A Growing Middle Class in China

Someone forwarded me an article “China’s Illusory Middle Class Market” by BusinessWeek a while ago, questioning whether there is middle class in China and if it changes anything at all.

I have just returned from China, interviewing people for my upcoming book on the emerging middle class in China. Clearly, no doubt that there is a growing middle class in China, mostly in coastal urban areas at this time. I have talked to many people – almost all of them own homes, and a lot of them have cars.

This is a picture of the home of a typical middle class family in Hangzhou, a second tier city southwest of Shanghai.

My current experience tells me that the Goldman Sachs report that the Chinese middle class will reach 650 million by 2015 is not too optimistic. At least I know the statement cited in the article that “many Chinese may purchase virtually nothing else for years before buying a car” is not true.

In reality, a lot of wealth was created in individual hands in just these few years. I visited IKEA and local department stores – they are literally fully fully packed! My sister bought two pairs of shoes while visiting a department store with me, and my mother said she just bought four pairs of shoes a few weeks ago!

I would say, taking into consideration purchasing power parity, the middle class people I met there have more or less the same level of affluence of average people here in the Bay Area.

14 thoughts on “A Growing Middle Class in China

  1. I do not doubt what you saw. Are you sure you saw typical working-class neighborhoods, or were you channeled to “tourist-friendly” areas?
    I know from my experieces in Africa and eastern Europe that tourists do not always see the “real world” when they visit…unless they make a special effort to get off the “tourist track.” Cape Town, SA is a good example. Most tourists see the waterfront area and the cable car ride up Table Mountain. The shantytown slums on the outskirts of the city are horrific…if you get a chance to see them.
    You are obviously a pro, so I probably do not need to tell you this.

  2. I am not a tourist myself in China. I return to my parents’ home and visit my old friends. Also, my interview is about the middle class people and they are mostly in the cities now.

  3. Thanks for the imformative article Helen. I believe the sleeping giant is rapidly awakening. Good luck with your book.

  4. I hope that what you have said is true. It will mean that the coming US recession will be somewhat offset by rising Chinese domestic consumption. However, I am hesitant to believe that it is as rosy as what others have been saying. There is still 700 hundred million peasants in China who are being left behind by the Chinese dream. Granted they are in the rural countryside, but that does not mean everyone in the cities are middle class or even approaching that status. Millions of migrant workers and their families subsist in the cities. They are not given the same financial opportunities. Their children are not given the same education. Just because a Chinese in the city does not mean he or she is middle class.

  5. Is Hangzhou really a second tier city? Depending on what measures are used, the case could be made that it is second only to Shanghai.

  6. J.D

    What is your source that indicate the apt pictured above is in top 5% or fewer? I was last in China in 2001 equivalent to eons ago in current China years. I would say the apt pictured above is typical “middle class” in an 2nd tier city (I visited Chengdu and Chongqing) even back then. My relatives lived in apt like those, let me tell you they are definitely not in the top 5%.

    Although huangjin has a point about whether Hangzhou is 2nd tier city, In fact, I am not sure Chengdu and Chongqing shoud be consider 2nd tier any more.

  7. Judging by the size of the concrete column, I believe this is one of those expensive, spacious, high-rise condominium in one of the major city in China. I wonder how many American middle classes can afford to live in a condo like that. Wow, shall we all move to China? Unbelievable story!

  8. Hao Han, your family could be luckier than you realize. Take a look at their salaries, assets, professions, and start crunching a few numbers. Big apartment in Hangzhou, a rich city with money to burn on funky lighting? Not average. Even car ownership is a bad indicator. What 20 million in the whole country (a hight estimate)? Right there you’ve got your top 5% households. All those black audis aren’t middle class working stiffs.

  9. I believe this is one of those pre-Olympic propaganda waged by Chinese Communist Party. Remember they are still in power! Old habit die hard.

  10. I live in China, and I don’t think there’s anything close to typical about the pictured home. Extremely wishful thinking.

  11. Bowly:

    Dont know where u lived, but i found “middle class” are much better than this, especially in beijing or shanghai.

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