China and India: The $10 Trillion Engine of Future U.S. Growth

Shoppers browse at a store in Chandigarh, Punjab, India, on Sept. 28, 2012. Photograph by Sanjit Das/Bloomberg

My friend and colleague Michael J. Silverstein, writing in this space in late October, mentioned that the most dangerous thing about China is America’s misguided attitude toward the country. In short, we appear to be afraid of China’s success.

The U.S. has never before run from a challenge. This is the wrong time to start.

As Silverstein and his co-authors—Carol Liao, David Michael, and Abheek Singhi—point out in their new book, The $10 Trillion Prize, one of the reasons many Americans feel threatened by China is they don’t know a lot about the country. What they do “know,” by and large, is what they’ve been told by politicians and others who accuse China of stealing U.S. jobs.

Yes, many low-skill, low-wage U.S. jobs have moved elsewhere, in many cases to China. Yes, many low-cost, mass-produced products that used to be made here are now being made there, and in other low-cost countries, such as India, Indonesia, Malaysia, Mexico, Thailand, and Vietnam. And, yes, many of those jobs will never come back.

But as China and the other developing countries grow, they also become potential customers for U.S. goods and services, from corn and soybeans to automobiles, commercial jetliners, heavy machinery, construction and farm equipment, and banking, investment, and insurance services, to name just a few.

It wasn’t that long ago that the prevailing American vision of the Middle Kingdom was that of millions of mindless peasants marching in automaton-like lockstep to the orders of the party bosses. They led lives of drudgery, on collective farms, toiling for mere survival. Everybody dressed like Chairman Mao. Dissent was met with tanks. And it wasn’t that long ago that that may have been accurate in some respects.

But China today, as Silverstein and his co-authors make clear, is a booming multiclass society with hundreds of millions of people who want nothing more than their own version of the American Dream: a nice home, a quality car, a good education for their children, appliances and conveniences, better health care, stylish clothes, more time for travel and leisure. In short: a better life for the next generation than the current generation enjoyed. The same is true in India.

The authors visited with and tell the stories of dozens of Chinese and Indian families and entrepreneurs who are striving for the same things Americans want—and for the first time in their lives, they have the money to get them.

My colleagues have calculated that between 2010 and 2020, Chinese and Indian consumers will spend some $64 trillion on goods and services. Chinese consumers will spend approximately $41.5 trillion, with annual expenditures reaching more than $6 trillion in 2020. Indians will spend $22.5 trillion, with annual spending hitting an estimated $3.6 trillion by 2020. Combined, they will be spending some $10 trillion per year by 2020—more than three times what they spent in 2010.

That’s what U.S. politicians and business leaders should be talking about: the promise of China and India as engines of future U.S. growth. That’s the prize the book is about.

China and India today show the kind of unbridled optimism that used to be the hallmark of America. Many Chinese and Indian entrepreneurs expect their companies to grow by factors of 10 over the next decade.

Rather than fear such growth, Americans should embrace it, wish them well, and make sure our businesses, farms, and factories are prepared to meet their needs.

Before it's here, it's on the Bloomberg Terminal.