Over the past several decades, China’s economic development has lifted hundreds ofmillionsofpeopleout of poverty and resulted in a burgeoning middle class. Middle class households typically have enough income to satisfy their primary needs – food, clothing, and shelter – with some disposable income for additional consumption and savings. In 2000, China’s middle class amounted to just three percent of its population. By 2018, this number had climbed to over half of the population, constituting nearly 707 million people. China’s growing middle class presents new economic opportunities, but also poses significant political and demographic challenges.
Breaking Down the Middle Class
The Rise ofChina’s Middle Class
Decades of economic development have fueled a massive increase in incomes in China. China’s Gross National Income (GNI) per capita has grown more than ten-fold since 2000, reaching $10,410 in 2019. Although this is significantly lower than the $43,861 average of OECD economies, China’s GNI per capita is on the high end among fellow BRICS countries. In 2019, China led Brazil ($9,130), South Africa ($6,040), India ($2,130), and came in just behind Russia ($11,260).
The increase in income has led to a rising middle class in China. While there is no standard definition of “middle class,” most metrics use income bands to differentiate between economic classes. For instance, the Chinese government defines incomes ranging from $7,250 to $62,500 (RMB 60,000 to 500,000) per year as middle class. McKinsey uses a range of $11,500 to $43,000 (RMB 75,000 to 280,000) per year. To facilitate cross-country comparisons, the World Bank uses a dollar-per-day amount, adjusted based on purchasing power parity (PPP). In 2015, Pew Research Center expanded this metric to include four additional income levels, with “lower-middle” and “upper-middle” together constituting the broader middle class.
| Breakdown of Class Income Bands |
|---|
| Income Band | Daily Income | Annual Income |
|---|
| Poor | <$2 | <$730 |
| Low | $2 – $10 | $730 – $3,650 |
| Lower-middle | $10 – $20 | $3,650 – $7,300 |
| Upper-middle | $20 – $50 | $7,300 – $18,250 |
| High | >$50 | >$18,250 |
Source:Pew Research Center |
Based on Pew’s income band classification, China’s middle class has been among the fastest growing in the world, swelling from 39.1 million people (3.1 percent of the population) in 2000 to roughly 707 million (50.8 percent of the population) in 2018. This amounts to an increase of 667.9 million (or 47.8 percentage points). Among BRICS economies, only Russia has come close to matching China’s rate of increase. Russia’s middle class grew by 62 million people, expanding from 28.2 percent of the population to 71.5 percent. Meanwhile, Brazil’s middle class grew by 54.8 million (30.3 percent to 51.4 percent), and India’s expanded by 64.8 million (1.2 percent to 5.7 percent).
Most of China’s middle-class growth has occurred within the lower-middle income band. In 2018, China’s middle-class share of 50.8 percent of its population was nearly identical to that of Sweden (51 percent), but differences emerge when breaking down the middle class into its lower and upper echelons. In China, 68 percent of the middle class falls into the lower-middle income category, while in Sweden this figure is only 11 percent.
| Middle Class Size in BRICS Economies (2000-2018) |
|---|
| Economy | Share of Total Population in 2000 (%) | Share of Total Population in 2018 (%) | Change (%) |
|---|
| China | 3.1 | 50.8 | 47.7 |
| Russia | 28.2 | 71.5 | 43.3 |
| Brazil | 30.3 | 51.4 | 21.1 |
| South Africa | 15.1 | 22.5 | 7.4 |
| India | 1.2 | 5.7 | 4.5 |
Source:World Bank (PovcalNet) |
Spending Habits of the Middle Class
The Chinese middle class is beginning to behave similarly to its counterparts across the world in terms of consumption of goods and services. Middle class spending growth has been primarily driven by consumers in the upper-middle income band, which have a significant amount of disposable income. For instance, passenger vehicle sales in China grew continually for 26 straight years through 2017, when 24.7 million passenger vehicles were sold. Sales in China have declined in recent years, to 21.4 million passenger vehicles in 2019, but the Chinese market still accounts for roughly one-third of global sales.
Higher incomes have also enabled consumers to be better connected. Since 2000, China’sinternet penetration ratehas skyrocketed, from just 1.8 percent of the population to 54.3 percent in 2017. While this is much lower than in some advanced economies like South Korea (95.1 percent) and the US (75.2 percent), it is considerably higher than India’s rate (34.4 percent). Notably, internet penetration rates are significantly higher in China’s cities. According to theChina Internet Network Information Center, the internet penetration rate among urban residents stood at 76.4 percent as of June 2020, compared to 52.3 percent among rural residents.
Growing access to the internet has spurred rapid growth of China’s e-commerce market, which is now the largest in the world. In 2020, China’s e-commerce market was valued at nearly$2.1 trillion, making it more than three times larger than the entire European e-commerce market.
| Breakdown of the Global E-commerce Market (2020) |
|---|
| Country/Region | Value
(Billions of US$) | Global Share (%) |
|---|
| China | 2,090 | 53.4 |
| North America | 749 | 19.1 |
| Europe | 591.2 | 15.1 |
Asia-Pacific
(excluding China) | 358.3 | 9.2 |
| Rest of World | 125 | 3.2 |
Source: eMarketer |
Greater economic means have also created new educational opportunities. Between 2000 and 2018, annualgross enrollment in tertiary educationgrew more than seven-fold, from 7.6 percent to 53.8 percent.1Many students are flocking overseas to study. Annual outbound students climbed from about 285,000 in 2010 to over662,000in 2018, with most leaving to study in the US, UK, Australia, and Canada.
Chinese tourism, both within China and abroad, has seen significant increases. Domestically, Chinese tourists made 5.5 billion visits in 2018, spending more than $773 billion. This far eclipses the 2000 figures, which saw just 744 million domestic tourists and $38.4 billion in tourism expenditures. Annual spending by Chinese travelers abroad has likewise soared, from $14.2 billion in 2000 to over $277.2 billion in 2018. Chinese travelers are primarily visiting Asian countries, including Japan, Thailand, and South Korea, but they are also traveling farther afield. According to the US International Trade Administration, about three million Chinese visitors traveled to the US in 2018, making China the fifth-largest source of tourists to the US.
Although Chinese consumer activity is catching up to – and surpassing – that of other countries, Chinese households saved a much greater share of their income (36.1 percent) than households in other major economies such as Germany (10.2 percent), the US (7 percent) and the UK (1.7 percent) in 2016. However, the Covid-19 pandemic is shifting saving patterns. Savings rates rose to 19 percent and 33 percent in the eurozone and the US, respectively. The impact has been mixed in China. Some unemployed individuals have dipped into their savings for survival, while others have reduced spending to cope with the uncertainty.
Debt patterns are similarly changing. Historically, Chinese households have had low levels of debt as a percentage of GDP as a result of their relatively high savings rates. Yet, from 2014 to 2019, China’s households added $4.6 trillion in borrowing, causing household debt to surge to 56 percent of GDP.
Much of this recent growth in household debt is linked to property markets. Chinese households keep agreater proportionof their wealth in real estate, averaging 74 percent in 2012 compared to 52 percent in the United States. Moreover, China has an above average home ownership rate of about 87 percent compared to just68 percentin the US.
Rising housing prices are putting increased financial pressure on China’s middle class.At the end of 2018, debt related to housingaccountedfor two-thirds of all household debt in China.In first-tier cities like Shanghai and Beijing,home pricesranged from 15 to 20 times theaverage household incomein 2018. In comparison, thehousing price-to-income ratiowas 9.2 in San Francisco and 5.4 in New York City in 2017. The cost of renting is also on the rise. Average monthly rent in Beijing grew by overten percentin the first seven months of 2018 alone.
Consequences of a Growing Middle Class
The expansion of China’s middle class has presented a host of new environmental, demographic, and social challenges. As the middle class continues to grow, the Chinese government faces ever-evolvingdemands to address these challenges.
The increased consumption levels of the middle class have contributed to environmental stresses. Rising vehicle purchases, higher gasoline consumption, and urban sprawl areresultingin higher CO2emissions and elevated levels of air pollution.This hasprompted action fromthe Chinese government,includinga drive to increase renewable energy production and apledgeto makeChina carbon-neutral by 2060.
Dietary preferences have also shifted. Arisein animal protein consumption among the middle class has increased agricultural production and placed a considerable strain on the environment.This shift in middle-class diets, coupled withthe sedentary lifestyle often associated with higher income occupations,has led to an increase inhealth carecosts. Chronic and non-communicable diseases like heart disease and diabetes are on the rise in China, and theyare often expensive to treat. From 2000 to 2018, annualhealth care expendituregrew from $55.5 billion (4.6 percent of GDP) to $893.5 billion (6.6 percent of GDP).
Health care concerns are further compounded by the fact that China’s population isaging. China’s population pyramid is in the process of inverting.Its dependency ratio(the number of people belowage15 and aboveage65 divided by the total working population) isexpected to increase from37.7percentin 2015 to66.6percentin 2050. Without working-age adults to support older generations, the rising costs ofcaringfor olderretired family members are expected to increasingly burden Chinese households.
Inequality also poses a challenge for China, as the benefits of economic growth have not been shared equally throughout Chinese society. China’sGini index– a measure of a country’s income inequality scored from 0 (perfect equality) to 100 (maximal inequality) – increased from 32.2 in 1990 to 43.7 in 2010. China’s Gini index has declined somewhat in recent years, to 38.5 in 2016, but it remains in the middle among major developing economies. China’s 2016 Gini Index was far lower than that of South Africa (63 in 2014) and Brazil (53.3 in 2016), but slightly higher than of Russia (36.8 in 2016) and India (35.7 in 2011).
The Chinese government has faced growing demands from the middle class to address these interconnected issues. To alleviate the burden of rising health care costs, Beijing has extended healthcare coverage to urban non-workers and reducedout-of-pocket (OOP) spendingon health care. In 2000, OOP spending covered 59 percent of total health care costs. This figure fell to 28.6 percent by 2018 as a result of growing contributions from the government as well as public and private insurance. The government has put in place plans to further reduce OOP spending to 25 percent by 2030.
To support China’s aging population, the governmentincreasedaverage pensions by more than 10 percent annually from 2005 to 2015. Pension raises have stalled somewhat, rising just by five percent in 2019, but Beijing has also looked to expand coverage by introducing a more general pension that covers workers not participating in the formal economy.
In addition to expanding the middle class, decades of economic development have also lifted hundreds of millions of Chinese citizens out of poverty. Learn more.
Leaders in Beijing have also sought to spur wage increases and broaden the social safety net. China’s provinces and municipalities have regularly raised minimum wages in recent years. They have also put in place measures to expand unemployment insurance to migrant workers where, previously, these benefits would not follow their move to a new city.
Most importantly, China’s leaders are focused on sustaining the economic growth that has powered the country’s middle-class growth. The governmentcut taxesby RMB 2 trillion (about $288 billion) in 2019, largely in an effort to offset the economic impacts of trade tensions with the US. The move boosted China’s GDP by roughly 0.8 percent that year, but China continues to face seriousdownward pressureon economic growth. Overcoming threats to economic development will be key to the continued expansion of China’s middle class and meeting their ever-growing demands.
FAQs
Breakdown of annual middle class household income in China 2021-2022. As of January 2022, the largest share of Chinese middle-class families had an annual income of between 100 thousand and 300 thousand yuan per year. According to the same survey, almost 90 percent of respondents have at least one child.
What percentage of China is middle class? ›
These three regions had a total of 16.6 million middle-class families, accounting for 50.08 percent of the whole of the Chinese mainland.
What percentage of Chinese are wealthy? ›
This statistic illustrates the distribution of adult population in China in 2020 by wealth range group. That year, approximately 12.5 percent of adults in China had wealth of 100,000 to one million U.S. dollars. In comparison, around 54.3 percent of adult population in Hong Kong were in this wealth range group.
Is China low middle-income? ›
China is now an upper-middle-income country. Although China has eradicated extreme poverty, a significant number of people remain vulnerable, with incomes below a threshold more typically used to define poverty in upper-middle income countries.
What is the average income in China in US dollars? ›
Median salary
The median salary in China is 26,800 Yuan (USD 3,855) per month.
What percentage of China is working class? ›
The working-age population fell to 63.3% of the total from 70.1% a decade ago. The group up to age 14 expanded by 1.3 percentage points to 17.9%.
What is the average wealth of a Chinese citizen? ›
A decade ago, China's citizens were estimated to hold just 9% of the world's wealth. That figure has now more than doubled, while median wealth in the country has skyrocketed from $3,111 to $26,752 between 2000 and 2021.
What is considered high class in China? ›
The Rise of China's Middle Class
| Breakdown of Class Income Bands |
|---|
| Income Band | Daily Income | Annual Income |
|---|
| Upper-middle | $20 – $50 | $7,300 – $18,250 |
| High | >$50 | >$18,250 |
| Source: Pew Research Center |
3 more rowsIn 2021, the last full year for which Beijing's National Bureau of Statistics offers data, the average Chinese worker earned 105,000 yuan a year, the equivalent of $16,153. The average American worker earned some $58,120 a year, 3.5 times his or her Chinese counterpart — still wide but not what it was.
Who is more rich China or USA? ›
As per projections by IMF for 2021, United States is leading by $6,033 bn or 1.36 times on an exchange rate basis. The economy of China is Int. $3,982 billion or 1.18x of the US on purchasing power parity basis.
While China and the US are comparable in nominal GDP, there are far more wealthy individuals in America than in China. China — with a population of 1.4 billion — has 780,000 people holding assets worth $1 million or more, while the US — with a population of 332 million — has 5.27 million people in the same category.
Who is richer between USA and China? ›
The U.S. makes up 23.93% of the total global economy, says Investopedia. The World Bank Group lists China as the second richest country in the world as of 2021, possessing a GDP of $17.734 trillion along with a GDP per capita of $12,556.3. China makes up 18.45% of the total global economy.
How much salary in China is poverty? ›
BEIJING, April 1, 2022— Over the past 40 years, the number of people in China with incomes below $1.90 per day – the International Poverty Line as defined by the World Bank to track global extreme poverty– has fallen by close to 800 million.
Is China considered a Third World country? ›
For example, in the Western theory, China and India belong respectively to the second and third worlds, but in Mao's theory both China and India are part of the Third World which he defined as consisting of exploited nations.
Is China upper middle-income? ›
The World Bank defines a high-income nation as one with a nominal gross national income (GNI) per capita above $13,205. China logged in at $12,608 last year, the National Bureau of Statistics reported.
Is it cheaper to live in China or America? ›
The cost of living in China can vary by location and type of purchase. On average, China's cost of living is 45% lower than the U.S according to Numbeo. Rent in China is 60% lower than the U.S. on average.
How much is a house in China? ›
An average 80 square meter apartment within Shanghai's Inner Ring Road goes for upwards $886,000; while in the city's hinterlands it sells for around US$200,000. In Beijing, the average cost of a home of this size is roughly US$310,000.
What is the average rent in China? ›
How much is rent in China? Depends where you are but rent in a shared apartment can amount to 2,500 RMB to 3,500 RMB for a shared apartment in a Tier 1 city like Bejing or Shanghai. Additionally having your own studio can cost you around 4,000 RMB.
What is China's most common job? ›
This is because teaching is one of the most common occupations in China, with some estimates putting the number of teachers at around 60 million. Teaching has become a popular career choice for young Chinese because of the many career opportunities available to those who have a teaching qualification.
Does China have a minimum wage? ›
Minimum Wages in China remained unchanged at 2590 CNY/Month (364.326 USD/Month) in 2023. The maximum rate of minimum wage for employees was 2480 CNY/Month and minimum was 690 CNY/Month.
Working life in China is usually centred on a 40-hour week spread across five days (most often Monday to Friday). General banking hours are Monday to Friday from 8am to 5pm. A standard working day is eight hours long.
What is the average age of a millionaire in China? ›
According Hurun, the average Chinese millionaire is 39 years old, a full 15 years younger than your average millionaire in the US. There's around 960,000 millionaires in China, a land of 1.4 billion inhabitants.
Is Russia richer than China? ›
China dominates every aspect of the bilateral economic relationship, as a net exporter, net creditor and net investor, despite Russia long being a richer country than China.
Is 10000 a lot of money in China? ›
Before we get started, let's do the math: 10,000 RMB is about 1,500 USD, a salary of about 18,000 USD per year. While this figure in the US, Canada, the UK or Australia would be, by many standards, quite low, in China it's actually not that bad.
What age is middle class in China? ›
The new middle-class population in China has the following characteristics: Age: individuals between 25 and 40 years old. City: living in third-tier cities and above.
What are the 5 social classes in China? ›
In the Qing dynasty, the population could be divided into five classes. The top class was the emperor and his immediate family. After that came the gentry (officials all the government). Next came the agriculturalists, landlords, farmers and peasants.
What is the average class size in China? ›
The Classroom
The class size in China is large, averaging 40-60 students. The seats in the classroom are usually arranged in rows and lines. Students in one class usually have a fixed chair and desk and they change their seats regularly.
What is the minimum wage in China per hour? ›
Minimum wages in China continue to rise. As of April 12, 2023, Shanghai has the highest monthly minimum wage among 31 provinces (RMB 2,590/US$400 per month), and Beijing has the highest hourly minimum wage (RMB 25.3/US$3.9 per hour).
Does China have a class system? ›
The Upper Classes
At the very top of the Chinese class structure are the elites. This includes not only political elites but also the wealthy and the popular.
Is China a communist or capitalist country? ›
The CCP maintains that despite the co-existence of private capitalists and entrepreneurs with public and collective enterprise, China is not a capitalist country because the party retains control over the direction of the country, maintaining its course of socialist development.
As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
Will China overtake America? ›
There is still much work to be done to propel China to the top of the world's economy, but it is certainly possible that the Chinese economy can surpass the power of the US by 2050. It may also be too early to make definitive projections of China's future.
Is China a rich or Poor nation? ›
According to China's National Bureau of Statistics, national gross domestic product per capita reached 85,698 yuan in 2022, or about US$12,741 based on the yuan's average exchange rate last year. That puts the country just slightly below the World Bank's high-income threshold of US$13,205, as of July 2022.
Does the US have more poverty than China? ›
To a reasonable level of accuracy there's no one in China in the bottom 10% of the world's population by wealth. And yet there's some 10% of those global poor in North America, and another 20% or so in Europe. So, yes, it really is true that there're more poor people in America (and Europe) than there are in China.
How much does the US owe China? ›
Top Foreign Holders of U.S. Debt
| Rank | Country | U.S. Treasury Holdings |
|---|
| 1 | 🇯🇵 Japan | $1,076B |
| 2 | 🇨🇳 China | $867B |
| 3 | 🇬🇧 United Kingdom | $655B |
| 4 | 🇧🇪 Belgium | $354B |
6 more rowsMar 24, 2023
The GDP per capita is calculated by dividing a country's GDP by its population. Thus, the richest countries in the world are those with the highest GDP per capita. Currently, the richest country in the world in terms of GDP per capita is Luxembourg, with a GDP per capita of $135,700.
What is the wealthiest country in the United States? ›
Richest counties in the U.S. by median and mean income and poverty rate
| Rank | County | State |
|---|
| 1 | Falls Church city | Virginia |
| 2 | Loudoun County | Virginia |
| 3 | San Mateo County | California |
| 4 | Santa Clara County | California |
16 more rowsJan 31, 2023
According to data published by London-based investment fintech Invezz, Japan, Greece, Italy, Portugal, and the US are the top five nations with the highest level of government debt.
Is the average American richer than the average Chinese? ›
China's average wealth, however, was still less than a third of the wealth of the median American ($93,271) — and only about 10% of the wealth of the median Belgian ($256,336). Global wealth increased by 9.8% in 2021 compared to the year before, reaching a total $463.6 trillion.
Is there inequality in China? ›
China's current mainly market economy features a high degree of income inequality. According to the Asian Development Bank Institute, “before China implemented reform and opening-up policies in 1978, its income distribution pattern was characterized as egalitarian in all aspects.”
Is living in China safe? Yes, many expats, especially women, find living in China is much safer than in cities like London or New York. Street harassment and catcalling is virtually unheard of for foreigners, and streets tend to be well lit at night.
What is the poorest city in China? ›
Guizhou has the largest poverty population, with 2.95 million. Xinjiang has the highest poverty rate, which is 9.9 per cent. Gansu, Guizhou, Tibet and Yunnan also have a poverty rate above 7 per cent.
Is China a First World country now? ›
Definition of First World
Modern journalists using the term First World countries are typically describing the most industrialized nations. This includes all of the major actors on both sides of the Cold War: the United States, Russia, China, United Kingdom, France, Germany, Spain, Australia, and more.
Is China a superpower? ›
According to the 2021 Asia Power Index, within Asia, the United States still took the lead on military capacity, cultural influence, resilience, future resources, diplomatic influence, and defense networks, but fell behind China in two parameters: economic capability and economic relationships.
Is Mexico a First World? ›
The World Bank classifies Mexico as an upper-middle-income country. However, the country is characterised by vast social disparities. More than 40 per cent of the people live in poverty.
How much does the Chinese middle class make? ›
Breakdown of annual middle class household income in China 2021-2022. As of January 2022, the largest share of Chinese middle-class families had an annual income of between 100 thousand and 300 thousand yuan per year. According to the same survey, almost 90 percent of respondents have at least one child.
What is the average income in China middle class? ›
A typical Chinese middle-income family of three earns between 100,000 yuan (US$14,772) and 500,000 yuan per year, Ning said.
What is the average household income of China? ›
According to the source of income, in 2022, the per capita wage income of residents nationwide was 20,590 yuan, an increase of 4.9 percent, accounting for 55.8 percent of disposable income; the per capita net operating income was 6,175 yuan, an increase of 4.8 percent, accounting for 16.7 percent of disposable income; ...
Is China's middle class bigger than the US? ›
Credit Suisse's new Global Wealth Report is getting a lot of attention for the finding that China's middle class is now bigger than America's. “China now has the largest number of middle-class adults by a wide margin—109 million compared to 92 million in the United States,” the report states.
Is China in middle income trap? ›
Answering the question depends on the definition of middle-income employed. According to the World Bank's official classifications, a country becomes high-income only when its gdp per person exceeds around $13,200. By that standard, China looks set to escape the middle-income trap in a year or two.
On average, China's cost of living is 45% lower than the U.S according to Numbeo. Rent in China is 60% lower than the U.S. on average. But the cost of items like cars and private school tuition are actually very similar. Many products commonly used in the west are imported to China, making them more expensive.
What is the minimum wage in China? ›
Minimum Wages in China remained unchanged at 2590 CNY/Month (365.488 USD/Month) in 2023. The maximum rate of minimum wage for employees was 2480 CNY/Month and minimum was 690 CNY/Month.
Is China upper middle income? ›
The World Bank defines a high-income nation as one with a nominal gross national income (GNI) per capita above $13,205. China logged in at $12,608 last year, the National Bureau of Statistics reported.
Is China more affluent than the US? ›
While China and the US are comparable in nominal GDP, there are far more wealthy individuals in America than in China. China — with a population of 1.4 billion — has 780,000 people holding assets worth $1 million or more, while the US — with a population of 332 million — has 5.27 million people in the same category.
Is middle school free in China? ›
Nine-year compulsory education policy in China enables students over six years old nationwide to have free education at both primary schools (grade 1 to 6) and junior secondary schools (grade 7 to 9). The policy is funded by government, tuition is free. Schools still charge miscellaneous fees.
What is the wealth gap in China? ›
According to the annual report released by the World Inequality Lab last month, the bottom 50 per cent of Chinese adults earn about 25,520 yuan (US$4,000) a year, while the top 10 per cent of the population earns, on average, 14 times more at 370,210 yuan. The gap is bigger than in most developed economies.
What is China's poor income? ›
BEIJING, April 1, 2022— Over the past 40 years, the number of people in China with incomes below $1.90 per day – the International Poverty Line as defined by the World Bank to track global extreme poverty– has fallen by close to 800 million.
How bad is income inequality in China? ›
At this time, the Gini coefficient for rural – urban inequality was only 0.16. As of 2019, the official Gini coefficient in China was 0.465; inequality was at its highest in the 2000s, with numerous sources reporting a significant decline in the 2010s.
Are there rich and poor in China? ›
China's rapid economic development in the last four decades has benefited everyone in the country by eradicating absolute poverty, but it has to be admitted that the economic gains have largely benefited those in power. In other words, China has a rich state and relatively poor people.
