Who's Middle Class in China?

What is the definition of middle income? Many feel they are scraping by

The Chinese government wants its citizens to think their lowly salaries are a sign of increasing social status, but many beg to differ.

Last Friday the National Bureau of Statistics issued a report on how different income groups spend their time in China. It said people who earned under 2,000 yuan (US$295) a month were in the "low income" category; those on salaries of 2,000 to 5,000 yuan (US$295-US$740) a month were "middle income", while a "relatively high" monthly income was 5,000 to 10,000 yuan (US$740-US$1,480).

Anyone earning more than 10,000 yuan per month was in the "high income" group.

How many families in China are enjoying life like this one?

But many people online were in disbelief by this definition, because even though they were described as "middle income", they were barely scraping by.

The response forced the statistics bureau to clarify that the middle-income definition applied only to the report. "The term 'middle-income group' mentioned in the survey has nothing to do with the income brackets in the general sense," the statement said.

While the World Bank ranks China as an "upper middle income" country with a GDP per capita of US$8,827 in 2017, ranked 73rd in the world, Beijing has never given an official definition of middle income.

"A typical family of three, for example, might have an annual income of 100,000 to 500,000 yuan. There are 400 million people, or 140 million households -- [in that income bracket] who has the means to buy a car, a flat, or go traveling," said statistics bureau chief Ning Jizhe on Monday.

But many say that despite fitting into that income bracket range, they are still struggling to make ends meet.

Guess this family doesn't worry about making ends meet

Wang Xiaoyi, a researcher at the Chinese Academy of Social Sciences wrote an article about it in the Beijing Youth Daily earlier this month.

"The middle-income group, especially those who are young, don't see themselves as such even though their income has reached a certain level. People who are not on low incomes also feel the pressure of living costs -- they're not enjoying the good life. It's as important to boost their sense of achievement as it is to lift people out of poverty."

Welcome to the rat race...

China's Demographic Crisis

China is projected to have less than 15 million babies born in 2018

The projections are becoming a reality for the Chinese government -- 2018 was indeed the turning point for the country's population to drop significantly since 2000. Some economists are already calling it a "demographic crisis" that threatens China's currently struggling economic development.

The final figure for the number of births in 2018 will fall below 15 million, well below the government's estimate of 20 million.

While China's National Bureau of Statistics has yet to release the countrywide number, provinces have already recorded lower births.

Yi Fuxian says this is a turning point for China's population

A paper co-authored by Yi Fuxian, a researcher at the University of Wisconsin-Madison, and a long-standing critic of China's family planning policy, and Su Jian, an economist at Peking University, say this will have long-lasting effects on the country.

"The year 2018 will be remembered as a historical turning point for Chinese population," Yi and Su wrote in the paper. "The Chinese population has started to fall, the ageing problems has accelerated, and economic vitality has weakened.

"A great nation, which once upon a time accounted for nearly a third of the world's total population, is gradually degenerating into a small group of the old and the weak thanks to wrong demographic policies."

Hua Changchun, an economist with Guotai Junan Securities, wrote a research note saying the number of births across China could be as low as 14 million if there is a 20 percent drop in births nationwide.

Less births will impact China's economic development

He said the drop in births would not only impact China's social and economic development, but also lead to a drop in demand for property.

This last point led Ren Zeping who is the chief economist for property developer Evergrande Group, to be very concerned about the birthrate dropping and urged China to lift all birth controls "and encourage people to have babies". 

China had hoped lifting the one-child policy in 2016 would lead to more births, but there was only an initial spurt, as many, especially in big cities cannot afford to raise another child, nor do they care to heed the call of the government to do their patriotic duty to procreate for the country.