Sinomania!

from the Xinhua Finance newsfeed:

-China's Hu leaves for Japan to attend G8 climate change session
-Q2 business prosperity index rises to 137.4 vs 136.2 in Q1
-China to buy additional 300,000 tons sugar at 3,400 yuan per ton
-China economy expanded at 'decent' rate in Q2 - JPMorgan
-CITIC Bank sees H1 net profit up over 150 pct yr-on-yr
-Bank of Ningbo sees H1 net profit up 85-90 pct
-Vanke H1 property sales 24.13 bln yuan, up 38.1 pct yr-on-yr
-Chongqing Changan Auto June vehicle sales 18,053 units
-General Motors H1 China sales up 12.7 pct yr-on-yr at 590,126 vehicles
-China Railway Group units wins 2.95 bln yuan worth of contracts
-Exim Bank to auction 10 bln yuan in 3-yr floating-rate debt
-China Shipping Group to auction 100 pct of terminal unit for 2.6 bln yuan
-Alibaba Group invests 2 bln yuan in online auction unit Taobao.com
-China NDRC approves two alumina projects involving total capacity 1.5 mln tons
-HK-listed CNOOC Ltd reports new discovery in Bohai Bay
-China Eastern Airlines to lease three A340 aircraft from ICBC unit
-Western Mining completes approval process for FerrAus deal
-SDIC, Dutch group Vopak to build crude storage facility in Hainan
-Asia Environment completes placement of 50 mln shares to KSC Fund
-Singapore-listed Bio-Treat reaches settlement with Abax; no material impact seen
-China NDRC approves nation's first offshore wind power project
-Singapore-listed Jiutian Chemical to invest in new methanol facility
-Huaneng Group wins approval to build two wind farms
-BoComm raised to 'BBB+' on capital strength, risk management - S&P
-Hong Kong-listed Agile Property's rating unaffected by Morgan Stanley deal-S&P

Investment advisors and analysts -- Howard Gold and Nicholas Vardy are but two examples -- are warning not to "put a dime into Chinese stocks" at least until the bottom is reached in Chinese stock markets. Since 2008 began, Shanghai A and B shares have lost 40% or more and are down even further compared to Shanghai's peak in October 2007. The Shanghai Composite was down over 5% today alone.

Last May I pondered if the Shanghai Composite would end up like the NASDAQ or Nikkei bubbles -- watch my video on YouTube. I was surprised to see Shanghai go up all the way past 6,000 later in the year. Many analysts now believe the index will need to sink all the way to between 1,000-2,000 to hit bottom.

But I think comparison to the far more mature NASDAQ and Nikkei markets is simplistic. There are too many variables with Shanghai and its latest incarnation goes back only to 1990. Will foreign buyers be allowed into the A market? Will A and B shares finally merge? Will outflows by individual Chinese retain investors be extended to every investor? I think it is entirely too premature to dismiss Chinese stocks as important and long position investments, particulary in new technology (green & alternative energy) sectors.

The first China bash talking point in the US presidential election cycle is circulating and it's a particulary goofy one relating to the renewed interest in drilling for oil on the continental shelf off the eastern seaboard. China, according to Republican Congressmen, is already drilling there off Cuba! None other than Vice President Dick Cheney has refuted this claim but it is widespread on talk radio and TV - Sinomania! first heard it on CNN a few days ago. Unfortunately, like Obama's Muslim past, it is a fabrication that repeated enough is taking hold in minds willing - and wanting - to believe it.

Beijing will allow key price increases in the energy sector giving oil and gas majors approval for close to 18% price hikes, the second double digit increase in less than a year. Fuel remains subsidized in China and undervalued to world markets.

The announcement brought down the spot price for a barrel of oil more than $4 today.

Electric utilities will also get a rate hike - something sought after before last Winter's devastating snow storms -- to increase kilowatt hour charges just under 5%.

The 4th Strategic Economic Dialogue bilateral talks between China and the United States are underway in Annapolis, Maryland.

The Chinese delegation is emphasizing joint cooperation on energy and the environment stressing that the world's number 1 and 2 oil importers have much to gain by working together.

Treasury Secretary Hank Paulson said that both nations are responsible for "maintaining a stable, secure and prosperous global economic system."

It is only a matter of time before China becomes an issue in the Presidential elections. Will the strategic dialogue fall victim to politics by year's end?