CHINA:Growth in the world’s second-largest economy is decelerating and rattling financial markets around the world. Behind that slowdown is an evolutionary shift in China’s economy from a dependence on exports and investment in factories and housing to a reliance on spending by its emerging middle class.
That transition, a gradual and perhaps painful one, will affect which U.S. companies stand to benefit and which will be squeezed as China’s growth slides from the double digit annual rates of the mid-2000s to 7 percent, 6 percent, maybe even less.The shift is likely to pinch American manufacturers that prospered during China’s investment boom makers of heavy construction equipment and industrial machinery, for instance.
But the service sector a broad category that includes things like restaurant meals, haircuts and hotel stays remains “reasonably robust” and has been a dominant driver of China’s growth since the first half of 2012, said economist Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics.”Chinese consumers now have more discretionary income to spend on entertainment, education and travel after years of robust economic growth.
That additional income has created a bright outlook for companies that serve them.The Princeton Review, a Washington D.C., company that helps students prepare for standardized tests and college entrance exams, remains bullish on China. The company declines to provide specific sales numbers. But the number of Chinese students enrolling in U.S. colleges is growing by double digits every year.
