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Construction of a gigantic international passenger terminal, expected to compete with existing terminals in Hong Kong, began on Saturday.

The terminal, capable of docking international passenger liners, especially luxury cruises, is to be built alongside the Huangpu River in Shanghai.

The 160,000-square-metre Shanghai Port International Cruise Terminal, in the downtown Gaoyang pier, will include an 850-metre international port that has three 80,000 ton berths for international passenger liners, according to the Shanghai International Port (Group) Co Ltd, the main developer.

The project will make Shanghai the first Chinese mainland city with berths for large international cruises, a prerequisite for Shanghai to further develop cruise ship business.

Analysts in Shanghai said they believe the competition with Hong Kong ports, if any, will be positive for both to develop.

The project is due to be completed by the end of 2006, with a total investment of 2 billion yuan (US$241.8 million). It will go into operation in 2007, announced Lu Haihu, chief executive of the company yesterday.

Hong Hao, vice-secretary general of Shanghai Municipal Government, yesterday reiterated the city's ambition of becoming an international marine transport centre.

The terminal, which is part of the development of the areas along the Huangpu River in preparation for Shanghai World Expo 2010, will become a "water gateway'' and "a new spotlight,'' said Hong

Shanghai government has been considering the development of cruise ship business to vitalize the city's international tourism.

Shanghai Tourism Administration filed up a general plan of cruise ship business development in the coming years along with the city's World Expo preparation.

Ocean cruises are another "lucrative tourism cake'' in the coming years along with Shanghai's Formula One race, which is scheduled for the second half of this year, according to the plan.

Hong Kong-listed Star Cruises, the world's third largest cruise line, has been negotiating with the city government to further invest in the terminal area to construct service facilities for international cruise ships, which may include a complex of hotels, shops, restaurants, bars and other entertainment facilities, according to company sources.

The terminal area, with a water depth of 8 metres, has good geographic conditions for ocean liner stopovers, and the surrounding region including Shanghai suburbs and its neigbouring Jiangsu and Zhejiang provinces, is attractive to overseas tourists, said Yu Jianmeng, the Star Cruises's chief executive officer for Chinese mainland business.

Yu also said earlier that the company hopes to make Shanghai the homeport of part of the company's luxury liners in the future.

More than 50 international cruise liners docked at Shanghai in 2003 despite of SARS, bringing tens of thousands overseas tourists, said Shen Huixun, an official with the International Passenger Office of the Shanghai Port Authority.

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