China saw a record high venture capital investment of 1.27 billion US dollars in 2004, according to statistics made by a non-governmental venture capital research institute.

The investment, from both Chinese and overseas professional venture capital investment enterprises, is 28 percent higher than in 2003.
Venture capital was invested in 253 new businesses in 2004, 43 percent more than in 2003.

Among the industries drawing venture capital in 2004, the IC (integrated circuit) industry absorbed 424 million US dollars, ranking the first.

Traditional industry is another hot spot for venture capital investment as 178 million US dollars have been invested in 30 businesses there. Among all the traditional industries, manufacture drew the most attention in 2004.

China also saw improvement in the recouping of venture capital investment after profits, as 60 investment enterprises recouped 802 million US dollars in 2004.

Stock ownership transfer is the major means of recouping. In 2004, some investment enterprises, such as Shanda Networking Co., recouped after making profits from their invested enterprises' being listed overseas.

Sources: Xinhuanet

Planners at the University of California-Davis tore up designs for a 10,000-seat stadium and reconsidered.

Honda Motor Co. Ltd. announced a price increase on most automobile lines for the first time in a decade.

Cooper Tire & Rubber Co. reported that operating profit fell $10 million in the fourth quarter.

The common thread: Skyrocketing steel prices that are sending a shock wave through commercial construction and other steel-related industries.

West Coast steel contracts have risen 30 percent to 40 percent in the past year, and regional spot market prices for steel have soared nearly 90 percent.

"Steel has been the biggest thing affecting construction costs," said Aaron Alhady, director of business development for McCarthy Building Companies Inc.'s Northern Pacific Division. "It has affected the overall cost of projects 20 to 25 percent."

Steel increases have affected costs for everything from steel bars used to reinforce concrete to plumbing pipe and screws.

"Those costs get passed on," Alhady said. "It's a very touchy subject in the industry. So you do what you can to predict the costs. The challenge is trying to forecast those costs appropriately because you're making decisions about the programs today on what materials will cost down the road. We're talking about hundreds of thousands or millions of dollars."

Experts say Chinese steel consumption is a big reason for steel's white-hot prices. China's stampede to expand manufacturing and build infrastructure has created a huge demand for steel, in turn boosting demand and tightening global supplies of scrap iron, iron ore, pig iron and coking coal used to make steel.

Nobody knows for sure how much steel is being consumed or produced in China.

Steel manufacturers and steel buyers use production and consumption data to set prices and adapt to shifts in demand. However, Chinese industry is in such a dynamic state that it is difficult to tally its steel production and use, said George Wilson, chief projects estimator for McCree Inc., a large architectural firm in Orlando, Fla.

Most experts figure that China last year consumed 250 million metric tons -- one-quarter of the world's annual steel output -- and produced about 210 million metric tons. By comparison, U.S. steel consumption was 132 million metric tons in 2004. Imports made up about 27 percent of that total.

To feed their steel mills, Chinese producers have been scouring the world for scrap steel. Scrap prices in the United States, the world's largest supplier, have risen by as much as 80 percent. Prices for iron ore, another key ingredient in steel making, are up 20 percent on world markets.

Add in the dollar's weak exchange rate and growing domestic demand for steel fueled by a rebounding U.S. economy and you get steel prices that are at 24-year highs, said LPA Sacramento Inc. chief architect Robert Chase.

"It used to be that we would look at a building and ask, 'Steel or concrete?' " Chase said. "But right now, steel is so expensive we think concrete first."

Steel prices prompted University of California-Davis planners to commission a redesign of a $21 million stadium the school plans to open late next year.

The original plan called for a 10,000-seat outdoor stadium with a concourse. The new version, drawn by San Francisco firm Ellerbe Becket, is a bowl sunk 16 feet below ground level.

"We revised the design to incorporate all 10,000 seats into the bowl area," said university project manager Jill Tomczyk. "(That) eliminated the use of steel for the elevated structure."

Source: Detroit News

Beijing this winter is festooned with orange banners and billboards that look like Communist agitprop. But instead of slogans exhorting hero-workers to produce more rice or steel, the message reads: "The economic census needs your support!" Time was, China's centrally planned economy didn't need such a census. Planners would have been expected to know how much of everything Chinese companies were churning out. But now, China is marshaling millions of T-shirted recruits to ask business owners across the country dozens of questions about their sales, profits, and production.

Will China's new capitalist roaders reveal such sensitive information? It's too early to tell, since the census only began a month ago and the first results won't come out until August. But the census is so important for the government that it has pledged to keep the data confidential and not use them to track down tax evaders. Beijing hopes the census will help it better understand China's $1.4 trillion economy -- and improve the quality of Chinese statistics, which many experts have long decried as grossly inaccurate. "We consider the criticism from home and abroad an impetus to speed up our statistical reform," Li Deshui, commissioner of China's National Bureau of Statistics (NBS), said at a conference on Jan. 17.

Just about everybody would benefit from better numbers out of China. Over the past decade, China's share of global output has doubled, to roughly 4%. The country sucked in some $65 billion in foreign direct investment last year, overtook Japan as the world's No. 3 trading nation behind the U.S. and Germany, and amassed more than $600 billion in foreign currency reserves. The price of oil, steel, aluminum, copper, and iron ore all turn on the economic figures China releases.

Until recently, though, China's statistics were about as reliable as a $19 DVD player. During the 1950s statistical fakery ran rampant; everyone from steel producers to hat makers pumped up figures to meet government quotas. After the 1997-98 Asian financial crisis, economists say, Beijing exaggerated its expansion to show how well it was withstanding the fallout. UBS economist Jonathan Anderson estimates that the official 1998 gross domestic product growth figure of 7.8% was nearly double the real level. "There is a smoothing exercise that goes on," explains Anderson. "The net result is that China's numbers are much less volatile than reality."

Slippery Production

These days, China is getting more heat for underreporting its growth than for exaggerating it. Some private economists think the country grew by more than 10% in 2004 despite the 9.5% figure released on Jan. 25. Shoddy recordkeeping is partly to blame. But there's also an incentive for local officials to meet -- precisely -- the official growth target set annually by Beijing. Once enterprises in a given municipality reach the desired figure, any excess production may be moved to the following quarter. "There is political pressure when growth is running hot to err on the negative side and when running slow to err on the positive," says Arthur Kroeber, managing editor of the Hong Kong-based China Economic Quarterly. He adds, however, that China's numbers aren't any worse than those from most developing countries.

It's not just the headline numbers on growth, inflation, and investment that are questionable. Some experts say China's banks may hold $600 billion in nonperforming loans -- or 35% of all outstanding debt. The official number is just $200 billion, in part because the statistics bureau isn't as strict in classifying dud loans as it might be, and also because debt from many smaller regional lenders and credit cooperatives isn't included. Nor do government finance data include unfunded pensions or likely bank-bailout liabilities.

Some economists are taking matters into their own hands. Anderson oversees his own growth index that he compares with the official figures. He looks at hard-to-fake data including external trade, passenger traffic on planes, and energy consumption. Official figures show Chinese consumer spending last year was robust (fueling 13% growth in retail sales), rural incomes rose sharply, and investment jumped 26% for the whole economy. Put all together, "it is very difficult to get an economy growing at just 9.5%," he says, guessing the real number was 10.6%.

That's not to say there has been no improvement in statistical reporting from China. The World Bank, International Monetary Fund, and private economists all see huge gains. In 2001, for instance, China doubled to 700 the number of items it includes in its monthly survey of consumer prices, leading to a more accurate assessment of spending patterns. To bypass local party officials who might be inclined to fudge economic performance to move up the ranks, the NBS now collects data directly via the Internet from 5,000 large and midsize companies -- accounting for nearly half of China's industrial production -- and from 3,000 real estate companies and 1,200 wholesale and retail outfits. The NBS is making more random checks of data, which discourages cheating. And the census should help shed light on exactly what is happening in the private sector. Chinese statistics "are light years ahead of where they were," says Kent Kedl, executive director of Technomic Asia, a Shanghai-based market strategy consultant.

Massaging The GDP

Two areas, though, continue to concern China watchers. There has long been a suspicion that Beijing has at various times either over- or underreported numbers such as consumer spending, retail sales, and capital outlays to leave room for massaging the final GDP (news - web sites) calculation when needed. Another mystery is the actual size of China's service sector. While China is widely known as the world's manufacturing workshop, its health-care, retail, leisure, tourism, and education sectors are booming, too. The government says services accounted for about a third of China's output last year. Yet many private economists believe the census will show that services are much bigger -- perhaps as much as 40% of output. The Chinese "have always recognized the need to improve their data on the service sector," says China watcher Nicholas R. Lardy, a fellow at the Institute of International Economics in Washington, D.C.

The push to add more integrity to Chinese economic data is a work in progress -- and the census is a good start. But the real test will come if China's growth bubble pops and economic expansion slows dramatically. If Beijing comes clean about what's really happening in its economy even when the numbers are embarrassing, China will prove it has matured. But if the government continues to hide the truth, all the sloganeering around the economic census will ring as hollow as the old-time propaganda.
 
Source: Business Week

According to the Chinese Academy of Social Sciences (CASS), China is now home to some 99 million migrant workers, virtually all of whom have moved from rural to urban areas in search of better jobs.

Once upon a time they came to the cities in droves, many of them wandering the streets and desperate for work.

But in 2004, migrant workers began to come into their own as a social force: The labor shortage in the Pearl River and Yangtze River deltas and a number of random strikes indicate that the workers have recognized their importance to the economy. Now they are demanding that their employers recognize it, too.

The stream of farmers pouring into the cities during the past two decades seemed so inexhaustible that most people didn't even notice when the first signs that it was drying up appeared. But by the latter half of 2004, the Ministry of Labor and Social Security reported that a significant labor shortage did exist in certain areas. The dearth of young female workers ¨C the most sought-after group for manufacturing and processing jobs ¨C was particularly pronounced.

The Pearl River Delta, southeastern Fujian Province and southeastern Zhejiang Province abound with the factories that rely on such women to fill orders, but now those areas are unable to fill 10 percent of their positions. The Pearl River Delta region alone lacks 2 million workers.

It wasn't hard for the labor ministry to figure out why. Wages hadn't been raised in years, even though the companies were hauling in virtual buckets of gold and regional costs of living rising substantially. Meanwhile, hours were growing longer without compensation, while regulatory limits on work hours or days were largely ignored. Essentially, employees' rights were trampled.

By mid-2004, the problem had become serious. Without enough workers, many of the companies found themselves unable to fill orders. Some made plans to move inland, where recruiting would be easier. In an effort to keep them where they were, local governments joined the companies in their recruiting efforts.

In the Pearl River Delta, migrant workers struck for their legal rights. According to Dr. Liu Kaiming, head of the Shenzhen Modern Society Observation Institute, at least three strikes involving 2,000 to 3,000 workers each occurred in Shenzhen in the past year.

Liu says that many of today's migrant workers are better educated than those of years past, and more than a few are junior college or technical school graduates.

Unlike their silent, docile predecessors, the current generation of migrant workers has access to new telecommunication technologies, such as mobile phone SMS, and they know how to use it. If they aren't already familiar with safeguards for their rights and interests, they can find out.

Today's migrant workers are not merely scrounging for a full rice bowl in the cities. They want their due political, economic and social rights as well. Researcher Wang Chunguang of CASS said that they are looking for the same treatment as their urban peers: higher salary, improved working and living conditions, basic social security and the right to education for their children.

In the past, their requests for such basic compensation received not even a modicum of consideration. But since Premier Wen Jiabao began pressing for timely payment of wages in October 2003, many workers have received their salaries long held in arrears. Zhejiang, Shandong and Guangdong provinces have raised their minimum wages.

Overall, the structure of employers and migrant workers remain unchanged: capital strong, labor weak. But the influence of the migrant workers on the nation should not be underestimated. In the past 20 years, they have been a silent force pushing forward China¡¯s economic and social reforms. They have accelerated the nation's shift from a planned to a market economy, and their migration to the cities dealt a fatal blow to the old, restrictive residence registration system.

In 1984, China saw the first migrant workers appear in its cities. In 2004, the first shortage appeared. These workers have become a new social stratum, rooted in cities and essential to urban economic and social development. And they are becoming a force to be reckoned with.
  
Sources: China.org.cn