Who are the Chinese middle class?

The working class in capitalist society is made up of all those who are obliged through economic necessity to sell their mental and physical energies for a wage or salary. If this is your position then you are a member of the working class. The job you do and the status it might have, the pay you receive and how you chose to spent it, are irrelevant as long as you are dependent on working for a wage or salary in order to live. What makes a wage or salary-earner a member of the working class is not the mere receipt of a salary but being economically dependent on it for a living. What this means is that essentially we are living in a two-class society of capitalists and workers. Classes are defined by the relationship of their members to the means of production, not by how rich or poor they are. The existence of a middle class is one of the greatest myths .

It may be popular to talk (usually vaguely ) about various other 'classes' existing such as the 'middle class', but it doesn't add our understanding of capitalism. The figures for wealth ownership are only an indication of the class structure of society--they show that society is divided into classes but not how it is. So, classes should not be defined on the basis of them; classes are defined socially not statistically. And the working class is defined socially as those members of capitalist society who are excluded from the ownership and control of the means of production and are therefore forced to get a living by trying to find an employer to buy their labour power. Just like most workers they have to consume their incomes in order to survive at the prevailing standards of comfort of their peers. Most of those called the "middle class" fall into this category and the following article exposes the fallacy of defining what is "middle class" Whilst there are statistics, government statistics and politicians' proclamations, working class membership is easily defined.

The following article exposes the different definitions in regard to China.

A lot of international companies have long believed that they must have a presence in China because they consider its 1.3 billion people to be potential consumers, implying a seemingly endless stream of future revenue. The existence of a robust middle class, upon which this vision is based, is clearly growing at an accelerated pace in China, but an increasing body of research raises question about who the country's middle class really are and the true meaning of their disposable income.

Recent definitions of what constitutes the middle class in China range from approximately 10 percent to nearly half of the population. In 2007, Goldman Sachs said it believed 100 million Chinese consumers should be classified as middle class, and estimated that by 2015 that figure would jump to 650 million. The Asian Development Bank (ADB) suggested earlier this year that by 2020 more than 1 billion Chinese will be classified as middle class.
In a study released earlier this year, the ADB defined the middle class in China as individuals earning between $2 per day (the low end of lower middle class) and $19 per day (the high end of upper middle class) in income. The Bank notes that in 2005, 35% of the Chinese work force earned just $2-4 dollars per day, another 30% earned $4-10 per day, and less than 5% earned more than $10 per day. The Bank defines "affluent" consumers in China as those earning more than $20 per day (or $7,300 per year), consisting of 44.8 million in urban areas and 11.1 million in rural areas of the country -- approximately 4 percent of the total population.

According to a 2009 report in The Economist, the commonly accepted definition of income for the poverty line in the developing world is two dollars per day, implying that individuals above that income are by definition part of the emerging world's middle class. By contrast, the poverty line in America is $13 per day, but it would be difficult to imagine telling someone who makes $14 per day in the USA that he or she is not in poverty. By the same token, a person making more than $20 per day in China under the ADB's definition will hardly feel wealthy.

While defining the middle class is a relative proposition, but what seems clear is that the number of people belonging to the middle class in China, and more generally in Asia, is rising. A 2010 report by the Brookings Institution suggests that Asia's middle class is projected to increase from 28% in 2009 to 66% in 2030 -- an increase of 235% in just 20 years. The report says that China's middle class is poised to rise significantly not only because of the country's economic growth rate, but because more Chinese will continue to break out of the ranks of the poor. By 2030 the number of Chinese making more than $10 per day should increase to 74% from 11% today.

In 2006 the China National Research Association (CNRA) defined six criteria for what constitutes middle class status in China, based on education, salary, profession, societal influence, savings and holidays. At that time, the income benchmark for being a member of the 'new middle class' was just RMB2,000 (approximately US$300) per month (or $3,600 per year). McKinsey notes that as of 2006, 77% of urban Chinese households lived on less than RMB25,000 ($3,676) per year -- meaning, that by the CNRA's definition, 77% of Chinese do not belong to the new middle class.

A 2009 study by China's National Bureau of Statistics found that even with an 8.8% rise in disposable income that year, per capita disposable income for the average urban resident was just RMB17,175 ($2,525) and RMB5,153 ($758) for the average rural resident of the country, and that urban dwellers earn 333% more than farmers. This is important because as of 2006, 70.8% of the Chinese population engaged in some form of agricultural work according to Xinhua in 2008, and 54.3% of Chinese live in rural areas, meaning the majority of Chinese have very little disposable income.

So the idea that the majority of average Chinese consumers will be owning a home or a car in the near future, appears to be mistaken. This represents the paradox of the Chinese consumer market, where according to the ADB, in 2005 the percentage of "affluent" households owning a radio, television, air conditioner, refrigerator, or car was lower in China than in the Philippines -- a country considered to be much poorer.