Middle Class in China

Sometimes as I start to read a post or news article, I come up with major objections, then as I read through, I notice that I’m not the only one to come up with the objections.

Today I read that China’s middle class will reach 700 million

by 2020, according to Euromonitor. … 700 million out of the estimated 1.45 billion people of 2020 will have an income of roughly between 80,000RMB (11,800USD) to 120,000RMB (17,700USD) a year..

The obvious silliness of this figure is the definition of Middle Class. At the high-end, that’s 10,000 RMB / month. Which means that they are earning between 25% to 50% more than they are paying for rent. Assume ownership, its still only 60-70% more than mortgage payment in Shanghai. I specifically say Shanghai because if someone is making this salary level, chances are they live in a 1st tier city, which has overly inflated living costs. In 10 years (by 2020), I think its a safe bet to assume that there will be significant inflation. So this this middle class income level will be less relevant in the future.

The Shanghaiist post goes on to quote a translation from The Beijing Times:

The reasons for the study of the issue and people’s growing expectations basically come from the rational spirit, peaceful state of mind and conservative psychological condition that middle class status can bring. [...] In the last 10 years, middle class families assets have been increasing because of the rapid rise in housing prices. But the burdens on these families are also growing bigger. Most middle class families have become more and more nervous.

Although the increase of wealth is essential, a peaceful, rational and conservative state of mind is more crucial is to the middle class.

I hate the whole “conservative state of mind” which Chinese media promotes as a fake cultural norm. But the quoted opinion piece is correct. And it is correct not just because “middle class” people have more stressful lives because they have more to lose, but also because, at these income levels, they may actually not be true middle -class vis-a-vis the rising cost of living. Even today, at the middle class salary levels described above, families would not have such a comfortable, secure existence in one of the 1st tier cities.