Since the beginning of this year, Chinese airport stocks have performed solidly on both mainland and Hong Kong exchanges.

At present, three leading Chinese airports are listed on mainland exchanges: Shanghai International Airport, Guangzhou Baiyun International Airport, and Shenzhen Airport. On average, the three stocks have gained 11 percent since the beginning of the year.

The mainland-listed airports are about 20 percent cheaper than Chinese airports listed in Hong Kong, such as Beijing Capital International Airport and Hainan Meilan International Airport.

WSJ.com, the online edition of the New York-based Wall Street Journal, quoted an analyst at China Merchants Securities Research, Guo Dongmou, as saying that in the next five years, China's airports are set for an aggressive annual growth rate in revenues - 50 percent faster than the country's overall economic growth rate.

Some analysts think Guo Dongmou's estimates are too conservative. In the past five years, cargo volume in Chinese airports has increased 91 percent to 3.07 million metric tons, while passenger numbers have more than doubled to 138 million.

According to the General Administration of Civil Aviation of China, the country will buy 100 planes each year until 2010 to meet the demands of an expected doubling of passenger numbers and cargo volume.

The airport sector is set to be boosted by the further liberalization of the aviation industry. In 2002, China raised the overseas investment limit on Chinese airports to 49 percent. It has helped attract big investors, such as the Civil Aviation Authority of Singapore, which operates Changi Airport.

Another example is a recent agreement between China and US pledging a nearly fivefold increase in weekly flights between the two countries by the end of 2010.

Tang Qian, an analyst at BOC International, told WSJ.com that airports in Beijing and Shanghai will benefit most from the agreement because most of the additional flights they are likely to receive are from the US.

Moreover, Tang Qian said two gala events, the 2008 Beijing Olympic Games and 2010 World Expo in Shanghai, will help those airports as the Chinese government is expected to make further investments to upgrade facilities in both airports.

Foreign joint-venture cargo businesses have also sprung up in China. FedEx and United Parcel Service, both of the U.S., and Germany's Lufthansa have announced plans to establish cargo hubs or joint ventures in Guangzhou, Shanghai, and Shenzhen.

Shenzhen Airport-based Jade Cargo International, the first joint-venture cargo airline in China, in which Lufthansa Cargo has a 25 percent stake, is expected to fly its maiden voyage as early as July.

It's estimated that Jade Cargo will contribute at least 200,000 metric tonnes of cargo business to the airport annually when it becomes fully operational in 2007, or 43 per cent of the airport's air-cargo traffic of 466,500 metric tons in 2005.

The expected change in landing fees will also contribute to the booming of China's airport sector. Reports say Chinese aviation authorities have been working on a draft to charge the same landing fees for local and foreign carriers on international routes.

Such a move would reduce fees for foreign carriers by 20 to 30 percent, while Chinese carriers on international routes will pay 70 percent more fees to airports. Reports say the authorities are considering raising the local carriers' landing fees by at least 15 percent on domestic routes.

Despite these promising notes, some analysts are singing a different tune. Deng Hongmei from Everbright Securities said to WSJ.com that currently, profit-hungry funds are facing many other investment options on the market. So many options may entice them to retreat from infrastructure stocks, such as airports.