China isn't a threat to America. It's an opportunity. (+video)
President Obama and Mitt Romney both say it’s time for the US to get tough with China. They have it wrong. China's rising middle class provides a ready consumer market for savvy American companies, while Chinese infrastructure projects increase demand for US construction goods.
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They’ve got it wrong. America needs to better understand China, engage with China’s people and leaders, align its interests with China, negotiate quietly behind the scenes, and work to make China its partner in prosperity. Calling the Chinese "cheaters" serves no useful purpose. Protectionism would be a mistake.
Yes, China needs to play by the rules. That’s why we have rules. When the US has a complaint – and there are many legitimate things to complain about – there are protocols and procedures for settling such disputes. And as Mr. Obama admitted in the final presidential debate, the US has been very successful in pursuing and prosecuting trade grievances.
But the relationship is bigger than that. While China and India may pose an economic threat to the unprepared, they also represent one of the greatest economic opportunities America will ever see.
The truth is that the US and Chinese economies are now joined at the hip. Include India, Brazil, and a handful of other rapidly developing countries and you’re looking at America’s economic future.
At the Boston Consulting Group, we believe the economies of China and India alone will grow at an average annual rate of 8 percent over the next decade. Driving that remarkable growth is the rise of the middle class. China and India now boast some 300 million middle-class households – households with high aspirations, energy, confidence, optimism, and disposable income.
I've been carrying around a 500-page compendium of interviews we recently completed with consumers in China and India on their hopes, dreams, and wishes. They want what most Americans want – a house, a car, good schools for their children, and access to healthcare. They want the American dream.
Who’s better equipped to help them realize this dream than American companies?
Behind this already consumptive emerging middle class, ready to move up, are hundreds of millions of “P-H-Ds”: poor, hungry, driven 20-somethings, who outnumber US youth by a ratio of 10:1.