 60,000+ ton panamax class cargo vessel is scheduled to arrive mid December with intent to load up with a cargo of Canola or more specifically Canadian rapeseed ("Canola" is a trade brand that means literally Canada and oil). The news has excited Canada's futures markets for many believe the cargo of canola may be China bound. If so, it means Ottawa and Beijing have sorted out the suspension of canola trade imposed by Beijing on November 15 when China declared canola imports must be cleared by a phyto-sanitary certificate that the canola was free of Leptosphaeria maculans or blackleg. The restriction was sudden and Canada believes it is neither a health nor safety issue. China is Canada's number 1 market for canola, buying over 2.8 million tons last year. But no destination is yet recorded for the unnamed vessel.....

In Shanghai today GM announced it will cede control of its 12 year old highly successful (and lucrative) joint venture with Shanghai Automotive group to its Chinese partner SAIC Motor Corp. With a controlling interest of 51% SAIC Motor will be able to run Shanghai GM independent of Detroit. Further, a new joint venture will be formed in Hong Kong called General Motors SAIC Investment Ltd. to expand into India and carve market share in the subcontinent for the Wuling microvan and other products....

At a confab around the Marintec China 2009 convention, currently underway in Shanghai, Wei Jiafu - head of Chinese shipping giant COSCO (China Ocean Shipping Group Comany, Ltd.) - revealed to reporters that the company was working with Chinese nuclear authorities to explore developing nuclear powered container ships. Captain Wei Jianfu gave a grim outlook for traditional ship orders saying he believed 40% of backorders will be cancelled or postponed. In other news, Chinese, Taiwan, and Korean shipping companies will respond to the slowdown in global trade by literally slowing down and employ "super slow steaming" a method begun by the Maersk Line for greater fuel efficiency and reduce emissions....

New guidelines issued by the Chinese State Council (the Cabinet of China's central government) encourage foreign investment in tourism specifically, according to some translations, allowing foreign businesses to set up joint ventures for travel outside China. The Chinese domestic tourism market is already open to a degree. For example, 100% ownership of hotels by foreign investors is allowed.

Beijing is pushing tourism - where China has immense potential - and all related services to account for an ambitious 5% of GDP within 5 years. By contrast tourism's share of GDP in the USA has been flat at just under 3% since 2001.

Overall, foreign direct investment (FDI) in China rose 5.7% in October. Although total FDI is down compared to 2008 the first 10 months of 2009 China received over $70 billion (US dollars) in foreign investment....