Farmers and Caterpillar: So hot right now?

A falling dollar is supposed to stimulate U.S. exports, and if China and other developing countries allow their currencies to appreciate, consumers in those countries should be able to start buying stuff from the U.S. and other advanced countries. This morning I was trying to think about what U.S. industries are poised to benefit from this shift—that is, what do we make that Chinese consumers want?

Chinese consumers are still, by Western standards, very poor. So the products they buy will primarily be low-cost products, such as clothing and food. Ironically, the abundance of cheap labor has attracted a lot of the garment industry to China, so we're out of luck there.

Food, on the other hand, is something the U.S. still produces in large quantities. Demand for crops grown in the U.S., such as corn, wheat, and soybeans, should take off even more than it already has. It might be a good time to be a farmer. (I would include cars on this list, but let's be honest, the U.S. auto industry isn't going to win a lot of market share in China.)

A rise in the RMB should also spur infrastructure investment in China. This, however, will undoubtedly be done through the Chinese government—they are, after all, still technically communist. Building highways, schools, and hospitals will require heavy construction equipment. So the Chinese government will probably need to buy fleets of bulldozers, excavators, and rollers. Luckily, the U.S. has the largest heavy equipment manufacturer in the world: Caterpillar.

Just off the top of my head, it seems that farmers and heavy equipment manufacturers are in the best position to benefit from increased exports to China.