A Burgeoning Middle Class

If you think of China as the world’s manufacturer with low-cost labor, think again. As its economy continues to grow, a burgeoning and increasingly affluent middle class of consumers is rapidly emerging. According to Chinese Academy of Social Science, the number of the households that has achieved middle class status reached 250 million in 2005, mostly in coastal urban areas.

These urban elites are attracted by the western lifestyle. As they become more sophisticated, they seek out the higher-end design aesthetic of western brands that has traditionally been unavailable from cost-conscious local designers and manufactures.

Walking on the streets of Shanghai, it’s not rare to see European luxury labels like Burberry, Louis Vuitton, and MaxMara all over the place. There are some brands I have never seen in the US, such as Bentley and Harry Winston. Chinese are very status-conscious people. The new rich know what prestigious brands they want and they want their status known, whether it’s Rolls Royce for car, Dunhill for shirt, or Cartier for jewelry.

When Chinese Vogue was launched last August, its print run of 300,000 copies sold out almost immediately. Recently, US giant homemaking lifestyle magazine Better Homes and Gardens has partnered with one of China’s biggest print media companies to launch a Chinese edition, with a mix of American and China-specific content to target consumer and advertising markets.

The urban elites are role models with a lifestyle sought by hundreds of millions of Chinese. It’s estimated that another 300 – 400 million consumers from second tier cities will be joining the middle class in the next two decades or so. China will soon become, if not already, the world’s largest market for new purchases of eveything from cosmetics to computers to automobiles. It would be interesting to see what impact it will have on the world economy.

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26 thoughts on “A Burgeoning Middle Class

  1. I think in two ways: Selfish-paranoid American, and humanitarian, The first perspective makes me worry about the oil supplies. 400 million to become economically powerful in the next two decades? That is a miracle yes, but will current industrial capacity be ready to double its size over the next two decades? Will Chinese money outspend the US Dollar and threaten our capacity to live as an industrial nation if our oil imports actually fall to meet China’s rise? As a humanitarian, I think materialism isnt the big issue, I think its freedom. While the acceptance of capitalism is a good start, I hope China moves towards an open government.

  2. Stanley,

    Thank you for your comment. You asked very a good question. I think China will bear environmental consequences as its demand on energy for modernization. It’s a paradox. As for oil supplies, I think there are already innitiatives to develop althernative energies such as ethernal and fuel cell, etc. to reduce US dependence on oil. In term of humanitarian, I believe a growing middle class will inevitable lead to democracy.

  3. Thanks for bringing another side of the Chinese rise in economic power to light. Usually you hear about the millionaires or the poor, but not those in the middle.

  4. Don’t forget however, that in China you have to have permission to be middle class as it exist there. It’s true that there are millions that want to move to the cities to get better paying work etc., but they aren’t allowed to. The government is controlling this, and it has led to some unrest. I do agree that the more educated, and the more wealth to go around, the more a democratic movement will grow. China is in a catch 22 in a way, and as is known recently got Google to design an Internet control system for them to stop any ideas of democratic thought. They haven’t forgotten Tiananmen Square and don’t want another.

  5. Katrina, yes for the first time in Chinese history, there are an emerging middle class!

    John, I think you confused rural migrants with urban middle class in China. Yes, there is a huge migration going on in China. Actually, the government is planing to move 500 million people from rural to urban areas over next ten years. It’s a gigantic job and I wouldn’t be surprised if there are chaos. The middle class I am talking about is totally different from this group. They are urban dwellers that have traditionally lived in the cities.

  6. There was a book being covered on booktv about four months ago on the history of China under Mao, I didnt realize the devestation this man caused to the people of China by selling the domestically needed food supplies to Russia for nuclear technology. It seemes as if with the assimilation of capitalism, and the growth of chinese buying power, knowledge of the free societies will become inevitable, I think Helen is right, the newgrowing Chinese middle class will lead to an at least transparent government, if not a democracy strictly speaking.

  7. Stan, I don’t know about that book. Thank God those days are ended.

    I understand many Americans good intention to want more democracy for Chinese people. It’s so basic and that’s one of the reasons I came to this country. I mentioned in another post, for a country like China that has three thousand years in fuedalism, democracy is a gradual process. It won’t happen overnight. I doesn’t happen by changing government or constitution or systems, it happpens when people internalized the concept of democracy in both their hearts and minds, and it definitely comes with economic advancement. Now I am saying this as once a RADICAL Chinese student who came to this country in 1989 (if you still remember what happened that year).

    Another thing is that for poeple who have struggled on the poverty line for decades or even centuries, to be able to live a better life economically is their biggest aspiration. If you ask people these days what they really want, they will tell you they want better lives. Unfortunately it is very materialistic at this point, but I believe people will come to the point for spirituality and others.

    It seems to me Americans want democracy for Chinese more than Chinese do for themselves. The recent internet cersorhsip caused more bubbles in this country than it does in China. It really becomes more a political issue than the issue for democracy itself.

    An interesting story: I married an American who is from a big family. Each year, we get together for family reunion (in fact, we will be meeting this weekend). My mother in China was surprised to hear this. She said: “I thought Americans don’t care about family – they divorce all the time.” The truth is even you hear a lot about divorces in the media, it doesn’t mean Americans don’t care about family.

  8. Liz,

    Thank you for your comment. It’s sad the people in China still cannot talk about 1989 Tiananmen Square incident openly in public. However, these days, people can make fun of government in the newspapers, blogs, etc. as long as there are no organized events. It’s big improvement already. Even in this country, we also bear the consequences of “freedom of speech”, do we? Everything is relative.

    I normally don’t comment on political issues as first of all I am not interested and second of all it usually leads nowhere. But sometimes it’s unavoidable. Think if someday Chinese come to tell Americans that you should care more about family values – not to have so many divorces, not to let your children to leave the house at 18 and not to look after their parents etc, does it sound rediculous?

  9. Helen,
    This is a wonderful article. And it is an excellent affirmation of what I saw going on economically in China the short time that I was there. One thing that was said to me while there, or at least that I heard somewhere was this metaphor; that after the Tianneman Square uprising of 1989 as a citizen of China today you stand in a room. There are two doors in this room. There is a sign above one door saying “Economic Opportunity”. The other door has a sign above it stating “Politics”. If you walk through the door of “Economic Opportunity” you can do anything you wish (this is one of the problems) and have totally free reign. If you choose the door with the sign for “Politics” over it, watch out! And never, never mention 1989 or expect a government response. Thank you for this insightful article.

  10. Patricia,

    Thank you for your comment and for sharing your experience in China.

    I believe China’s rising in its economic power will benefit the world as a whole – contridictary to some views that consider China as a threat. I see some people in this country are either mystified or threatened by China. That’s because they don’t really know and understand Chinese people.

    As China become more integrated to the world economy, it has a lot to offer to the world, not just in economic term, but in other areas such as its ancient wisdom, philosophy, relationship building, herbal medicine, food and diet culture, etc, etc. I sincerely believe the US and China can learn from each other and complement each other.

  11. Hi Helen,
    Your article draws attention to the important reality of the emergence of a large middle class in China. In the suburb of Hangzhou, where I lived in a small apartment complex, I was surrounded by young couples with children who parked their new cars in the underground garage. Everyone had washing machines and “western style” bathrooms. The complex had, not only a playground for the children, but a convenience store, several garden ponds, trellises, benches, and a pavillion where residents could sit, read, or visit. Also, store fronts were being opened everywhere on the ground floor. A restaurant that opened in one of these developed a non-stop take-out business delivering lunch, (“wu-fun”). They also had a booming dinner business. It was clear that amazing economic growth was only months away. However, proof that it has sprung from the rural habits of only several years prior was evidenced by the occasional site of a water buffalo wandering down the street with its owner. Recent immigrants from the countryside still live and farm the fertile plots of land nearby.
    There were also other signs, of extremely rapid change. For one,
    the details of construction in the buildings are, frankly, shoddy. Workman who came to replaster and paint the damp and peeling plaster in my kitchen left gypsum all over the woodwork without any concern. They were young, but, rather than careless, it seemed that their attitude was one of anyone from a “more-than-five-thousand-year-old-and-recently-feudal” culture might adopt. The moisture in the walls would, after all, always exist. No amount of new plaster would halt it’s progress. The temporary solution of staunching it for the meantime was all that could be done before it would have to be scraped and redone again. A different concept of “a job well done” was imposed upon the work ethic. The workman were simply pragmatic. They were cheerful and did not create any work-related stress. Their criteria for “doing a good job” seemed to be that of “sustaining the strength to continue to work.”
    This seemed also to be true for the workmen I saw hoisting steel girders, by hand, through the doorway of a new store. They set up a good-natured competition and with a series of “heave-ho” type chants got the job done without incident. Then they sat down for a long rest and liquid refreshment.
    Daily life on the increasingly prosperous east coast of China is exciting right now, in part, because these two attitudes of the “old” and “new” world values are visible everywhere.
    Helen, I know you are right in pointing out that this will soon change. Here in the U.S. it seems that we don’t want to acknowledge this fact. Thank you for calling it to our attention. And yes, I do remeber the summer of 1989. However, 1989 was 17 years ago now. Still a legacy not rectified, but not current reality either. The truth of the present day probably lies somewhere in between the two doors of “Politics” and “Economic Growth? I am hoping that the influx of foreigners for the Olympic Games will be a chance for contact and for change. “JinWen”

  12. Liz,

    Many people are falling in love with China now. China has its challenges and environment is one of them, and China has its dark side too. In today’s flat world, any country seeking to maintain or achieve “super power” status will be self-destructive. We are living in a global community and we are so much inter-dependant on each other, more so than ever.

    In his book “The World Is Flat,” Tom Friedman talked about in the future there will be two or three “United States” and it’s better for the world. I agree with him. Having lived in both countries, I see America and China can really complement and balance each other. It’s almost like good husband and wife complementing and balancing each other (if they learn how to appreciate each other) :-)))

  13. Helen,
    I do not see China as a threat. I fell in love. I am hoping that China steps up to the plate and takes world leadership roles where it can really do so. There is a relatively significant “Environmental Movement” afoot, albeit not in government circles. They know that they have a raging problem. It would be cool if they saw this as a leadership opportunity!

  14. Very interesting. It is nice to find pieces like this that educate, as opposed to the mindless banter that has afflicted the site recently. I have only read half of the comments so far, I look forward to the rest of them.
    Jim Vaughey

  15. Helen – Do you think this trend has changed the patterns of immigration to the US? I work in a school with many Chinese immigrants – it does seem we are getting more of those who are being left behind by the economic boom.

  16. Nathan, thanks for the comment. I think it will affect teh immigration trends to this country. Do you mean you are seeing more students who are not doing well in China and immigrate to this country instead?

  17. No – it seems to me that my school is getting more students from rural China. We used to get Chinese from Hong Kong or Vietnam . Now most come from small cites and are not educated. This is an overgeneralization of course, but it does seem as if the immigrants in the last five years have been refugees from economic hardship.

  18. Nathan,

    Immigrants from small cities may mean those people are having money (or rich) although they are not well educated. For someone to immigrate to the US, he or she needs to have some amount of money or relatives in the US. I know a lot of Chinese parents sending their children to the US for education because they are economically able to do so. That actually means those people are benefited from the economic boom. What school are you with?

  19. Lincoln High School – Los Angeles City Schools – It is on the East side of the city which has gradually become more Asian. They represent about 20% of the student body. It is hard to judge trends at this level, but I don’t see too many kids from Hong Kong any more – that used to be the main place Asian immigrants at our school came from.

  20. Diana, welcome back! Another very challenging issue for China, beside environment, is social inequalities that came with the economic prosperity. At this point, the government tries to increase the size of middle class which I think is very smart. It’s interesting to watch how it’s unfolding….

  21. Excellent article, Helen! Thank you for posting. I’ve enjoyed all the thoughtful comments as well. I agree that China does not have to be a threat and think it will be exciting to watch where they go with economic and environmental issues.

  22. Helen: What is considered a “middle class” income in China? A number of my friends and I discussed this one night and could not find an answer? I don’t know if I would assign automobile ownership in China as middle class, cars are far to expensive and are own by the “rich”. I’m just wondering, in RMB, what a middle class income would be?

  23. Steve,

    Good question! According to McKinsey recent report, there will two surge of middle class in China: lower middle class with annual income of RMB25,000 – 40,000, and upper middle class with annual income of RMB40,000 – 100,000. With PPP, RMB100,000 will have a lifestyle of what $40,000 can buy. But with the currency and exchange rate issues, this numer may very well be under estimated.

    The “rich” does not qualify for middle class. The middle class I am referring to is the mass who will have disposable income to purchase home, cars and other stuffs. I may have another article coming soon to address these issues.