The Chinese stock market, like much of the rest of the world’s stock markets, has sold off hard this year in the face of a slowing global economy. Its stocks have been battered despite the fact that the Chinese economy is holding up noticeably better than the rest of the world.

China is still growing its economy fast, at 7.5%, despite global economic issues. Also, the Chinese government is becoming more proactive with its efforts to save its stock market and economic future. For example, on Nov. 26, the People’s Bank of China cut interest rates by 1.08 percentage points to about 5.6%, the largest cut in 11 years.

Another big move by the Chinese government was its announcement of a gigantic $586 billion economic stimulus plan package that aims to bump up growth by 2 to 3 percentage points. Under the package, China will pour money into infrastructure projects and education, as well as environmental protection and high technology.

Investors now have one more reason to be hopeful. Leaders in the Far East are set to hold a high-level meeting this week. Analysts are expecting more government polices to be announced to spur economic growth, such as boosting exports, injecting capital into China’s stock market and raising social spending.

Now might be the perfect time to position for an equity market recovery in China. One place investors can turn to for ideas on how to play China is TheStreet.com’s "China Watch" video series, which concentrates on finding viewers the best plays for investing in China with a combination of research and opinions from industry experts.

Below are some highlights from some recent “China Watch” video segments.

On last Wednesday’s "China Watch: Tapping Into Telecom" video segment, TheStreet.com's Gary Krakow said that China has the largest cell phone market on the planet. He thinks a 3G upgrade could be a boon for some Chinese telecom companies. Krakow explained that China has a large untapped cell phone market in the rural areas with penetration at only 12%. To see which two stocks he favors, check out the China Watch Portfolio at Stockpickr.com.

On last Friday’s "China Watch: Hedging For A Global Recession" video segment, Ed Mullen, CEO of Emperor Investment Management, the first hedge fund in mainland China, said there will definitely be an economic slowdown in China during 2009. However, he believes that China will see a soft-landing 6 to 18 months out as the stimulus package works its way through their economy. His favorite Chinese sectors are Internet (think Baidu.com (BIDU) and Sohu.com (SOHU)), infrastructure (think Fluor (FLR) and Foster Wheeler (FWLT)), consumer staples (think Coca-Cola (KO) and Diageo (DEO)) and telecom (think China Mobile (CHL)).

Investors who want answers about how to play China can submit questions to the “China Watch Weekend Mail Bag.” On last Saturday’s "China Watch Mail Bag: SOS for Shippers" video segment, a viewers asked: “With China cutting rates down to 5, how much more do they need to cut or what else can they do to lift the Baltic Freight Index?”

Sham Gad of Gad Managing Partners said that bulk shippers are being killed because China’s appetite for everything they ship has completely dried up. He mentioned that lower interest rates are good, but without China’s appetite, shipping rates will not return to levels seen in the past. One shipping stock that has been hit hard from the China slowdown is DryShips (DRYS). To see some other shipping stocks that are being affected by the weak demand in China, check out the China Watch Portfolio.

On Monday’s "China Watch: Wait for Green Light on Gushan" video segment, Stocks Under $10 portfolio manager Frank Curzio said that Gushan Environmental (GU), a Chinese biodiesel producer, is on his “watch list” as crude oil prices come down. He pointed out that the stock is trading below cash and that shares could fall by an additional 10% to 15% before investors should consider the name. To learn more about two small-cap Chinese stocks that are on Curzio’s “watch list,” check out the China Watch Portfolio.

Posted on Dec. 8, 2008