Page 15 - Accelerating out of the Great Recession

INTRODUCTION

consumer, even in tough economic times. In 2008, total private
consumption in China was equivalent to just 15 percent of total
U.S. consumer spending, or 2.9 percent on a per capita basis.
Thus, a 32 percent increase in private consumption in China
would be needed to offset just a 5 percent reduction in U.S. con-
sumer spending.
This is not going to happen.
China is not a strong enough economic engine to pull the
whole world back into a period of high growth, even though
it is the world’s fourth-largest economy and accounted for
nearly a quarter of total global growth in 2008. There are just
too many developed countries (including the most important
one in the world) suffering from the effects of a severely dam-
aged economy for China to pull off a kind of indirect global
bailout.
So we do not subscribe yet to the theory of decoupling. We
remain concerned about the United States because it is still the
main economic player on the global stage. Over the next few
years, the Indian and Chinese economies may well perform
spectacularly. So in time, it may indeed no longer be axiomatic
that when the United States sneezes, the world catches a cold.
But for a while yet, at least, any economic ills of the United
States still matter to the wider world.
Put plainly: We believe that much of the world is now enter-
ing a period of prolonged slower growth, as we will discuss in
the coming chapters. This is of great significance to business
leaders and executives—for at least five reasons:

1. It increases the competitive intensity of business. In order to
grow, companies will have to gain market share. The
management teams and strategies of all companies—

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