Economic sector growth is as diverse as the individual players that make up the 45 or so Asian economies. The Asian economic board game is dominated, of course, by the king that holds everyone else in check. Needless to say, that would be China. With or without global recovery, China’s inertia has become an unstoppable force that has a drafting effect on all of lesser Asia. Sizeable India and Japan remain outside the sphere of influence. They pull their own wagons.
The total global recovery picture has been lazy. Lazy, but not without some positive effect on China and the whole of Asia. China’s exports decreased in 2009, but the void was filled by strengthened domestic demand. Exports have picked up substantially as robust private demand continues.
The blossoming middle class of China’s 1.3 billion people is what’s keeping the ball rolling. There is a rising younger consumer segment that is driving technology, housing, banking, and other key areas. And with growth in consumerism comes increased discretionary spending.
The powerful rising middle-class phenomenon that is gripping developing economies is driving some sectors more than others. On the whole it is not so much a hot-sector issue as it is a pure spending issue. Asian consumers are spending more because they have more to spend. Some sectors have become favored recipients. Along with Asia’s broad non-discretionary spending segment, the rapidly increasing discretionary marketplace is creating a regional boomtown.
U.S. companies have capitalized on opportunities in Asia, particularly China. Although the United States economy remained sluggish, 84% of America’s Chinese operations proved profitable according to a 2008-2009 survey by the U.S.-China Business Council. The survey also indicated that 72% of those companies had the same or better profitability in their Chinese operations as compared with the company’s overall profitability.
China will undoubtedly continue to open its doors to the U.S. and other nations in maintaining a balance-of-trade position to support massive Chinese exports. As long as the yuan remains strong against other currencies, particularly the dollar, investment in China will remain hard to turn away from.
