Their birth rates dropped during the bubbles and didn't recover afterwards despite government providing incentives. China's one-child policy alone will lead to a demographic catastrophe in two decades. The property bubble makes the trend irreversible: when the government abandons the one-child policy, there wouldn't be meaningful impact on birth rate. Within two decades Chinese population could be very old and declining. Of course, property prices would be very low and declining also.

China has taken another step forward in its mission to build its own commercial airplanes, but industry experts remain skeptical of Beijing's long-term objective of becoming less dependent on Boeing (BA) and Airbus (EADSY.PK) - made machines.

China's first domestically-developed regional ARJ21-700 jet successfully made a trial flight of 1,300 kilometers in July. It took the jet about two hours to fly from Shanghai to Xi'an, the capital of northwestern China's Shaanxi Province, according to the China Economic Review.

Although it might seem counter-intuitive, China's manufacturing sector has emerged strengthened by the global economic downturn and the world’s factory is moving up fast on the services front as well. As I mentioned in a previous post, so says a recent report from PricewaterhouseCoopers (PwC) on the relative attractiveness of emerging markets for foreign investors.

China's manufacturing sector has shot up from 14th position in PwC's index in 2008 to become the fourth most attractive destination in 2009, beaten only by Malaysia, Chile and Bulgaria, which are all much smaller economies. Of the so-called BRIC countries -- Brazil, China, Russian and India -- China was the only one to improve its position.

Huawei maybe the best company many Americans and Europeans have never heard of, and that's a big problem for China, according to a recent report in Newsweek entitled Generic Giants. With revenue of more than $18 billion in 2008, soon it will overtake Nokia (NOK) Siemens (SI) as the world's second-largest maker of telecom hardware, after Ericsson (ERIC).

The challenge for many Chinese companies as they go global is to build an attractive brand image that motivates consumers to pay premium prices for their products. With headquarters in booming Shenzhen, the telecommunications equipment-maker with a hard to pronounce name made BusinessWeek's latest list of the world's 10 "most influential" companies, alongside Apple (AAPL), Wal-Mart (WMT), Toyota (TM), and Google (GOOG). Yet Huawei is by far the least internationally recognizable name on the list.

Foreign companies should view China more as a competitive manufacturing base and as a hub for an Asian growth strategy and less as a low-cost provider of labor and resources, the American Chamber of Commerce (AmCham) in Shanghai said in its latest survey of its members in China. The survey suggested that foreign manufacturers in China develop a strategy to capitalize on the domestic market and reduce dependence on exports.

While foreign investment has fallen dramatically in the past year, China remains a popular manufacturing base for foreign firms amid the global economic downturn. Anil K. Gupta and Haiyan Wang, authors of the new book Getting China and India Right, wrote in Businessweek in June that the role of higher domestic productivity as a driver of China's economic growth is growing and the future lays in R&D-related work.

The global economic downturn has dramatically changed the outlook for international trade. The World Trade Organization foresees a nine-percent fall in trade in 2009, as businesses around the world cut back and families stay out of stores and malls. While the international trade body also predicts that China will overtake Germany as the biggest merchandise exporter this year, China is losing cost advantage.

Just as Mexico was becoming the rising star of global manufacturing in the 1990s, China's even cheaper wages turned the Asian country into the world's factory early this decade. But a combination of factors, such as higher labor costs and an appreciating yuan, are making China less competitive for manufacturing firms serving the North American market.

Many of the best opportunities for growth in China for foreign companies involve moving into the country's heartland and away from the modern mega-cities along the eastern coast. The government’s nearly $600 billion stimulus program launched earlier this year is targeting the country’s interior and is expected to accelerate this trend.

A recent study from Ogilvy China suggests ways in which companies can tap into the opportunity offered by the government's stimulus package, in a significant part of the nation where consumer cultures and retail landscapes vary markedly from that in 2nd-3rd tier cities and leading cities.

China has improved its information technology infrastructure and taken a higher ranking worldwide in the use of IT, a report released in June by the World Economic Forum. China ranked in 46th position globally this year, from 57th a year earlier, based on the NRI - networked readiness index. It also replaced India to take the leading position among the BRICs - China, Brazil, Russia and India, according to the Global Information Technology Report 2008-2009.

This improved infrastructure has been a boon to the country's IT outsourcing industry. Over recent years, China has made major strides in laying the groundwork for a diverse and successful outsourcing market. Edge Zarrella, Global Head of IT Advisory at KPMG, explained in a new report entitled, A New Dawn: China's Emerging Role in Global Outsourcing: “China has been quietly asserting its position in the global outsourcing industry, attracting little in the way of fanfare. Having conceded a significant head start to the now established outsourcing centers like India, it suffered somewhat from the trend for multi-nationals to place all of their outsourcing work in one location.”

Apple (AAPL) has a brand image that marketing managers around the world can only dream about. In the eyes of its incredibly loyal consumer base, Apple represents the pinnacle of innovation and coolness. Like many Western brands, Apple depends on suppliers in Asia to manufacture its popular products, such as the iPhone and the iPod.

Led by the legendary Steve Jobs, the California-based company is widely-admired for its user-friendly products and design capabilities. Sometimes this outsourcing of manufacturing strategy can lead to serious legal and public image problems.

The "Buy American" provision contained in the federal economic stimulus package continues to cause problems for the Obama Administration both at home and abroad. As Max Showalter wrote in Indiana, it has become a political football that Caterpillar Inc. (CAT) would like to see kicked completely out of the legislation.

Without a change, the world's largest mining and construction equipment manufacturer fears its operations -- including the Large Engine Center in Lafayette -- could be severely and negatively impacted.

Barack Obama is on a risky path toward further confrontation with America’s banker, the Chinese. As his economic stimulus package makes its way though Congress, Uncle Sam’s biggest trading partners are warning we face a spiral of protectionist policies. The House-approved version includes a "Buy American" provision that generally prohibits the purchase of foreign iron and steel for any infrastructure project in the bill.

While it may not hit the Chinese economy directly, this provision has the potential to stir up a nationalistic backlash among government officials in Beijing. Running big trade and budget deficits indefinitely is not possible for America, either economically or politically. The Chinese indirectly control Washington’s purse strings. China has become the biggest foreign holder of U.S. debt, second only to the U.S. government itself in overall holdings.

IBM recently announced the location of its two newest global service delivery centers and its choice was an eye-opener. Instead of Bangalore or Shanghai, Big Blue picked East Lansing, Michigan, and Dubuque, Iowa, according to Business Week. Michael Daniels, senior vice-president of IBM Global Technology Services, is quoted as saying that while the cost-competitiveness of East Lansing and Dubuque were factors in the company's decisions to locate there, salaries and other costs weren't the biggest factors.

The global slowdown and events in India have many Western firms rethinking their outsourcing plans. First the tragic terrorist attacks in Mumbai heightened tensions with rival Pakistan. Then in December, a well-publicized accounting scandal at Satyam (SAY), India's fourth-largest IT services company, in which the longtime chairman admitted to fraud that artificially inflated profits, has focused Western clients to think twice about relying too much on Indian, or for that matter, any foreign companies for outsourcing help.

Similar to many other parts of the world, the labor market in China is ice cold with many companies laying off staff or implementing hiring freezes. But don't tell that to university graduates in China. A new study by Shanghai's prestigious Fudan University finds that graduates in Shanghai still expect high salaries, and want the security and guaranteed income that comes from working for government agencies. As Frank Mulligan writes at the Talent in China blog, many are experiencing a bad case of Beijing Olympic Delusional Syndrome.

The symptoms are an irrational belief in the ability of China, and the Chinese government, to weather the economic storms that are buffeting the world economy, and ultimately come up smelling of roses. Chinese exceptionalism, if you like.Twenty years of solid economic growth, or 10 years of continuous employment for every professional that you know, will do that to you. Success breeds complacency. It should come with a government warning that says it 'may cause blindness'.

Just days before Barack Obama officially takes office, his economic advisers reportedly are considering including a “buy American” provision in the economic-stimulus legislation that the new president and his team have made its first priority.

Jen Psaki, a spokeswoman for Obama’s transition team, is quoted in a Bloomberg report as saying,

With revenues up over thirty percent in past year and record low steel prices boosting its bottom line, Thermos, the manufacturer of vacuum flasks, faces an unusual situation in the industrial city of Kunshan, just on the outskirts of Shanghai.

According to a recent report in the Financial Times, the company has been asked hand over part of its profits to help soften the impact of the global economic crisis on others. Lin Chao Min, deputy chairman of Thermos (China) Housewares, is quoted as saying, “We were approached for a sum of Rmb5m [$740,000] to Rmb8m.”

Despite a slowing global economy, higher unemployment, and grim outlook for the Year of the Ox, Chinese consumers are the least concerned about saving in the Asia Pacific region. A new report from MasterCard says their strong willingness to spend is backed by the country's economic momentum. The Shanghai Daily reports:

About 77 percent of respondents on the Chinese mainland said they were concerned about saving while the average for the region was more than 87 percent.