Foreign investors are now welcomed in China and are allowed to take majority stakes in China’s airports and airlines. This new law came into effect August 1st, 2002. The move is being made to attract more overseas investors into the booming Chinese aviation market. Currently foreign stakes in airports are kept at 49% and 35% for airlines. Now majority interest can be purchased. The airports most likely to attract increased foreign interest are those with international connections because they could capitalize on duty free shopping. The Civil Aviation Administration of China (CAAC) said it would also strap restrictions on eligibility for senior management posts. At present only the Chinese partner can supply the post of chairman and president in the foreign invested airport. After China has joined the World Trade Organization (WTO) the rules have changed! The government has directed its fragmented airline industry to merge to create free globally competitive carriers: China Eastern Airlines, China Southern Airlines and Air China. A recent report in the regional trade newsletter Aviation Analyst - Asia Pacific estimated that 90% of China’s 143 airports lost money last year, mainly because of too rapid expansion and relatively low retail concession revenues. About 60% of China’s airports are still managed directly by the CAAC. They have ownership structures that include the include the central, provincial and municipal governments. The bureaucratic system is unable to respond to markets demands. Beijing Capital International Airport Company backed by Partner Aeroports d’ Paris is likely to be among the key investors in other national airports. The joint venture plans to acquire shares in Shenyang, Chengdu & Xi’an airports and six others with which it has signed Letters of Intent. Chinese passenger numbers continue to grow. Domestic passenger traffic was up 19.5% in 2001 and the passenger traffic in Hong Kong and Makau were up 7.7% with international traffic up 7%.
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