Stocks based in China that trade in the U.S. as American depositary receipts, or ADRs, jumped higher for the second day in a row on Monday as Far East markets rallied and rumors swirled around trading desks that the U.S. and Chinese governments were considering plans to accelerate stimulus plans to keep their economies from suffering any further deterioration.

Some of the Chinese ADRs that saw big gains on Monday included Xinyuan Real Estate (XIN), which surged 7.3%; Focus Media (FMCN), which traded up 7%; Yingli Green Energy (YGE), which added 6.9%; and Home Inns & Hotels Management (HMIN), which rose 6.3%.

TheStreet.com’s Jim Cramer can’t get enough of China. On Monday, he said he wants to double down on China right here. He explained that China has a tremendous amount of flexibility and the communist country could be the key to turning around the world economy.

One of the key reasons that Cramer is becoming more bullish on China is due to the rebound in the Dry Baltic Index (a number issued daily by the London-based Baltic Exchange that tracks the price of moving major raw materials by sea) from 600 to around 1000. This big move up in the index shows that demand for shipping goods globally is starting to pick up, which could signal a return in economic activity around the globe.

The bottom line: If the Baltic Index is signaling a recover, and it’s clear that Cramer thinks it is, how should investors play it? Here are some ideas that could help investors make some money off of China.

Should investors look to buy copper stocks for a play on China’s huge stimulus plan?

On Monday’s "China Watch: Shining Copper Plays" video segment, Stephanie Link, director of research for TheStreet.com’s Action Alerts PLUS, said that Cramer has been buying Freeport-McMoRan (FCX) because the company has been cutting capex, cutting production and eliminating the dividend in an effort to improve its balance sheet. She explained how this shows that the company has been through boom-and-bust periods before and knows how to navigate through tough environments. She told viewers that copper prices should stabilize here and eventually move higher.

Link also mentioned that she thinks the commodity market has bottomed, because the Baltic Dry Index is now trading above 900. Visit the "China Watch" Portfolio to learn about a few more commodity names that could benefit from China’s stimulus plan.

Are China ETFs the best way to play China?

On last Friday’s "China Watch: Stay or Stray from ETFs" video segment, TheStreet.com research manager David Peltier said the best way to play China is with the iShares FTSE/Xinhua China 25 Index (FXI) which gets an investor long the 25 largest stocks in China. He also mentioned that the ProShares Ultrashort FTSE/Xinhua China 25 (FXP) is a way to short China with two times leverage. He cautioned investors that the leveraged short ETFs, such as the FXP, have tended to underperform and not provide the returns people are looking for.

Peltier said that if you want to bet against China, use options for a truer return. He told viewers that his favorite sector in China right now is infrastructure. Check out the "China Watch" Portfolio to learn more about some infrastructure plays on China.

Is the Chinese Internet sector still hot?

On last Wednesday’s "China Watch: Internet Still Buffering" video segment, Dave Peltier talked about why Chinese Internet stock Sohu.com (SOHU) has been trading down despite being upgraded by Oppenheimer. He explained that shares of Sohu.com are under pressure because of the “weak overall market” and the lack of a “risk appetite” among investors.

He said the company looks attractive, trading at 10 times earnings, with lots of cash on its balance sheet, however, the company could be running into an image problem like the one Google (GOOG) experienced when that stock was at $700 a share. Peltier said Sohu.com could trade down to the lower $30s before it’s a compelling buy.

Check out the "China Watch" Portfolio to see what Peltier thinks about other Chinese Internet stocks, including Baidu.com (BIDU), SINA (SINA) and NetEase.com (NTES).

Got questions?

Investors who are looking for answers on how to play China can submit questions to the “China Watch Weekend Mail Bag.” On last Saturday’s "China Watch Mail Bag: Red-Hot Infrastructure" video segment, a viewer asked: “I’ve constantly heard that infrastructure will be the sector in China in 2009, but what are the infrastructure stocks to watch?”

TheStreet.com’s Stephanie Link said that China has put into a place a very aggressive $600 billion stimulus plan, but separate of that big plan is another $40 billion plan that will put money into technology infrastructure. She told viewers that she is bullish on infrastructure names such as Foster Wheeler (FWLT) for plays on China.

To see which technology infrastructure names Link likes, check the "China Watch" Portfolio.

Posted on Jan. 27, 2009