The economic picture in China is starting to look better every day. In fact, things are improving to a level at which Chinese government officials are starting to acknowledge it publicly.

During a state radio report on Sunday, the Chinese Premier Wen Jiabo said China will accelerate its planned spending of 600 billion yuan ($87.6 billion) on key technology projects and will introduce more measures to save its economy. Wen added that economic conditions in December were better than expected and that China is likely to be the first in the world to rebound from the global financial crisis.

Many market observers think China is the key to a global economic rebound. Investment guru Jim Cramer believes that China will lead the world into economic recovery and has said that China is committed to its stimulus plan like no other country in the world, because China doesn’t want to experience civil unrest. He explained that copper is worth watching for investors looking for a barometer for China.

Cramer is such a believer in China that he is jumping into the iShares FTSE/Xinhua China ETF (FXI) at higher prices. In a recent post to his RealMoney blog, he wrote: “I even paid up for a China ETF yesterday for Action Alerts Plus -- see that product for the particulars. We see it with rate cuts and with off-the-chart stimulus. The moves in Asia are stunning, particularly when you consider that the gadget market is pretty moribund.”

If Cramer is right about China leading the global recovery, then how should you play it? Here are some ideas.

On last Wednesday’s "China Watch: Security and Surveillance" video segment, Frank Curzio said that China Security & Surveillance (CSR) looks attractive trading at two times earnings and that the company should benefit from China’s stimulus plan. He also mentioned that other China plays like CSR, such as A-Power Energy Generation Systems (APWR), Gushan Environmental Energy (GU) and WSB Holdings (WSB), are all up tremendously since the last time he recommended them in a “China Watch” video segment.

To learn about another Chinese stock Curzio thinks investors should put on their radar, visit the China Watch Portfolio.

Should Investors Play China With Large-Caps?

On last Fridays’ "China Watch: Betting on a Big Name" video segment, Frank Curzio presented a large-cap stock that investors should consider for a play on China. He told viewers that the Chinese government arrested 11 people for software piracy for selling Microsoft (MSFT) office products illegally. He explained that the bust was equal to $2 billion and that the plant the Chinese government closed was the size of three legitimate Microsoft plants combined.

Some other U.S.-based software companies that could benefit from China’s crackdown on software piracy include Google (GOOG), IBM (IBM) and Apple (AAPL). Check out the China Watch Portfolio for more details.

Which Japanese Retailer Is Winning Big in China?

On Monday’s "China Watch: On the Fast Retail Track" video segment, Kristin Bentz (aka The Talented Blonde) told viewers that Japanese retailer Fast Retailing is taking the world by storm. She said its U.S.-based company Uniqlo competes with Gap (GPS), American Apparel (APP), Inditex and H&M.

Bentz explained that Fast Retailing keeps its prices low for consumers by brokering deals with huge textile manufacturers all over the world. To find out what Bentz thinks about Wal-Mart’s (WMT) new moves into China, check out the China Watch Portfolio.

Got Questions?

Investors who want answers to questions about how to play China can submit their questions to the “China Watch Weekend Mail Bag.” On last Saturday’s "China Watch Mail Bag: Luxury Market" video segment, a viewer asked: “Is the China luxury retail market really as strong as it seems? What are the best ways to play it?”

Bentz said that we're in the midst of a global luxury slowdown, but it’s a little less slow in Asia. She thinks the way to play the Chinese luxury market is with LVMH Moet Hennessy Louis Vuitton (LVMUY) and Tiffany (TIF). Visit the China Watch Portfolio to learn about some other luxury market plays in China.

Posted on Jan. 12, 2009