22
Oct
2010

China’s So-Called “Middle Class”

We translated a post before that enumerates and describes Shanghai’s 7 Social Classes. Here is a thread we found that talks about China’s so-called “middle class”.

The term “middle class” is relative per country. Recently, ADB released a report (Key Indicators for Asia and the Pacific 2010) early this year and mentioned that China’s middle class is numbered at 817 million. The report defined the middle class as those consuming between USD 2 to 20 a day. The middle class is also divided into 3 levels: first class, second class, and third class. Within China’s middle class, 303 million are at the lower level. Once they experience a crisis, it is easy to go back to poverty level.

The concept of “middle class” is pretty broad. If you have a monthly salary of RMB 6,000, that is considered as middle-class salary. Salary is just one of the key indicators. Another is how you compare to the standard of living in Shanghai. Besides Hong Kong, Macau, and Taiwan, Shanghai is probably the closest to being “international” in standards; so it could be the most accurate “middle-class” benchmark. Otherwise, how come many expatriates identify with Shanghai?

Life as a slave–the “middle-class” dream

They are the middle class. House slaves. Car slaves.

Beijing University of Technology and the Chinese Academy of Social Sciences published a paper that talks about the social strata construction of people living in Beijing. At least in Beijing, the middle class is composed of more than 40% of the population, numbering around 5.4 million. Their average monthly salary is RMB 5,923.18.

This statistic received various responses: how do you say one is middle class?

China does not really have a generally accepted definition of “middle class”. One could take the average monthly salary of RMB 6,000 as a starting point. But the people who made the report may have their own criteria. I think the starting point is too low.

How the middle class is being “strangled”

China’s so-called middle class is saddled with lots of pressure: house, car, credit card, kids…the establishment of an olive-shaped society seems far-fetched. As mentioned, from the figures above, once the 303 million experience a crisis, they can easily go back to poverty level.

Owning a house

In order to pay for your dream home, you pay off the mortgage around RMB 7,000 monthly from your salary. The rest will go to your basic expenses. Have you saved anything?

In the Fourth Ring Road in Beijing, average price per square meter is RMB 35,000 to 40,000. In order to own at least a 100-square-meter space, one would need at the very least RMB 40,000 to 80,000 annual revenue. And one needs to work nearly 45 years.

This means that if you started working at 20, by the time you turn 60, you still can not afford to buy a small 100-square-meter space.

Daily increase of fuel prices

You make a one-time purchase of a really cheap car, but then the price of fuel is very volatile, increasing almost daily. Even the price for parking is tagged at RMB 15 per hour. You go out and watch a movie at a discounted rate of RMB 40. However, the money you saved you pay for the parking–RMB 45.

Kids’ basic expenses is more expensive than the adults’

As we all know, there are safety concerns with regards to the local products; so we have no choice but to buy imported ones. And of course we have the best hopes for our children, so scrimping on their education is unheard of.

The middle class have their own vanity. Some really insist on buying imported products. So the money you earn locally is spent on the more expensive goods from abroad.

Here are stories of some middle-class Chinese: I earn an annual income of RMB 200,000, but I am not happy at all.

Case No. 1

Because I have a family of my own, I also have my own house and car–make that 2 cars even. Though my annual income is RMB 200,000, life is not happy at all.

Our monthly income is totaled at less than RMB 20,000. Maintaining 2 cars costs RMB 4,000. Food, at the minimum, costs RMB 3,000. And then there are a lot of bills: water, electricity, gas, cable TV, telephone, internet–all of that amounts to around RMB 1,000. The kid’s allowance is RMB 2,000. When I eat and have fun with my friends, that is RMB 1,000 off my pocket. Repair of miscellaneous items that can break down, etc. is pegged at RMB 500. Caring for the elderly at home (because both parents are busy with work) costs RMB 2,000. What’s more, the a-yi’s salary is RMB 2,000. Total expenses is RMB 15,500, with RMB 4,000 remaining. That RMB 4,000 is then set for any unexpected expenses. For example, if the furniture is too old already and can not be repaired anymore, we have to buy new ones. From time to time, there are relatives who needs help financially, so they would “borrow” money from me. What else is left?

Case No. 2

This man was promoted from junior account manager to senior account manager. His annual salary also increased from RMB 4-50,000 to RMB 300,000. Just looking at the salary, he is considered “middle class” already. But it has been 8 years since his promotion and he is still living in a rented apartment in Pudong whom he just considers as a “nest”. “I do not know if you could say I am middle class. This kind of middle class–is this success or failure?”

Case No. 4

Wang Yan went to the United States for her PhD after graduation and worked in a litigation firm in Washington. Her husband (also a graduate student) decided to go back to Beijing, so Wang Yan followed as well. From an “American” lawyer, Wang Yan became a “Chinese” lawyer. Good educational background, decent work, and decent income–Wang Yan accurately depicted China’s “middle class”. But she could not help but laugh, “Me? Middle class? Middle class should at least own some assets. I do not even have a house. What ‘middle class’ are you talking about?”

Wang Yan continues, “In the United States, everyone is so afraid of unemployment. As long as you have work, you have financial security. In China, it definitely is not ok if you do not have work. However, if you have work, you are afraid to go to work due to fierce competition and endless overtime.”

Such is the life of the Chinese middle class. Agree or disagree?

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