The Chinese Academy of Social Sciences (CASS) issued a report stating that the total number of middle class citizens in China has risen to one-fifth of the entire population. Analysts think that the size of the middle class is currently not sufficient to have a significant effect on promoting political reform. The economic significance of the growing middle class in China is greater than its political significance.

In the report, CASS didn’t use the word “middle class.” Instead it said that those earning a middle-income in China rose to 19 percent of the whole population in 2003. It reported that the Chinese middle-income class is an example of accelerated growth. The medium-income class is currently growing by 1 percent per year. It is estimated that by 2020 the medium-income class will be 40 percent of the whole population.

According to the standardized measurements of CASS, those with family assets of 150,000 yuan (US $18,750) to 300,000 yuan (US $37,500) are labeled “middle income.” Currently, 49 percent of families in China’s cities and towns meet this criterion. Taking into account the low income of most rural families, the population of the Chinese middle-income class is currently only 19 percent of the total population.

Xie Guozhong, a Chinese economist in Morgan Stanley’s Hong Kong Division, said that the price of housing and food in China is low, which is why so many people can join the middle-income class.

The Middle Class Has Not Been Too Interested In Political Reform

Dr. Martin K. Whyte, a professor in the Sociology Department of Harvard University and a specialist in China’s sociology, said that there is a lot of conjecture right now in the west. Some believe that what happened previously in the Western world may also happen in China. Along with the growth of the middle class, there will be more pressure on the Chinese government to perform political reform and implement democracy. However Whyte doubts this, because the situation in China is different from that in Western countries. He believes that most of China’s middle class own private corporations, and have more interest in economic profits for themselves and little interest in promoting Chinese political reform. Mr. Whyte said, “According to some research, the owners of Chinese private corporations are less active in promoting the process of democracy than some members of the Chinese Communist Party. These people are just interested in protecting their own commercial profits, so they are more interested in stability than democracy.”

China Hasn’t Reached The Turning Point, Yet

Pei Minxin, Director of the China Program at Carnegie Endowment for International Peace, said that the size of China’s middle class is not yet sufficient to play a pivotal role in promoting political reform. Minxin says that the situation will change dramatically if the percentage of the middle class increases to more than 60 percent.

He says, “The percentage is only a background number to show some kind of change is occurring. Yet the middle class has to induce political openness using political approaches. In the current situation, the Chinese political elite—actually the political elite inside the Chinese Communist Party—have no intention of opening up the political system. Even though there are more people in the middle class than ever, 20 percent still isn’t enough to effect a change. When the proportion of the middle class is over 60 percent, political openness will be inevitable, and the pressure on the government will be dramatic. Right now, the percentage is just over 19 percent, and hasn’t yet reached the so-called political turning point.”

The Economic Significance Of The Growing Middle Class In China Is Greater Than Its Political Significance

Some observers point out that the current trend among residents in Chinese cities is to buy cars and houses. Such actions have increased the assets of families living in Chinese cities. Pei said that the economic significance of the rapid growth of China’s middle class is greater than the political significance. “Perhaps it [the growth of the Chinese middle class] has more influence on economic development than on political development. If the percentage of the Chinese middle class reaches one-fifth, we’re talking about 300 million people. This equates to a huge consumer market in China. In the past, not many of China’s 1.3 billion people could afford to make big purchases. Now, there are 300 million who can afford expensive items; the population of China’s middle class is almost the same as the population of the United States. However, the average income in China is only 10 percent of that in the United States. So, if you only look at China’s middle class, their average income is almost 30 percent of that in the United States. This is a huge number.”

The Growing Middle Class Has A Limited Effect On Decreasing The Number Of Those In Poverty

Although the population of the middle class is increasing, China is an agricultural country, and the vast majority of China’s population is composed of 900 million peasants. So the gap between the rich and the poor is increasing. Pei said that the effect of the growing middle class has a limited effect on decreasing poverty. He thinks that solving the problems of the poor depends on the various policies of the Chinese government.

He says, “The situation of those in poverty depends on the economic development and the policies of the government to help the poor. Yet the absolute or relative reduction of those in poverty is relevant to economic and social policies, especially China’s tax policies. Currently, all these public policies in China do nothing to decrease the number of those in poverty.”