A couple of reports may signal a softening of international entrepreneurial activity in China.
First, Red Herring reports that venture capital investments in China fell in Q1 of 2005.
“Venture capital investment in China dropped 24 percent in the first quarter, and some observers are blaming enforcement of a new government policy….The drop may have been caused by a regulatory initiative known as Document 11, which was circulated in late January. The rule makes it difficult for Chinese entrepreneurs to establish the elaborate structures that facilitate listing on international stock markets.”
Second, the Treasury Department in looking into possible Chinese manipulation of monetary policies to effect trade. Any retaliatory efforts by the US could make outsourcing to China a more difficult and expensive process.
Add these developments to the pervasive reports of Chinese businesses thumbing their noses at intellectual property rights and we may see a rocky road ahead for our economic relations with this government. At a minimum, it all drastically increases the risk for American small businesses doing any business with Chinese companies in the next year.
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