CHINA is losing its appetite for dump trucks, iron ore and construction cranes. But the Chinese still want to travel and give their kids a better education.

    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.

    “Yes, China is slowing,” said Jeremy Haft, an entrepreneur, consultant and author of the forthcoming book “Unmade in China: The Hidden Truth about China’s Economic Miracle.” ‘’But households have huge (savings). People need to keep eating, walking, powering their homes.”

    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 Natick, Massachusetts, 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.

    “We do not see any slowdown in the future,” said Steven Chou, international vice president at Princeton Review.

    Also doing well are American companies that make things in China and export them back to the United States, where economic growth is solid.

    Haft, for example, runs a company that exports U.S. cattle hides to China. Business is booming, he says, because the Chinese turn the hides into wallets and ship them back to the United States, where the economy and consumer demand are comparatively healthy.

    Recent trade numbers highlight the changes: U.S. merchandise exports to China rose just 0.2 percent in the second quarter to US$30.5 billion from a year earlier. By contrast, services exports, which include tourism and banking, surged nearly 14 percent to US$11.97 billion.

    Boeing Co., the biggest provider of commercial jets in China, forecasts demand for 6,330 new jetliners in the country by 2034, with a value of US$950 billion. Most of those new planes will handle passenger growth. Company executives said in a recent podcast that they’re seeing “tremendous” demand for international flights, and they also expect a surge in demand for cargo-carrying aircraft.

    At General Motors, which sells more vehicles in China than any of its U.S.-based competitors, sales in July slipped 4 percent compared with a year ago. But the company’s first-half sales in China rose 4.4 percent to a record 1.7 million vehicles, and the carmaker still forecasts single-digit growth for the rest of the year.

    So far, the shift is hurting companies that have benefited from China’s building boom. Construction equipment giant Caterpillar, for instance, said its Asia-Pacific region sales dropped 21 percent in the second quarter — a casualty of a slowing China.

    China is facing a construction glut, which is leading to a deceleration in property investment that will likely bottom over the next few quarters, Lardy, the economist, said.

    “Ninety percent of the population already has a house,” he said. “They’ve got a lot of very under-utilized real estate.”

    (SD-Agencies)