It’s generally acknowledged that China has been the big red growth agent on the world stage since the Great Recession knocked the stuffing out of the global economy. China’s breakneck GDP growth in recent years has helped create a burgeoning new wealthy class of “Chuppies,” a term used to describe the country’s nouveau riche population.
The tremendous growth of not only the Chuppie class, but also the near concomitant rise of China’s middle class, has made the Asian behemoth the demand hub for all types of goods and services. China’s huge appetite for agriculture commodities, basic materials, oil, technology products, luxury goods, etc., continues to keep the global growth engine revving.
Recently, some have questioned the China growth story, citing as evidence the country’s slowdown to 9.1% GDP growth in the third quarter. That number was down from the 9.5% growth the Chinese economy experienced in the second quarter. Although there has been a decline in the rate of China’s GDP growth, what needs to be kept in perspective is that despite this relative slowdown, China’s economy still is growing five times faster than U.S. economy. Moreover, the latest data from China’s manufacturing sector suggests the GDP slowdown soon might come to an end. The HSBC Flash China Purchasing Managers’ Index (a widely followed measure of manufacturing activity) rose to 51.1 in October from September’s reading of 49.9. A reading greater than 50 is considered expansionary, and that means we could see a bump in GDP growth in the final quarter.
Given China’s dominance on the global stage, what’s the best way for investors to play her economic prowess? Here are five companies in five different sectors that continue profiting from China’s dominance.CVR Partners
With all of China’s billions of richer mouths to feed, the demand for protein has surged. So too has the need to grow the feed that helps grow the protein sources. The greater demand for food means big demand for fertilizer to help squeeze out every drop of profit from each acre of land. That’s where fertilizer maker CVR Partners (NYSE:UAN) comes in.
CVR Partners is the only company in North America that uses a petroleum coke gasification process to produce nitrogen fertilizer, a process that keeps the cost of the product very low. In fact, CVR is the lowest-cost producer of nitrogen fertilizers in the country. The company has the large production capacity of a 1,225 ton-per-day ammonia unit, and that production capacity is going to be put to the test thanks to the burgeoning demand for protein-rich food in China.China Mobile
China’s new wealth class has made it the biggest market in the world for personal technology devices, such as cellular phones. As of May, more than 900 million cell phones were in use in the county, and providing the communications services for the nearly two-thirds of those phones is telecom giant China Mobile (NYSE:CHL). The company is the largest mobile wireless provider in the world, with more than 600 million subscribers.
Recently, China Mobile confirmed that it was in talks with Apple (NASDAQ:AAPL) to offer the iPhone on its specialized TD-SCDMA network. If that deal goes through, it would give China Mobile an even bigger slice of the world’s largest cellular pie.