The Rise of China's Global Middle Class in an International Context

• Published date: 01 January 2022
• Author: Terry Sicular,Xiuna Yang,Björn Gustafsson
• Date: 01 January 2022
• DOI: http://doi.org/10.1111/cwe.12400

©2022 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 5–27, Vol. 30, No. 1, 2022 5

The Rise of China’s Global Middle Class in an

International Context

Terry Sicular, Xiuna Yang, Björn Gustafsson*

Abstract

We estimate the size of the global middle class in China and 33 other countries and

analyze China’s expanding middle class in an international context. The “global middle

class” is defi ned in terms of being neither poor nor rich in the developed world. China’s

global middle class has grown rapidly and has been catching up with the middle class

in developed countries. By 2018 China’s global middle class constituted 25 percent of

China’s population; in absolute size it was nearly double the size of the global middle

class in the US and was similar in size to that of Europe. Cross-country analysis of the

relationship between the middle-class share of the total population and GDP per capita

reveals an inverted-U pattern. China is not an outlier from the cross-country pattern but

the speed with which its middle-class has expanded is unusual. The only other countries

with similarly large, rapid expansions of the middle class are transition economies.

Keywords: China, income distribution, middle class, transition

JEL codes: D31, O15, O53, P36

I. Introduction

In recent decades China has grown substantially faster than other countries and has

been catching up with the developed world. By 2018 China’s GDP was second largest

in the world after the US. In purchasing power parity (PPP) terms, China’s GDP was

already the largest in the world. This rapid economic growth has supported dramatic

improvements in the living standards of China’s population. Although, on average,

household incomes remain lower than in North America and Europe, China’s citizens

*Terry Sicular (corresponding author), Professor, Department of Economics, Social Science Centre, University

of Western Ontario, Canada. Email: sicular@uwo.ca; Xiuna Yang, Program Manager, Research Department

One, China Development Research Foundation, China. Email: yangxiuna2005@163.com; Björn Gustafsson,

Professor Emeritus, Department of Social Work, University of Gothenburg, Sweden, and Research Fellow,

Institute for Labor Economics (IZA), Germany. Email: bjorn.gustafsson@socwork.gu.se. The authors thank

the referees for their helpful comments and gratefully acknowledge financial support from the Faculty of

Social Science, University of Western Ontario.

Terry Sicular et al. / 5–27, Vol. 30, No. 1, 2022

©2022 Institute of World Economics and Politics, Chinese Academy of Social Sciences

6

increasingly live lives that resemble those in the developed world. Furthermore, a

growing share of China’s population now enjoys incomes that make it possible to afford

types of consumption considered middle class in North America and Europe – for

example, holiday travel and private ownership of an automobile.

The emergence of a well-off consumer class is very much in line with the stated

aims of China’s policymakers during the reform era. In earlier times, peasants and

workers were the focus of the official rhetoric, but now the new model citizen is

someone with high cultural capital and the economic capacity to consume (Goodman,

2014a). The potential benefi ts for China of a well-off middle class were noted in a joint

report by the World Bank and Development Research Center of the State Council as

follows: “…a growing middle class will also act as a catalyst for improved governance,

better delivery of public services, and the empowerment of civil society” (World Bank

and Development Research Center of the State Council, the People’s Republic of China,

2013, p. 9). The expansion of the middle class could also have political implications.

To the extent that the middle class has benefi ted from, and has a vested interest in, the

existing order, it would tend to work within the system rather than challenge the system

(Tang, 2011). China’s middle class is also important from an international perspective.

Due to its large population, the size of China’s middle class could potentially overtake

the middle-class populations of western countries, thus shifting the global center of

gravity of worldwide demand.

The aim of this study is, first, to investigate whether Chinese household incomes

have caught up with those of the middle class in the developed world, and, second, to

examine how the trajectory of expansion in China’s middle class fi ts into broader patterns

worldwide. We are interested in international comparisons and catching up, so we defi ne

the middle class relative to household incomes in high-income countries, or, specifi cally,

as being neither poor nor rich in high-income countries. We choose middle-class living

standards in high-income countries as our yardstick because they represent an aspirational

idea of what it means to be middle class. We refer to households that meet this yardstick

as belonging to the “global middle class” or, in short, the “middle class.”

Using this defi nition, we employ household survey data from the Chinese Household

Income Project (CHIP) to estimate the share of China’s population that has reached

the global middle class. The years of our analysis – 2002 through 2018 – span a period

during which China followed a policy strategy that emphasized the development of

a moderately prosperous society (xiaokang shehui). The policy emphasis has since

shifted to achieving “common prosperity”, an aspirational goal that aims for standards

of living comparable with those of the middle class in the developed world. We fi nd that

China has made substantial progress towards this goal, although prosperity so defi ned