China's New Years Resolutions: Increase Middle Class and Eliminate Poverty by 2020
January 3, 2008
For most of us, losing 10 pounds (or at least not gaining 10 more) would be a great accomplishment for the upcoming year, but the Chinese government's a bit more ambitious. By 2020 it plans to eliminate "absolute poverty," and to have over half the population part of its middle class.
These highly ambitious proposals lend themselves to two basic questions: What is "absolute poverty," and what is the "middle class"? While we can provide our best-educated guess as to what constitutes "absolute poverty" the government hasn't given an elaborate definition, so your guess is as good as any, but the official poverty line is living on less than 70 cents a day.
On the other hand, China's rapidly developing middle class will be a fascinating group to watch. According to the Chinese government, a member of China's middle class has an income between $8,000 and $27,000 a year. By comparison, the U.S. middle class is very loosely defined as those earning between $25,000 and $100,000 annually, and the 2006 poverty threshold would be $10,210, which translates to over $27 a day.
Of course, these figures aren't an exact comparison, and $8,000 goes a lot farther in Hubei than Houston. Furthermore, China's GDP continues to grow at a staggering rate of about 10% annually, and it's possible that the middle class, and lower class standards for that matter, are only increasing. But just because more and more people are joining the ranks of the middle class doesn't mean that they feel wealthier.
According to a China Youth Daily and Sina.com poll only 12.7% of China's middle class thinks it's living a middle class lifestyle, but about 83% of respondents say they intend to be middle class in the next 10 years.
This survey had a slightly lower standard for "middle class," which it defined as being between the ages of 20 with an income between $7,500 and $25,000 annually, and most survey recipients didn't like that definition. For them "middle class" was all about a stable income, and the ability to afford a house and car.
Considering the rising property values and number of new cars making their way onto city streets, the Chinese Dream of having a stable, comfortable existence is becoming a reality for many more people. The survey even expects the number of Chinese middle class citizens to triple over the next 10 years to triple to 100 million by 2016.
100 million isn't quite half the population the government intends to have in its middle class by 2020, but this development definitely marks the potential for a huge new market for consumers and a dramatic shift from China's communist principles.
In a pure communist society, you wouldn't want to increase the middle class (which the China Academy of Social Sciences defines as those who earn 2.5 times more than the average worker) because everybody should theoretically benefit together. Although new numbers from China's MInistry of Agriculture indicate that the income of rural residents has risen 7% during 2007, the wealth gap continues to grow.
Raising the standard of living for all Chinese in order to achieve these 2020 goals will be more than enough to keep officials busy, and these objectives are only the tip of the iceberg when it comes to China's social challenges. On the other hand, considering how much China has changed over the past 30 years, anything is possible.
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