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Briefly…Top Ten Tweets (From Economists, Consumers & Workers, To Demographics, Dangers & Disruptions)

Some recent themes in China business continued to trend last week, and our review (and links) are below.

Speed of change is the starting point for this post – something that can is represented in China by Shanghai’s changing skyline over the past 20 years (see the link below for comparative photos. And, yes, your blogger wandered the old Pudong in boots, when suits were still seldom seen…).

China’s economy also continues to change quickly, and a trio of economists are on hand to provide their views on 2010. It seems there is some consensus on 10%-plus GDP growth, and that the second half of the year will be slower than the first, reducing pressure on overheating (and recent reports of growing inflation – CPI up 3.1%). Non-performing loans, government debt, and the RMB are also covered. On the RMB front, gradual appreciation may be on the cards (from September?), but will continue to be reviewed in light of internal and external (Euro) considerations.

Still on the economic front, foreign direct investment (FDI) in the first five months of the year grew 14.3%, year-on-year with a total of US$38.9 billion. In terms of trade China’s exports rose sharply in May, by 48.5%, the highest rate for 6 years – though from a low base a year ago. Bloomberg reported that: China’s “Exports rose to $131.76 billion last month, the highest value since September 2008, and imports climbed 48.3 percent to $112.23 billion. The trade surplus of $19.53 billion was the biggest in seven months”.

How far the export performance can be sustained is open to question, especially given the Euro’s decline “China’s pegging of the yuan to the dollar has resulted in a 20 percent gain against the euro this year”). Many are, of course, also watching for continued import demand.

And that demand will come, in part, from the rising, middle-class consumer. They are defined by different people in different ways, but a recent China Tracker post puts it like this: “if you check the figures in the forthcoming book “The Chinese Dream” by China Tracker contributor Helen Wang, China’s middle class is defined as urban professionals and entrepreneurs between 25 and 45 years old who have college degrees and earn between $10,00 and $60,000 a year. That would be a pool of 300 million people”.

Of course, the majority in China have not yet had the luxury of grappling with global brands and, in terms of trends, worker unrest and strikes have continued to dominate the headlines – especially at foreign funded firms (including, but not limited to, Honda and Foxconn). Some reports have suggested Foxconn is considering changing its “factory town” model, as well as moving to inland and offshore locations to bring down costs.

On the other side of the pay coin, Shenzhen is the latest in a line of some 20 local governments so far this year to raise the minimum wage requirement – up 15.8% to RMB1,100 (US$161) for full-time workers. In this case the aim is not to head off protest, but to attract scarce workers and boost consumption. Guangdong province has also moved to introduce a points-based system for migrant workers to be granted “hukou” (household registration).

Arthur Kroeber, in the The Washing Post, points to where these trends are heading, and why: “This is the thin end of a very long wedge,” said Arthur Kroeber, managing director of GaveKal-Dragonomics, a research firm. He said the number of 15- to 24-year-olds in China is set to fall by one-third over the next dozen years, from 225 million today to 150 million in 2022… “This is the beginning of a long process in which bargaining power is going to shift from the company to the workers.

Pay and conditions, corporate social responsibility, supply chain risk, unions, and worker activism are all issues that are due for foreign investors to review. But they are not the only ones…it seems that those at the top end of the pay scale are also under the spotlight – a danger warning for any expats hiding earnings from the Chinese tax man is provided by the ever-friendly China Daily: “In particular, the [tax] authority plans to tighten up checks on individual incomes earned by foreigners in the Chinese mainland but paid by overseas agencies, according to the latest announcement of the State Administration of Taxation. To achieve this, they will cooperate with banks and foreign exchange control departments directly. “

David Wolf, in Advertising Age, picks up on some of these themes, in an article tagged “China Is Undergoing the Most Disruptive Changes It Has Experienced in 30 Years”. He suggests China is at a crossroads from where it needs to find clear direction on issues such as growth, income inequality, international status, and treatment (fewer favours) for foreign firms.

The China business environment, it seems, is very much like the Shanghai skyline – fast-changing, and challenging…

1. @shanghaiist RT @ananthkrishnan: Unbelievable. RT @GE_Anderson: Astounding skyline comparison: Shanghai 1990 vs 2010. http://is.gd/cMX07 [1]

2. GDP, stimulus, assets, NPLs, RMB… RT @vshih2: Stephen Roach, Lu Ting, and me…Chinese economy on China Bus Review http://bit.ly/aHao6v [2] 8:55 PM Jun 8th (Also note: Watch the food inflation RT @ChinaResearch: China May CPI Grows 3.1%; PPI Up 7.1%: … year-on-year in May http://url4.eu/4Jwfv [3])

3. FDI RT @dailyhknews: Foreign direct investment in China rose 14.3% y-o-y…first 5 months of 2010…http://tinyurl.com/2vsmog9 [4]

4. RT @fonstuinstra: China Exports Jump 48.5% as Europe Crisis Yet to Bite – BusinessWeek http://ht.ly/1WxoJ [5]

5. RT @gadyepstein: How To Think About The Chinese Consumer « The China Tracker – Forbes.com http://bit.ly/9K2B4e [6][post by @bupbin]

6. RT @chinalabour: A roundup of this week’s strike action in China – http://bit.ly/c6EIiL [7](see also: Looking inland & overseas RT @NiuB: Hon Hai Fallout Could Include Relocations: http://bit.ly/9N0umR [8])

7. Another raise RT @fonstuinstra: China’s Shenzhen to Raise Minimum Wage 15.8% to Attract Workers – BusinessWeek http://ht.ly/1W9pZ [9] (see also: Working harder for workers RT @niubi: Chinese farmers in Guangdong accumulate points for hukou http://bit.ly/9yhZjX [10])

8. Thin end of the wedge RT @fonstuinstra: Demographics behind the labor unrest – Arthur Kroeber http://ht.ly/17E0vb [11]

9. Watch out, the tax man’s about! RT @niubi: Chinese Govt targets foreign fat cats dodging taxes… http://bit.ly/aJnBrU [12]

10. @TCBN Understanding New China: David Wolf Argues #China Undergoing Most Disruptive Changes in 30 Yrs http://tinyurl.com/2aq5gho [13] @wolfgroupasia

See more of the latest China business news on our twitter feed at @ChinaBlogTweets [14]