The below is a compilation of the most recent data and forecasts for industrial production, foreign trade, foreign-direct investment, overseas investment, producer and consumer prices, as well as prospects for revaluation. Also covers movements in the legal sphere regarding foreign talent and copyright regulations, and societal shifts such as China's mounting divorce rate.

Economy

Economic Future

China is not expected to become a fully developed nation until 2080, according to "The 2005 Report on China's Modernization," published by the Chinese Academy of Sciences in mid-February. Not until 2100 does the academy foresee China eventually pushing its way up among the top 10 of the world's most developed economies. Prior to 2080, the report breaks China's economic development into two stages, reaching the initial stage of a developed economy by 2020 and becoming a moderately developed economy by 2050.

The report states that mainland China has at present reached a stage of economic development seen by the US over a century ago, and currently ranks 69th among the 108 economies in the survey. Despite a per capita GDP that reached US$1,000 in 2004, the academy noted that the country's per capita GDP still ranked 100th in the world. China ranked 69th among the 108 economies surveyed after compounding the three major indices of the research, which included per capita GDP, the share of rural population, and the ratio of agricultural output to total GDP.

Industrial Production

Industrial production rose 20.9% year-on-year to 848.4 billion RMB (US$58.3 billion; US$1 = 8.3 RMB) in January 2005. Adjusted for the lunar holiday that hit output in January 2004, year-on-year growth was 8.9%. The adjusted figure was a sharp slowdown from the 14.4% year-on-year rate in December, and was the slowest increase since January 2004.

The consensus among most economists is that few conclusions can be drawn from the data due to warping from the holiday effect. Yet some are saying that China is indeed exhibiting a significant slowdown in industrial activity, and points to a slowdown in export growth later on in 2005.

For the first quarter of 2005, the China Information Centre projects 12% to 13% growth in industrial production.

Trade

China generated a record trade surplus of US$6.5 billion in January, a marked reversal of the US$30.5 million deficit created by high commodities prices a year earlier. According to China's General Administration of Customs, exports jumped 42.2% year-on-year to US$50.8 billion, growth fanned by the relaxation of global quota restrictions on textiles, clothing, and footwear -- the first relaxation in decades. Export performance was also attributed to the RMB's peg to the dollar, which has allowed exports to be more competitive as the dollar has lost value. Imports racked up US$44.3 billion, maintaining the 24% year-on-year growth rate seen in December 2004.

Trade with developed nations witnessed a stark rise. Trade with the European Union grew 36.4% year-on-year to US$15.9 billion. US and Japan trade hit US$14.3 billion and US$12.9 billion, respective year-on-year growth of 30.8% and 28.4%.

Foreign invested enterprises in China exported US$28.3 billion in goods, while imports by such companies amounted to US$25.7 billion. Trade volume of State-owned and private enterprises rose 16.1% and 59.8% to US$25.9 billion and US$15.1 billion, respectively.

Foreign-Direct Investment

According to the Ministry of Commerce, actual FDI totaled US$4.1 billion in January, up 10.7% year-on-year, a deceleration of 2.9% from the year-on-year rate for January 2004. However, contractual direct investment, an indicator of future investment flows, grew by 27.7% per cent to approximately US$12.8 billion. This rate of growth is 17.3 points higher than the year-on-year rate for January 2004. In January alone the ministry approved over 3,500 new foreign-invested companies, a 22% year-on-year increase.

China became the largest investment destination worldwide during 2004, pulling in over US$60.6 billion in FDI, a 13% increase from 2003. For 2005, Deutsche Bank in Hong Kong projects that China will achieve annual FDI growth in excess of 10%.

Overseas Direct Investment

While still dwarfed by the amount of investment flowing into the country, Chinese investment abroad demonstrated a sharp rise of 27% in 2004, totaling US$3.62 billion. In addition to ICT companies such as TCL and Lenovo looking abroad to expand their influence, the government has been actively encouraging companies from numerous sectors to look for opportunities overseas, rather than encouraging enterprise to keep funds at home as was the formerly the case. Part of the motivation behind this policy shift stems from an interest in securing access to natural resources, as well as to deflect criticism from the international community regarding China's mounting foreign currency reserves.

US$2.5 billion, nearly 70% of overseas direct investment, was funneled toward acquiring equity in overseas companies. The remainder, US$1.1 billion, was reinvested profit from continuing concerns abroad. In all, China-invested units offshore numbered 829 in 2005, a rise of 62.5% from 2003

Contracted investment overseas rose 77.8% to US$3.7 billion in 2004, portending another dramatic increase in actual investment for 2005.

Producer Prices

China's producer prices increased 5.8% year-on-year in January, a slowdown from December's gain, according to the National Bureau of Statistics. Prices of raw materials, fuel, and power moved up 10.7% year-on-year, 1.3 percentage points slower than December's increase.

Capital-goods prices rose 7.8%, a 1.6-percentage-point drop from December's growth. Food prices increased 2.3%, clothing prices moved up 0.7% and daily-use consumer goods grew 3.4%.

Oil prices grew 19.1%, yet the rise was 16.5 percentage points lower than the previous month's due to falling oil prices worldwide. Coal prices rose 25.8% in January, a one-percentage-point gain from December's increase. Steel prices moved up 10.8% from a year earlier, while nonferrous-metal prices rose 15.1%. The increase for both categories slowed slightly from December. Synthetic and chemical fiber prices jumped 21.9%.

Consumer Prices

China's consumer prices ticked up 1.9% year on year in January 2005. CPI has been edging downward every month since August 2004, when growth slowed to 5.2% from 5.3%. January's figure not only was lower than analysts' expectations of 2.4%, but was the slowest pace of growth in 14 months.

Seasonal factors were behind part of January's slowdown. The Lunar New Year holiday, a time when price increases are typically seen, did not occur until February. Prices of services and products in the transportation and telecommunications category also fell by 2.6%.

A variety of predictions have arisen for 2005, but most independent forecasts were lower than the 4% figure released by the National Development and Reform Commission. ING puts CPI growth at 3.5%, and even expects that growth is more likely to be lower than this projection. China Securities estimates an increase of 3.2%. Yet lower was Goldman Sachs, which put 2005 CPI at 2.6%.

Revaluation

The State Information Center, a government-backed think tank published a report in the semi-official China Business Post that the RMB may be revalued by 3% to 5% during 2005.

Legal Movements

Foreign Talent

The Chinese government is looking to institutionalize foreign recruitment to more closely monitor qualifications of incoming talent. The State Administration of Foreign Expert Affairs said the new regulations would take effect in the fourth quarter of 2005, which would include more comprehensive assessment and selection practices to ensure arrivals were highly qualified. No detailed qualifications were released, but the body did mention workers must have an above-college academic degree and must have experience as a department manager.

At present roughly 200,000 foreign workers are recruited into China every year, according to the agency.

Copyright Regulation Takes Effect

A regulation on the collective management of copyrighted materials, earlier approved by the State Council, came effective on March 1st. Under the regulation, rights such as performance, projection, broadcasting, duplication and Internet-based information distribution can be entrusted to collective management organizations for protection. The regulation also is intended to protect foreign copyright owners.

Society

Divorce Rate Climbing

The Ministry of Civil Affairs released data showing that over 1.6 million couples divorced in 2004, a 21.2% rise from 2003. In addition to a more liberal attitude toward divorce, the increase has been attributed in part to simplified procedures introduced in October 2003, which no longer required an approval letter from an employer or residential committee.