Like other observers, we have been watching China's burgeoning economy and its efforts to move up the offshore value chain, from a destination for low-cost manufacturing to one that performs software development and other sophisticated tasks for the likes of Cisco and Microsoft.
In a bullish blog from January, we speculated that China had a lot going for it in its quest to become the "next India." We took a more cautious tone in a post from May, noting that Western countries are still relatively reticent about locating business activities in China. The country finished third, behind India and Russia, in a silicon.com survey assessing its readers' interest in offshoring.
Despite such concerns, plenty of Western companies are expanding their activities in China, including outsourcing giant EDS, Microsoft and Cisco.
Now we are beginning to see stories questioning some of the financial statistics coming out of China and hinting that the country's stock market isn't exactly stable.
As the International Herald Tribune reports, 80 percent of China's market listings are former state-owned companies headed by Communist Party officials and their families. Even Chinese officials worry about a "bubble" in an environment in which these companies "are subjected neither to open scrutiny nor to the unmitigated market forces - not even to state regulatory agencies," notes the article.
Chinese firms appear to be badly in need of more oversight, as evidenced by an article about Chinese millionaires appearing in the Guardian Limited. The entrepreneur who appeared second on a list of China's richest folks compiled by Forbes magazine in 2005, with an estimated fortune of 495 million (U.S. $1 billion), is now serving an 18-year sentence for bribery and fraud -- and a number of his fellow millionaires have suffered similar fates.
Other possible economic problems mentioned in a recent piece by syndicated columnist Jonathan Power (that we found, oddly enough, in Pakistan's Daily Times) are China's rapidly aging population, a shortage of skilled labor and increasing disenchantment from foreign investors.