The Middle Class in China (1)

by Tzy C. Peng

	The middle class based on family wealth is a new social status in China, 
created under economic reform policies in the late 1970s.  This prospering 
and expanding middle class is rapidly becoming the mainstream of Chinese 
society.   Their hopes and aspirations will have a significant effect on 
the future of the world in the 21st century.
	
	In my 6-week trip (March-May, 2001) to China, I had many opportunities to 
engage in causual conversations with my relatives and friends (Age 20 - 
60) about economic situations in China.  Just before I came back to the 
U.S., I had a 2-hour dialogue after dinner with 4-5 people on the idea of 
middle class in China.  Among them, one was a college professor, one was a 
senior engineer, and one was a senior economist (retired).  All ordinary 
people with no special connections to current government officials. As a 
result of that dialogue, some description of this Chinese middle class are 
made more clear, and may in some way help us to view the real China, not 
by its ideology but by the economic reality. What follows is a summary 
of that discussion on the "Middle Class in China."

	What is the annual income of the middle class? 

	It is hard to define because the economy is so fluid in China that today's 
definition may be inappropriate for tomorrow. However, the best 
estimate out of a consensus among friends is probably 20,000 - 80,000
yuant.   "Yuan" is the currency unit of RenMinBi (RMB)t at about 8.3 to 1
ratio to the US dollar.  Thus, the Chinese middle class 
earns about $2,400 - $9,600 annually in the Greater Shanghait area of 16
million people.  Of course, Shanghai is the Chinese equivalent 
of New York city in the U.S.  The middle class of a lessor city or a small 
city will be proportionately less.  Yet, the term "middle class" is still 
appropriate in terms of the local economic conditions for those cities. 
Compared to the middle class income, the well-known college professor's 
salary is 10,000 - 20,000 yuan ($1,200 - $2,400) per year. The low end 
of labor wages are about 2,500 - 5,000 yuan ($300 - $600) per year, and 
the high end of entreprenour's earning can be 1,000,000 yuan ($120,000) or 
more per year.   There are not many super-rich people around, but recent 
indications are that the number can be in the hundreds, even in the 
thousands .   For many, both spouses work and often have extra 
income from the side jobs. 

	In addition, people employed by private business, especially a business 
jointly owned by Chinese and foreign investers can usually double or 
triple their wages for the same level of skill.  This provides a 
convenient partial solution for many laid-off skilled workers from the 
downsizing state-owned-enterprises.

	What is the percentage of the middle class in terms of the income-earning 
people as a whole?

	It has been estimated that the middle-class percentage is 20 -30% in the 
Shanghai area.  Again, this number can vary, sometime significantly, from 
region-to-region and from time-to-time.  However, there is a degree of 
optimism among the populace that unless another social upheaval occurs, 
the future trend of the middle class is continuing upward growth. 
This optimism may explain a current phenomenon prevalent in China, which 
is not readily understood by outsiders, especially the western analysts, 
to maintain the societal stability even with some suppression of political 
liberties.  In addition, this desire of maintaining stability does not 
always come from the top government officials, although the leadership 
will certainly do everything to hold on to their power.  More 
significantly, this desire comes from people at the grass roots who for 
the first time see hope for reaching wealth and prosperity at their level, 
at least economically. Ask the question of "who wants to be a millionare?" 
in today's China, you will see millions of hands going up.   It appears 
that the strong motive to get rich and have a good life is as desirable in 
China as it is in the United States. (to be continued)