China's middle class

To get rich is gloriousJan 17th 2002 | BEIJING
From The Economist print edition
 
 

China's middle class is expanding rapidly. But what does it want?

HAS China taken in a Trojan horse? The country's accession last month to the World Trade Organisation (WTO), optimists in the West often argue, will make China more prosperous and thereby boost the development of the middle class. This in turn will lead to demands for democratic reform because middle classes naturally want a say in government. Many Chinese scholars argue, however, that if substantial political change does occur in the next few years, the middle class will have little hand in bringing it about.

The growing affluence of urban China would appear to be striking enough evidence that a middle class is already fast emerging. Cities that 15 years ago were grim, Stalinist backwaters are today aglow with the trappings of middle class life. The cities that have benefited most from the flood of foreign investment into China over the past decade—Beijing, Shanghai and Shenzhen—now boast more white collar workers than blue collar ones. The working class, which according to Communist rhetoric still leads the country, is shrinking. The state sector is crumbling. Private enterprise is booming.

The party itself, meanwhile, remains way behind the times. It still will not use the term “middle class” in its official documents, preferring instead such phrases as “those with high incomes”. To recognise such people as a class would turn the ideology of the last 50 years on its head. Mao Zedong sought to eliminate the capitalist-roaders and, despite the more tolerant economic climate of the past 20 years, it was only less than three years ago that the legitimacy of private enterprise was fully recognised in the constitution. President Jiang Zemin caused a furore within the party last July when he suggested that entrepreneurs be officially allowed to join.

In a study of China's social classes published this month, the state-run Chinese Academy of Social Sciences (CASS) also shied away from the term “middle class”, explaining in a footnote that the word “class” has negative connotations. The survey says that this “middle stratum” is still very small, amounting to about 15% of the working population compared with 60% in America. Still, this would amount to about 110m people, or about half of the urban population in employment.
 
 

China's chief negotiator at the WTO accession talks, Long Yongtu, boasted last November that within ten years, some 400m-500m Chinese would enjoy a “middle income”, making China's market “much bigger” than that of the United States. An official from the State Information Centre estimated recently that by 2005 China would have 200m middle-income consumers. The official was quoted by a state-run news agency as saying this class could afford to buy cars and housing and spend money on leisure travel. No wonder the foreign business community is salivating over the promises made by China to open up its markets after entering the WTO.

But while no one doubts that there is a burgeoning group of relatively affluent Chinese, the size and political significance of this class is more questionable. Zhang Wanli, another participant in the CASS study, says there is a lot of “journalistic hype” in China about the size of the country's middle class. She says the middle class will still be much closer to 100m in five years' time, its growth constrained by growing urban unemployment as well as depressed incomes and widespread under-employment in the countryside.Not by bread aloneSome Chinese officials clearly do believe that the middle class could pose a political threat. A study by the party's powerful Central Organisation Department published last May noted that “as the economic standing of the affluent stratum has increased, so too has its desire for greater political standing.” The report said that this would inevitably have a “profound impact on social and political life” in China. President Jiang's gesture to businessmen last July was presumably aimed at ensuring their loyalty and deterring them from using their economic power in ways that might threaten the party.

But so far, at least, there is scant evidence that the middle class is seeking anything more than political security. Some Chinese researchers say that entrepreneurs who have applied to join the party or sought election to legislative bodies want to gain social status and security rather than change the system from within. The CASS study says the government has failed to give “full political recognition to the interests of their social stratum” as well as adequate legal protection for their property.

But private businesspeople do not look likely to push for such guarantees, at least not collectively. According to Shen Mingming, director of Beijing University's Research Centre for Contemporary China, the only groups in China with collective political consciousness are those traditionally recognised by the party: workers, peasants and “intellectuals”, as graduates are known. In recent years, unemployed workers and downtrodden peasants have staged frequent protests against corruption or violations of their rights. But for all their worries, private entrepreneurs are gaining wealth faster than any other group, thanks to market-oriented reforms. “During this transitional process, these people are direct beneficiaries, they are getting a free ride, so why should they bother” trying to secure political changes, argues Mr Shen.

Chinese scholars often point to the experiences of other Asian countries, particularly South Korea and Taiwan, which maintained their authoritarian systems through decades of rapid economic growth and despite the emergence of a big middle class. For the time being, officials in China seem more concerned about the polarisation of wealth. But the experience of those countries shows that the days of middle class rage come in the end.
 
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