China Economy - News & Updates

[Neo]

India misses Nasdaq bus; China gets dedicated country index
(PTI)

7 April 2007

NEW DELHI — India has lost out to China in the arena of one of the world's most respected stock exchange, Nasdaq, which has decided to launch a dedicated index of Chinese companies listed in the US.

The development comes amid the growing global appetite of India Inc to expand its overseas footprint with a number of cross-border acquisitions, joint ventures and setting up of foreign business units.

However, the number of Indian companies listed on the US stock exchanges has remained somewhat stagnant over the past few months, despite over 100 firms estimated to be mulling a listing either on the Nasdaq or NYSE.

Nasdaq Stock Market's planned China index would initially comprise of 30 Chinese companies listed on any US exchange.

The major impediment for India missing out to China for a dedicated country index is the lesser number of companies listed in the US as an index needs at least 30 companies, the market observers said.

Out of a total of around 120 Indian companies listed overseas, there are just seven Indian companies listed on Nasdaq with a market cap of around $32 billion— including — Infosys, Sify and Rediff, while there are ten Indian firms listed on another US exchange, NYSE.

Nasdaq CEO Robert Greifeld was in China earlier this week to persuade more Chinese companies to list on Nasdaq.

Incidentally, Greifeld had also visited India last year as part of the exchange's efforts to attract more Indian companies to list on Nasdaq.

However, in the last few months no new Indian company has listed on the Nasdaq, while as many as six Chinese companies were listed on Nasdaq in the first three months of 2007. Currently, there are 38 companies from China listed on Nasdaq with a market value of about $30 billion. Besides, there are 31 Chinese companies listed on the New York Stock Exchange with a combined market cap of a huge over $800 billion. Nasdaq president and CEO had told PTI in August last year: "We are currently in talks with several Indian companies drawn from various sectors and are confident that we will see more Indian companies listing on Nasdaq in the future."

http://www.khaleejtimes.com/Display...l/business_April149.xml&section=business&col=

 

[kvLin]

stocks and funds have been the hottest topic among Chinese people,and they did make a bunch of new-rich.

 

[Neo]

Thursday, April 12, 2007

China firm producing gas at field disputed by Japan

BEIJING: China’s CNOOC Ltd confirmed for the first time on Wednesday that it had begun producing gas at a field in the East China Sea despite Japan’s objections to development, which Tokyo fears might drain off its resources.

The state-controlled firm said in its 2006 annual report it was pumping oil and gas at the Tianwaitian field.

But it is also ready to begin producing from the nearby and larger Chunxiao field as soon as Beijing gives it the go-ahead, an industry source familiar with the development told Reuters.

The news came at an awkward moment as Chinese Premier Wen Jiabao arrived in Japan for a summit with Japanese Prime Minister Shinzo Abe aimed at setting aside rancour over the past and focusing on ways to tame rivalry over energy and regional influence.

Japan and China disagree over the boundary between their exclusive marine economic zones and Japan objects to Chinese development of gas fields near the border.

Although the fields are in an undisputed area, Tokyo fears the drilling operations could drain gas from its side by tapping into geological structures that stretch into that area.

CNOOC’s gas output from the Tianwaitian field last year was equivalent to a relatively modest 4 million cubic feet per day, the company said in its annual report, which was posted on the Web site of Hong Kong’s Stock Exchange.

But the industry source said actual output was now running at 500,000 cubic metres a day (17.65 million cubic feet), and when Chunxiao comes on line, annual production at the two fields could reach 600 million cubic metres a year.

Although CNOOC is the operator of these fields, it only gets half the output because China’s second-largest oil and gas firm Sinopec Corp has a 50 percent working interest and is responsible for gas marketing.

Since CNOOC only started test operations in February 2006 and took about six months to reach current levels, total production averaged over 365 days of the year was lower than the current daily rate.

Even if Chunxiao comes on line, combined output would still represent barely 1 percent of the 59 billion cubic metres of gas the country pumped last year.

But Beijing sets gas prices below global levels, so it is keen for its energy firms to maximise domestic production to curb a growing reliance on foreign supplies.

No comment: Japan said in February that China had told it that reports China had started production at Chunxiao were inaccurate. The Ministry of Economy, Trade and Industry, which handles energy affairs, declined immediate comment on the new figure.

“We will have to confirm that because we did not see anything about commercial production at the field in the company earnings report last month,” an official said.

The annual report, with full details of the firm’s reserves and producing assets, was released around two weeks after CNOOC revealed headline earnings figures for last year. At the time, Chief Executive Fu Chengyu said Japanese resources were not threatened by its drilling, but declined to comment directly on whether production had begun.

Japan is also concerned about expansion at the nearby Pinghu field, which has however been producing for several years. Output from CNOOC 30 percent share was 17 million cubic feet per day. The firm has largely avoided commenting on the politically sensitive fields, and a company spokesman could not immediately be reached to comment on the figures beyond the annual report.

http://www.dailytimes.com.pk/default.asp?page=2007\04\12\story_12-4-2007_pg5_27

 

[Neo]

April 13, 2007
China reserves

BEIJING, April 12: China announced on Thursday its forex reserves, already the world's largest, had surpassed $1.2 trillion, reflecting the central bank's struggle to keep the nation's currency from soaring. At $1.202 trillion, the reserves were up 12.7pc from the beginning of the year, and 37.4pc from 12 months earlier, the People's Bank of China said in a statement on its website. “Even for China it's a very strong increase,” said Paul Cavey, Hong Kong-based China economist with Macquarie Securities.—AFP

http://www.dawn.com/2007/04/13/ebr19.htm

 

[Neo]

Thursday, April 19, 2007

China may ink $12b worth of import deals with US

BEIJING: China is likely to sign import deals valued at up to 12 billion dollars with the United States next month in a bid to reduce its yawning trade surplus, state media said Wednesday.

The deals will be inked during a high-profile bilateral strategic economic dialogue in the United States in May, the China Daily reported, without giving any sources.

A proposed procurement delegation will cover a wide range of US products, from soybean and cotton manufacturing machinery to electronic goods, in its visit to Atlanta, Chicago, San Francisco and Washington, it said.

The deals are widely seen as part of the Chinese efforts to cut its huge trade surplus with the United States, which hit more than 230 billion dollars in 2006, according to US data. The Commerce Ministry was not immediately available for comment when contacted by AFP Wednesday.

When China’s President Hu Jintao visited the United States in April last year, Chinese enterprises sealed about 16 billion dollars in deals on products ranging from soybean to aircraft, the report said.

It said next month’s strategic economic dialogue, to be co-chaired by Vice-Premier Wu Yi and US Treasury Secretary Henry Paulson, is expected to be tense after Washington last week formally filed WTO complaints against China.

Beijing has said the US move to take China to the World Trade Organisation on copyright piracy and market access barriers would have “negative impact” on overall trade relations between the two.

http://www.dailytimes.com.pk/default.asp?page=2007\04\19\story_19-4-2007_pg5_30

 

[Neo]

April 20, 2007
China records 11.1pc growth :thumbsup:

BEIJING, April 19: China's economy grew a blistering 11.1 per cent in the first quarter of 2007, the government said on Thursday as it called for fresh measures to put the country on a more sustainable course.

The rapid expansion and acceleration of the world's fourth-largest economy in the first three months of the year is likely to have been boosted by a yawning trade surplus and massive investment in infrastructure.

“We must carefully carry out all policies of the central government and continue to strengthen and improve macro-economic control measures,” Li Xiaochao, spokesman of the National Bureau of Statistics, told reporters.

Growth in the world's fourth-largest economy was 10.7 per cent in 2006 and ran at 10.4 per cent in the three months to December.

The first three months of 2007 also saw the highest quarterly growth rate since the second quarter of last year, when the economy expanded 11.5 per cent, according to revised government data.

Analysts had expected China to pick up speed in the first quarter, with most forecasts at around 11 per cent, well above the government's official forecast of 8 per cent for 2007 as a whole.

The acceleration has come about despite a whole series of cooling measures adopted by the government since early last year, including interest rate hikes and reduction of tax incentives for exporters.

“Investment and credit are rising fast, and the trade surplus is large,” said Ma Qing, an analyst with Citic Securities in Beijing.

China's consumer price index rose 2.7 per cent in the first quarter of 2007 from a year earlier, and was up 3.3 per cent in March alone, the bureau said.

The government is targeting an inflation rate within three per cent so the March outcome will be of concern as prices have ticked steadily higher so far this year. —AFP

http://www.dawn.com/2007/04/20/ebr21.htm

 

[Neo]

Sunday, April 22, 2007

China’s oil reserves to hold 30 days’ imports by 2010

BOAO (china): China’s strategic oil reserves will probably contain the equivalent of about 30 days of crude imports by 2010, the country’s top energy official said on Saturday.

“According to my conservative personal estimates, by the year 2010, China’s (state) oil reserve will be equal to 30 days of imports,” said Chen Deming, vice chairman of the National Development and Reform Commission. Chen said China would not spend “too much” money on aggressively expanding its strategic reserves, as global oil prices were still at relatively high levels and any move by China to fill stocks quickly could cause turbulence in global oil markets.

The fact that China was a developing country with many other areas in need of spending such as education and social welfare was also a reason for not pouring an excessive amount of money into the reserves, he told the annual Boao Forum for Asia on the southern Chinese island of Hainan.

Chen said the government was adopting rules covering both commercial and strategic reserves. Each oil company would be required to set aside a certain amount as their own reserve, he said.

The next phase of the strategic reserves would be in locations with developed transport infrastructure close to refineries, he said, without elaborating.

Construction of the first phase of the reserves, with a total capacity of 16.2 million cubic metres, is expected to be completed in 2008.

Possible sites for the second phase which are expected to have total capacity of 28 million tonnes include Hainan, Tangshan in Hebei province and two sites in the southern manufacturing hub of Guangdong province.

http://www.dailytimes.com.pk/default.asp?page=2007\04\22\story_22-4-2007_pg5_25

 

[Neo]

Sunday, April 22, 2007

China’s CNOOC to talk energy with Japan, India

BOAO (china): Chinese offshore oil developer CNOOC Ltd is looking to work with Japanese and Indian firms to develop alternative energy sources and invest in oil fields in third-party countries, its chief executive said on Saturday.

CNOOC was forced in 2005 to withdraw an $18.5 billion takeover bid for US energy firm Unocal Corp due to heavy opposition from US lawmakers.

Fu Chengyu said the company was looking closer to home, to cooperate with big energy consumers in Asia.

“The cooperation will be in different forms, including technical cooperation, joint efforts on development of new energy as well as joint development of oil fields in other countries,” he told reporters on the sidelines of the annual Boao Forum for Asia, being held on the southern Chinese island of Hainan.

Fu declined to comment on whether CNOOC would start to produce gas from its Chunxiao gas field, which was disputed with Japan, in the first half of 2007. Fu said the company was aggressively developing alternative energy sources, including wind power, to diversify its business.

“CNOOC currently has only one core business oil and gas. But in 30 or 50 years, we may have several core businesses of other energy sources,” he said. Fu also reaffirmed that CNOOC Ltd would list shares on the domestic stock market yet this year. reuters

http://www.dailytimes.com.pk/default.asp?page=2007\04\22\story_22-4-2007_pg5_31

 

[Neo]

Sunday, April 29, 2007

President Hu Jintao reaches out to Taiwan business community

BEIJING: China’s president dangled the carrot of the country’s booming economy at a forum on China-Taiwan business ties on Saturday, in Beijing’s latest attempt to win hearts and minds in Taiwan.

Chinese President Hu Jintao told the roughly 500 delegates, including a former Taiwanese opposition leader, that the country offered boundless economic opportunities.

“At present, the mainland’s economy is developing powerfully, which creates more space, more motivation and even more superior conditions for cross-strait economic cooperation,” Hu said, with Lien Chan, honorary chairman of Taiwan’s main opposition Nationalist Party, or Kuomintang (KMT), standing beside him.

The Cross-Strait Economic and Trade Forum was discussing how to boost exchanges between China and Taiwan amid controversy this week over the 2008 Olympic torch route.

The need for direct flights across the Taiwan strait, which Taipei bans for security and political reasons, is a key agenda item of the event, although no members of the island’s independence-leaning, ruling Democratic Progressive Party are attending.

China and Taiwan have been bitter rivals since Nationalist forces fled to Taiwan after losing a civil war in 1949. China claims sovereignty over the island insisting it must eventually be returned to the fold, by force if necessary.

Pro-independence politicians in democratic Taiwan suspect China is trying to win the island over through commercial ties, though the Beijing forum, being held this weekend for the third time, has yet to yield any new Chinese government incentives.

Taiwan investors have poured up to $100 billion into China over the last two decades, lured by a common language and culture as well as low labour costs and close proximity to the world’s fastest-growing major economy.

Lien, a twice-defeated Taiwan presidential candidate, said the two sides should put aside decades of confrontation and start talking.

“The mainland is today open to the entire world, but cross-strait relations, for reasons which everyone are familiar with, hesitate to move forward,” he said. Neither Hu nor Lien mentioned the flap over the Olympic torch.

China accused Taiwan of a “perfidious betrayal of trust” on Friday for reneging on an agreement to host a stop on next year’s Beijing Olympic torch relay.

The relay schedule was unveiled by Beijing organisers on Thursday and included Taiwan as the stop before Hong Kong on the 137,000-km (85,000-mile) route.

Taiwan Olympic officials called China’s linking them to Hong Kong an attempt to include the island in the domestic relay route and rejected the plan.

President Chen Shui-bian said on Friday Beijing should consider the torch route that Tokyo used in 1964, which means sending the flame to Taiwan from a country other than China and passing it on from Taiwan to yet another country, but not China or any of its territories.

The KMT hopes trade and tourism deals clinched at the Beijing forum will help the island’s economy and its chances of winning parliamentary elections in December and presidential elections next March.

http://www.dailytimes.com.pk/default.asp?page=2007\04\29\story_29-4-2007_pg5_26

 

[Neo]

Sunday, April 29, 2007

Russia plans to build third oil pipeline to China

MOSCOW: Russia has built a third of its planned oil pipeline to China in the first year of construction and is on track to finish its first pipeline to Asia on time by the end of 2008, Russia’s pipeline monopoly said on Saturday.

Transneft said it had built over 900 km (559 miles) of the 2,700-km pipeline, which will eventually pump 30m tonnes a year (600,000 barrels per day) of crude to China. Transneft has said the pipeline will allow Russia, the world’s second largest oil exporter, to make its exports more flexible and re-route volumes to Asian market when prices are more attractive than on its current core European market. If additional crude resources are found in East Siberia, a new pipeline branch could be built to the Pacific coast to increase deliveries to 1.6m bpd. reuters

http://www.dailytimes.com.pk/default.asp?page=2007\04\29\story_29-4-2007_pg5_37

 

[Neo]

Wednesday, May 02, 2007

China’s evolving economic system
By Assar Lindbeck

The case for combining further government withdrawal from the production system with more engagement in the social field is compelling. China’s leaders seem to be promising this by voicing their concern for domestic entrepreneurship, social arrangements, rural development and environmental protection

It is generally agreed that China’s impressive economic achievements during the last three decades are largely the result of the radical reform of its economic system. While private ownership of firms hardly existed when these reforms started, private firms today account for about 60% of total production.

Ownership, however, is only one dimension of an economic system. China’s economic system has changed just as drastically in other ways as well. Decision-making regarding consumption and production has largely been decentralised to individual households and firms, respectively; economic incentives, markets, competition, and internationalisation have to a considerable extent replaced command, administrative processes, monopoly, and autarky. Generally speaking, China’s reform period has been a stark contemporary illustration of the historical lesson that unleashing individual initiative tends to boost economic development.

How, then, should today’s Chinese economy be characterised? Some observers describe China’s current economic system as “state capitalism”; others (including China’s rulers) call it “market socialism.” Both labels mislead. One reason is the domination of private firms on the production side. Another is the fact that “socialism” usually does not rely upon strong economic incentives and competition, which are the dominant economic factors in today’s China.

In fact, China is a type of mixed economy, with a number of specific features, some of which favour GDP growth, while others have not dragged down the economy to any considerable extent so far. But this situation is likely to change. So further reforms will be decisive in determining the Chinese economy’s future performance.

Although internationalisation of the economy has served China well, it is unlikely that the current 35% share of GDP claimed by exports and the heavy reliance on foreign technology are sustainable in the long run. Tension between widespread private ownership of firms and pervasive public ownership of assets is another specific feature of China’s economic system that looks similarly creaky.

For example, by disfavouring lending to private firms, state-owned banks distort the allocation of resources. Chinese agriculture provides another example of tension between private entrepreneurship and public-sector ownership of assets. In particular, public ownership of land harms the investment incentives for family farms and reduces their chance of consolidating land holdings in order to exploit economies of scale.

Reducing this tension over ownership of firms and assets is imperative, because the entry and expansion of small private companies will be increasingly important when China’s domestic markets and domestic innovation need to play a greater role. Thus, for China to gain maximum advantage from private entrepreneurship, it is important to continue shifting the share of financial assets and land holdings out of the public sector.

This would also help address the endemic corruption that is also a specific feature of the Chinese economic system. Corruption is difficult to reduce drastically so long as politicians and bureaucrats have much “to sell” to firms and individuals — including rationed loans from public-sector banks and regulatory permits of various types. In rural areas, corruption emanates from frequent expropriation of land-lease contracts held by farmers working on collectively owned land, which local officials then turn over to non-agriculture land developers. In both cases, reducing corruption will require not only government pep talks against bad ethics, but also institutional reforms, including further deregulation, stronger property rights, and more privately owned assets. Free media would also help.

No doubt, some types of corruption, including “asset stripping” in connection with the privatisation of public-sector firms, has speeded up the emergence of a class of private capitalists and entrepreneurs. But if corruption becomes a permanent element of China’s economic system, it is likely to both reduce the efficiency of the allocation of resources and damage the legitimacy of private entrepreneurship.

China also needs to shift from its highly “extensive” (resource consuming) growth strategy to a more “intensive” development path. Although high growth requires large-scale capital formation, the relation between investment in real capital assets and human capital in China seems to be out of proportion. This is reflected in the current investment ratio for real capital assets of 43% of GDP, compared to 4.3% investment in human capital in the form of education. China’s growth would be more efficient if these proportions changed in favour of education, including vocational training, which is very poorly developed.

Moreover, eliminating today’s vast wastage of natural resources, which underpins exceptionally high levels of pollution, will require a reformed regulatory framework, including higher user prices for energy, raw materials, and environmental resources. By shifting to a less resource-dependent development strategy, more resources would be available for improvements in the country’s much neglected social arrangements, particularly among rural citizens and “urban outsiders” (individuals in informal urban sectors). This includes addressing China’s patchy arrangements for income security, as well as its unevenly distributed provision of social services, such as health and education, in particular, in rural areas.

The case for combining further government withdrawal from the production system with more engagement in the social field is compelling. China’s leaders seem to be promising this by voicing their concern for domestic entrepreneurship, social arrangements, rural development and environmental protection. Only time can tell to what extent, and how fast, such promises will be fulfilled. —DT-PS

Assar Lindbeck is Professor of International Economics at Stockholm University. His most recent work is An Essay on Economic Reforms and Social Change in China

http://www.dailytimes.com.pk/default.asp?page=2007\05\02\story_2-5-2007_pg3_3

 

[Neo]

Thursday, May 03, 2007

China’s CITIC Res to buy Kazakh assets for $1b

HONG KONG: CITIC Resources Holdings Ltd will buy oil assets in Kazakhstan worth $950 million and a stake in an oil field in China to make it potentially China’s fourth-largest energy firm, two sources close to the deal said on Wednesday.

In a long-awaited move, the company has decided to exercise an option to buy a 50 percent stake at cost in the Kazakh assets from its parent company, China International Trust and Investment Corp (CITIC), one of the sources told Reuters.

That deal had been expected, as Chinese firms armed with cash especially resource-oriented ones scour the globe for investments to feed the world’s fourth-largest economy and establish a larger worldwide presence.

CITIC Resources, of which Singaporean state investment firm Temasek Holdings owns about 7 percent, will also buy an interest in an oil block in resource-rich Liaoning province, a fund manager familiar with the situation told Reuters.

No details of the investment in the northern Chinese province were available and it was not clear whether its parent would be the seller.

If successful, CITIC Resources would be on the way to joining China’s oil triumvirate PetroChina Co Ltd, Sinopec Corp. and CNOOC Ltd as the largest oil producers in the country.

“The company has been a shell company without material operating businesses. With this major acquisition, it will give them a clearer position and help investors judge the company,” said Steve Cheng, associate director at Shenyin Wanguo.

State-owned investment group CITIC bought the Kazakh oil assets of Canada-based Nations Energy Co Ltd for $1.9 billion in 2006. The cornerstone of those assets was the Karazhanbas oil and gas field, which has proven reserves of more than 340 million barrels and production of over 50,000 barrels per day.

Listed CITIC Resources raised more than US$220 million in February to help bankroll the Kazakh acquisition.

Trading in shares of CITIC Resources was suspended on Wednesday pending announcement of a substantial acquisition.

The stock has risen 62 percent this year, beating a loss of 3 percent on the index for Chinese companies listed in Hong Kong.

Last November, CITIC Resources made its first foray into the oil industry with the purchase of 51 percent of a production-sharing contract relating to the Seram Non-Bula Block on Seram Island, Indonesia. The block had average daily production of 4,700 barrels of oil in 2006.

http://www.dailytimes.com.pk/default.asp?page=2007\05\03\story_3-5-2007_pg5_29

 

[Neo]

China Power to spend $4bn on renewable energy

HONG KONG: China Power International, helmed by the daughter of former Premier Li Peng, plans to spend up to $4 billion by 2010 developing renewable energy as Beijing pushes to clean up its air and water and whittle down its reliance on imported resources.

To help bankroll the investment one of the largest planned investments in renewable energy ever announced by a corporation the company is studying listing shares on mainland stock exchanges, Chief Executive Li Xiaolin told reporters on Monday.

Hong Kong-listed shares in the company fell 0.5 per cent on Monday, lagging a 0.27 per cent gain in the benchmark Hang Seng Index. China intends to spend an estimated $200 billion on renewable energy over the next 15 years, partly to build hydropower, wind- and solar-powered plants to fuel growth in the world’s largest energy consumer after the United States.

The government aims to boost renewable energy to 10 per cent of energy use by 2010 and has ordered its largest power firms to ensure that 5 per cent of their generation runs on renewable sources by the end of this decade, rising to a 10th by 2020.

State-run firms from China Power to larger rivals such as Huaneng Power and Datang International Power are gearing up commercial projects. China Power International, which became the second-largest shareholder of Oriental Investment Corp this month, wants to change that firm’s name to China Power New Energy Development Co and re-focus it on renewable energy.

By 2010, China Power International plans to put into operation 1,000 megawatts (MW) of renewable energy capacity including wind, hydropower and biomass have another 1,000 MW under construction and have a further 1,000 MW in the pipeline.

“It typically takes 8 to 10 billion yuan to build 1,000 megawatts of renewable capacity. So the total investment will be 24 to 30 billion yuan ($3.1-$3.9 billion),” said Liu Genyu, Oriental Investment’s chief operating officer.

Analysts say high costs and low tariffs for renewable energy mean profit uncertainty, but executives remain optimistic.On the face of it, China Power’s five-year investment plan dwarfs spending by the world’s largest oil firms.

The country spent $6 billion on renewables in 2005, excluding large hydropower projects, China’s official Xinhua News Agency cited academics as saying.Shell has invested an estimated $1.25 billion from 1996 to 2006, according to calculations based on official data and company information, making the Anglo-Dutch company the oil sector’s biggest investor in green energy.

And BP Plc has spent around $900 million on renewables since 1999, according to published figures and information from BP sources. “Because of low tariffs and high costs, there are different views on profitability of renewable energy. But we believe the government is endorsing development of new energy and will gradually issue favourable policies,” Liu said.

http://www.thenews.com.pk/daily_detail.asp?id=54771

 

[Neo]

China’s savings deposits hit $2.27 trillion

SHANGHAI: China’s savings deposits bulged to 17.5 trillion yuan ($2.27 trillion) at the end of March 2007 but the pace of growth was slower than last year, state press reported. The growth rate cooled by 5.7 percentage points or an equivalent of 83.6 billion yuan compared to the same period a year ago, Xinhua news said, citing the central bank. The People’s Bank of China attributed the decline in growth to growing consumer spending and the depositors taking money out of accounts to invest in China’s booming capital market, it said. In the first quarter, 4.78 million stock accounts were opened in China and in April alone, 4.5 million new accounts were registered.

http://www.thenews.com.pk/daily_detail.asp?id=55610

 

[Neo]

Sunday, May 13, 2007

China to face labour shortage in 2010

SHANGHAI: China’s ample supply of low-cost labour, one of the mainstays of China’s remarkable economic transformation, could start shrinking by 2010, a state press report said Saturday.

“China is moving from an era of labour surplus into an era of labour shortage,” the China Daily reported, citing the Chinese Academy of Social Sciences, the nation’s key government-run research institute.

China 1.3 billion people constitute the globe’s most populous country but the new study said its massive rural labour force, that has spearheaded the nation’s roaring growth, may have been poorly estimated. The number of unemployed workers below the age of 40 in rural areas that migrate in search of jobs is only about 52 million, far below previous estimates of 100 to 150 million, according to the institute.

The shortage will eventually trigger a demand for higher wages, possibly as soon as in three years, it said. Rising labour costs would in turn go right to the nation’s economic heart as foreign investors forsake the world’s factory floor for cheaper workers elsewhere.

While it was too early to judge whether more expensive Chinese labour would become less competitive, the nation needs to start making adjustments now, said Cai Fang, a labour economics expert and chief researcher of the study.

“The country needs to change its growth mode from relying solely on one production factor (labour) to advanced production methods,” Cai said. afp

http://www.dailytimes.com.pk/default.asp?page=2007\05\13\story_13-5-2007_pg5_25