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China’s middle class is rising- and appears to be ready to take off by 2023.  As reported by Adam Roseman, Founder and Managing Partner at ARC China, approximately half of the urban population in China will be middle class by 2023.  At the moment, as documented by the think tank Chinese Academy of Social Science, China’s middle class population is 230 million in the cities, which accounts for 37% of its urban population.

The National Bureau of Statistics determined in 2010 that about 25% of the Chinese population is in the middle class bracket. China has made its intentions clear, hoping to move more citizens into the middle class bracket while also helping to grow the wealth of the current middle class.

One unique feature of China’s rising middle class is its age.  They are going to be unusually young.  Statistics have pinpointed that Chinese consumers between 18 and 29 are actually those with the highest income on average in the area because of their economic levels and other factors.

Certainly, as Adam Roseman points out, this is one location and one group of emerging people that is worth watching.

The coastal cities of China have become some of the most crowded, popular investment regions in the world today. However, the increase in prices and tough competition are forcing private equity firms to dig deeper in an effort to find good investment opportunities.

Some of the most popular areas include Beijing, Shanghai, Guangzhou and Shenzehn. Numerous companies such as ARC Investment Partners with Adam Roseman have seen the potential in China, and have made it one of their primary investments.

Derek Sulger of Lunar Capital, a Shanghai-based firm, says, “By and large, Eastern China is home to more investments that are larger, and more mature companies, so it’s logical that a disproportionate focus develops on these regions.”

The negative effects can be felt by many, though. Zheng Song of MDC explained: “Even some of the top-tier fast food chains feel that the rent in Beijing/Shanghai is too high and it is too difficult and competitive to make money. They also plan on expanding to second and third tier cities in the next few years.” For this reason, many firms have begun to shift their focus towards the mainland.

In a fascinating recent article on, NYU professor Nouriel Roubini discusses the global economy.  While he explains that it is possible that the world economy will see “anemic but OK” global growth, or perhaps even more optimistic scenarios, he says that we may, instead, see stunted growth from 2013.

He discusses the slowdown in China, which is a focus of companies like ARC China with Adam Roseman, the “perfect storm” of fiscal woe in the U.S. and many other factors influencing the global outlook.

The article, by Shamim Adam, is certainly worth a read by anyone in the financial sector or anyone interested in global economic issues.

Adam Roseman, Founder and Managing Patner of ARC China, recently wrote about the 3rd Nobel Laureate Symposium on Global Sustainability that was held in Stockholm, Sweden.  Participating in the event were many distinguished leaders, including the former Norwegian Prime Minister Gro Harlem Brundtland.

During the conference, Brundtland said, “I think the leadership in China knows that the pattern of development in China cannot be coal-based, oil-based, transport-based in private cars, so they talk about green economy, because they know they have different energy resources, they have to use solar and they are entering into changing all these technologies and implementing them.”

Roseman explained that the reliance on coal as the main source of energy in China is expected to change in the future. He explained how they plan to do so, and what the cost will be to the country.  He concluded by saying,  “China is taking an aggressive stance to reduce its environmental impact and has all the credentials to serve in the future as a model for other countries wishing to follow a sustainable path of development.”

Adam Roseman, Founder and Managing Partner of ARC China recently discussed the latest IMF official forecasts which show China’s economy surpassing America’s in real terms in 2016.

China’s GDP has increased above what was expected for the first quarter of 2011, according to the National Bureau of Statistics of China.  The GDP has increased by 9.7% in the first quarter of 2011, which is higher than the target that China set for full year 2011.

The largest contributor to this growth has been consumer spending, with 5.9 percentage points out of the 9.7% growth. Urban fixed asset investments have also surged. In addition, the producer price index rose in China by 7.3% in March from the year before, and this is the highest that it has risen in 30 months.

Premier Wen Jiabao has made it known that one of his main goals is to keep the price levels stable for the coming year.

Adam Roseman concludes by explaining that, “ARC China anticipates that China’s economy will reach equilibrium between economic growth and growth in prices by the end of this year with stabilization continuing in 2012. The march of China’s economy to pass that of the US by 2016 should be viewed as the major economic story over the next decade.”

In his weekly newsletter as part of ARC Investment Partners, Founder and Managing Partner Adam Roseman writes about China’s inflation rate. He explains that many have been concerned about the inflation rate there as a result of the recent financial crisis.

The prediction from the price monitoring center under the National Development and Reform Commission is that China’s inflation will ease in the second half of the year.  As the price monitoring center said, “At present, China’s aggregate demand and supply are basically balanced, so prices will not rise to a larger extent than before.”

Adam Roseman explained that ARC China expects the CPI growth rate to peak in June and then to fall by December.  Roseman pointed out in the article that China has taken serious steps to curb inflation. As Roseman explained, “People’s Bank of China (PBOC) has raised banks’ Reserve Requirement Ratio (RRR) six times in 2010 and three times so far in 2011. It is now at nearly 20% for most banks.”

As Ashton Tan explains in an article posted at the ARC China website in March entitled, “Looking Off the Beaten Track,” it’s often a good idea to look off the beaten path for the best investments.

As Derek Sulger, a founding partner at Shanghai-based Lunar Capital explains, “By and large, Eastern China is home to more investments that are larger, and more mature companies, so it’s logical that a disproportionate focus develops on these regions.”

More companies are looking further afield, trying to find investments that others haven’t yet discovered.  As the article explains, Adam Roseman, CEO and Founder of ARC China, believes that it’s important to be on site to manage businesses and to find potential deals. As Roseman explains, “The key really is spending time in those regions and not sitting in Beijing, Shanghai, and Hong Kong, and waiting for deals to cross your desk.”

ARC China manages to find these interesting investments by putting individuals in the target areas to build the brand name and to help with deals, and by working with third party finders who look for promising opportunities.

As part of the ARC China monthly newsletter, Adam Roseman, ARC China Founder and Managing Director, explained that China’s economy will surpass America’s in 2016.  He explains that this is actually ten years earlier than was forecast under current exchange rates.

The China GDP has increased by 9.7% just in the first quarter of 2011 from 2010, as reported by the National Bureau of Statistics of China.  This is higher than China’s target that they set for 8% for the full year 2011.

As Adam Roseman: ARC China explained, “Consumer spending, among the three engines of China’s economic growth, has contributed the most to the first quarter’s GDP growth, at 5.9 percentage points out of the 9.7 percent growth. Retail sales surged 16.3 percent year on year in the first quarter.”

In conclusion of his article, Roseman explained that ARC China anticipates equilibrium between economic growth and price growth for the Chinese economy by the end of 2011.  They assume that stabilization will continue in 2012, as reported by Adam Roseman. ARC China concludes by saying that, “The march of China’s economy to pass that of the US by 2016 should be viewed as the major economic story over the next decade.”

ARC Investment Partners, LLC is a private equity firm that invests primarily in companies in China. Adam Roseman, ARC China Founder and Chief Executive Officer, strongly believes that the country holds a significant amount of potential, which most firms have yet to acknowledge.

ARC is supported both financially and strategically by its investors.  Roseman has stated that: “Maintaining strategic partnerships with prominent investment banking firms and other service providers is critical to the long-term success of our portfolio companies. Our ability to execute successful investments is based on our strategic partnership with major investment banking, auditing, recruitment and legal firms, and is supported by our commitment on ongoing investor relations support, as well as substantial portfolio company business development and operational support.”

ARC ARC Investment Partners was mentioned in an article which appeared in the Economist, the prestigious business news journal headquartered in England. The article, entitled, “Global Private-Equity Firms are Seduced by the China Dream,” The private equity firm ARC Investment Partners is described in the following way: “ARC China is another small firm with experienced managers (that) invests only in companies which collect revenues in an obviously verifiable way, such as a retail company that receives fees from franchisees at a single point, rather than from a string of wholly owned stores.”

Among those “experienced managers” is Adam Roseman, the managing director and founder.