TAIPEI ( TheStreet) -- Every Chinese helmsman from Mao Zedong to Hu Jintao has made his own contributions and mistakes in plotting the Chinese economy. As early as next month, a group of new leaders will be seated.Xi Jinping, a Communist Party school president who helped plan the Beijing Olympics and chart Hong Kong policy, will take over as president and party chairman from Hu. Wang Qishan, a former central bank vice governor and one-time Beijing mayor credited with pushing SARS out of Beijing in 2003, will be put in charge of economic policies. Analysts with their ear to the dirty but always buzzing (new construction? more cars?) ground in Beijing expect these changes, and others, to the leadership of the world's second largest economy after the party holds its 18th National Congress from Nov. 8. The new team would officially take over as early as March. Chinese leaders usually avoid announcing personal policy agendas, preferring at least in public the cloak of unity across different factions and generations. So it takes a few years to gauge what makes a new leader really new. But there's consensus that the post-Nov. 8 team will do something fast about the country's increasingly ominous slowdown in economic growth, probably a series of moves to foster both consumption and manufacturing. Growth in either would be a welcome fix for multinationals with existing business in China (i.e., almost anyone you can name) but questions about where it's headed. China is still growing enviably fast, but the Asian Development Bank said this month it had lowered its 2012 GDP growth guess from 8.5% to 7.7% and next year's from 8.7% to 8.1%. The low-interest lender said risks to the economy were "likely to intensify in the short run" because of soft global demand and the shaky health of China's trade partners. Infighting over who's going to take which leadership job also has slowed down the one-party government's work, including formulation of economic policies. A highly public element of that in-fighting is the all-but-complete ouster of the outspoken, populist corruption-buster Bo Xilai. Once the infighting is out, stock markets from New York to Hong Kong should gain for a few weeks purely on sentiment that things won't get worse.
"Political power transition will remain an overhang until the final list of Politburo is announced or confirmed," says Joseph Tang, investment director at Invesco in Hong Kong. "The political infighting will remain a hurdle for the central government to come up with quick and effective policy initiatives in tackling the current economic problems." Those policy initiatives will push ahead with the 2011-2015 five-year plan for elevating domestic consumption as a driver of GDP growth. Healthy consumption would reduce China's dependence on exports to countries with waning demand. Policies that raise consumption will in turn increase the sales of foreign companies that sell en masse to the masses. No-brainer beneficiaries will be firms that are well-entrenched in China. They're the ones that have sunk money into the country. They know who to pay off, how to avoid scams and what to do with their inscrutable Chinese joint-venture partners. How about Procter & Gamble ( PG)? P&G reports annual China sales of $2 billion with a "No. 1 market share position in all categories where we compete." That means Chinese are hogging up Rejoice, Safeguard, Olay, Pampers, Tide and Gillette, according to the company's immodest website. P&G also claims a No. 2 position in volume. P&G share prices are at their second highest point in history, however, and analysts suggest holding any that might be in your portfolio. To buy, wait for China to launch pro-consumer policy and then for an unrelated dip in share prices that would turn positive again on China sales. On another supermarket shelf, check out PepsiCo ( PEP). In July it announced the opening of its sixth greater-China plant, a 25,000-square-meter fab that can make up to 15,000 tons per year of its signature Lay's potato chips. The company also picked a local partner this year to smooth drink sales and distribution. PepsiCo stocks have climbed steadily since the global financial crisis in early 2009 and buying more is still recommended. But the government knows its consumers aren't rich or loose enough to replace investment in the short term, so the new leadership will keep fueling the twin all-weather growth engines of infrastructure spending and huge real estate projects.
More importantly for multinational corporations, China will work toward policies that favor overseas manufacturers as some of those once on board leech out to cheaper spots in Southeast Asia. Factory work made up 43% of the economy as of 2009 but today it's blocked by an emerging lack of private capital, Asia-based economists fear. Credit Suisse chief regional economist Dong Tao said in an Aug. 20 research report that manufacturing is not profitable because of rising costs and overcapacity. The Purchasing Managers' Index figures for September would support his point. "The sudden disappearance of private investments has led to a crash in the demand for upstream products," Dong said. "That has gradually spread to downstream and then consumption. Very weak external demand has made the situation even worse." China needs to cut taxes and open the high-end service sector to private capital to restore manufacturing, he adds, speculating that "it will take time and courage for the leaders of the next generation to tackle the problems." Not an easy job. But one that well done could give Xi Jinping or Wang Qishan a welcome berth in economic history, certainly above Mao's multiple disasters or Hu's recent inaction. And foreign companies that have invested in China aren't about to disappear. Consider some of the major American PC makers. Dell ( DELL) pledged in 2010 to grow in China by spending $250 billion on production, procurement and sales by 2020. Its chief American rival Hewlett-Packard ( HPQ) agreed this year to set up a factory in the industrial growth hotspot Chongqing and make some 15 million inkjet printers per year. HP already has more than a 5% share of China's PC market, according to market research firm IDC. Chinese consumers like foreign-brand PCs but have spurned the Japanese competitors of HP and Dell following nationalist protests in September. Dell share prices haven't been lower since 2010, with HP shares falling 73% since their second highest in history that same year. Both are trading lower because of broader PC industry issues that may take another year to resolve. Analysts recommend holding -- no buys or sells -- shares of either. Hold off until the new Chinese leadership unleashes a powerful micro-processor for its manufacturing sector. At the time of publication the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.