updated 8/2/2005 5:48:27 PM ET 2005-08-02T21:48:27

UPS Inc., the world’s largest shipping carrier, said that China is the company’s top priority and that the American firm was expanding flights and facilities in the Asian nation that has become a manufacturing powerhouse.

“China isn’t an option. It’s essential. It’s our No. 1 priority,” John Beystehner, chief operating officer at UPS, said at a conference hosted by the Atlanta-based company.

Beystehner said the company plans to establish a hub in the Chinese financial capital of Shanghai by 2007. The firm’s 18 weekly flights in and out of China would expand to 21 next year, he added.

By the end of this year, the company’s China operations plans to have 3,500 employees, 1,400 vehicles and 75 facilities, Beystehner said.

UPS has also had strong growth in Hong Kong, where export volume grew by 20 percent in the second quarter, and Taiwan, where export volume rose by more than 25 percent, he said.

Rivals Fedex Corp. and DHL are also investing heavily in China.

Last month, Memphis, Tenn.-based Fedex Corp. said it would close its Asian hub in the Philippines and replace it with a new $150 million facility in Guangzhou, southern China.

Fedex predicts air freight from China to the United States will grow an average of 9.6 percent a year over the next 20 years.

DHL, a unit of Bonn-based Deutsche Post AG, has said it’s investing $215 million in express and logistical infrastructure in China over the next five years.

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