In a recent Forbes article, “4 Wall Street Predictions,” Liyan Chen noted “it is no exaggeration to claim that if China sneezes, the world catches a cold.”

The global economy is intrinsically tied to that of China and for now the economic outlook for China remains uncertain. The country has experienced volatility in the China stock market and weaker growth. China is currently in a state of transition as it moves from a manufacturing-led to consumer-led economy.

According to the International Monetary Fund’s (IMF) “World Economic Outlook,” the slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in some large emerging market economies will continue to weigh on growth prospects in 2016–17.

“Overall growth in China is evolving broadly as envisaged, but with a faster-than-expected slowdown in imports and exports, in part reflecting weaker investment and manufacturing activity,” the report stated. “These developments, together with market concerns about the future performance of the Chinese economy, are having spillovers to other economies through trade channels and weaker commodity prices, as well as through diminishing confidence and increasing volatility in financial markets. Manufacturing activity and trade remain weak globally, reflecting not only developments in China, but also subdued global demand and investment more broadly…”

KPMG Global China Practice, global chair, Vaugh Barber wrote in the foreword to the report, “China Outlook 2016,” a nuanced analysis of economic data confirms our view that China is transitioning from an  investment-intensive, export-led model of growth, to one driven by consumption and innovation, a shift that is being reflected in patterns of inward foreign direct investment and outward direct investment. This process has led to the emergence of a two-track economy. One track – in basic manufacturing and traditional industries – is experiencing significant headwinds; while a second track – in services, advanced manufacturing and consumer markets – is exhibiting strong growth potential.”

It will be interesting to see how China’s transition from an export-based economy to a more consumer-driven economy influences the paint and coatings industry. I am looking forward to attending CHINACOAT November 30-December 1 to learn more about China’s prospects for the future. If you are unable to attend this event, Coatings World will be reporting Live From the Show.

Be sure to go to our website, nitesh_cw.rodpub.com to sign up for these daily e-mail updates.