Airport authority in Shanghai is launching a 80 million yuan (US$9.67 million) project to build China's first international airport emporium in Pudong.

"The emporium, modelled on foreign major airports, is part of the expansion strategy of Pudong Airport," said Du Chuncai, president of the Shanghai Airport Group.

At the weekend, Du told China Daily that the huge retail store, built with self-collected funds, is a move towards the city's objective of turning its two airports into an aviation hub in the Asia-Pacific region.

The emporium, close to Pudong Airport, will cover 7 hectares, and be constructed in two phases to provide space for popular Chinese and overseas goods.

"Negotiations are under way with more than 300 companies at home and abroad about their entry into the emporium," said Andy Tsai, chief executive officer of Shanghai Universal International Investing Corp, a partner of the airport authority's for the management of the project.

Du said: "The fast growth of air passengers is a strong impetus for the project."

By the end of December, it is expected that Pudong Airport will have handled 15 million passengers for the year, which is due to rise to 20 million in 2004.

To back the emporium project, Du said the airport authority has delivered a report to the State General Administration of Customs to run a bonded warehouse zone for imported goods.

In another development, the airport authority is making preparations for the construction of the second terminal building at Pudong Airport.

Scheduled to be put into operation in 2007, it will be based on an international design, chosen through a bidding process. By then, Pudong Airport will have an annual handling capacity of 60 million passengers per annum with two runways and two terminals.

The airport authority is considering building a third runway in 2008 to meet the growing number of flights.

But local aviation insiders say the airport authority is facing a funding shortage.

"We will find it difficult to fund the projects by ourselves, as they are expected to cost more than 20 billion yuan (US$2.4 billion)," Du said.

Du said he hopes the problem can be solved with revenue from the city government and loans from foreign banks.

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