Article image

China and India: Boom or Bust?

In This Article
  • China and India are in the midst of a revolution in growth—and risk and volatility are part of the bargain.

  • There is a clear parallel with the early U.S. economy, which experienced strong growth punctuated by corrections such as the Panic of 1873.

  • China and India will have 1 billion middle-class consumers by 2020, and their annual spending will reach $10 trillion.

  • To participate in the largest-ever unfolding of consumer markets in history, there is no choice but to meet your competition in the marketplace.





Following recent declines in GDP growth in China and India, many are asking important questions: Have the two countries lost their way? Is China a bubble about to burst? Are India’s bureaucracy, corruption, and infrastructure issues insurmountable? Will income disparity create civil unrest comparable to an Arab Spring? Are political dysfunction and crony capitalism preventing reform? Will the next generation of leadership in the two countries change the dynamics in ways that are sufficient to provide enough jobs for their entry-level workers?

The $10 Trillion Prize

A series of Perspectives looks at what the growth of consumer spending in China and India means for business and society.

We believe that the answer to these questions is simple: China and India are in the midst of a revolution in growth. Risk and volatility are part of the bargain. We remain convinced that by the end of this decade, there will be 1 billion middle-class consumers in China and India—and both countries will have delivered long-term annual growth averaging 8 percent.

As we explain in our new book, The $10 Trillion Prize: Captivating the Newly Affluent in China and India, this growth will not occur along a straight line, and both countries will have to overcome corruption, imprudent investments, social disharmony, pollution, natural disasters, and political conflict. History is a good teacher. In the past, emerging-market countries have often experienced significant instability, with wide swings in yearly growth rates. The immaturity of their economies increases both risk and return.