Video #23 - China: New Middle Class
Wednesday, January 11, 2006BACKGROUND INFORMATION
China has used foreign trade, investment and technology to surpass its goal of quadrupling its gross domestic product in the past 20 years. According to BBC News, China's goal for the next 20 years is to regain its status as the world's largest economy.
As a result of this relentless growth, some of China's city workers now earn $7,000 to $9,000 a year. That is far above the 60% of the population who live in the countryside and are lucky to make $300 a year, or even the typical city salary of around $850 a year.
China is still expected to be behind the U.S. for some time when it comes to per capita income. The government's goal, according to BBC News Online, is to "achieve a 'well-to-do society' by 2020, with a per capita income of five times the present one of about US$1,000. Nevertheless, the rise of its middle class and this new group's hope for the future has engendered a generation that wants to stay in China and participate in its economic success. This feeling is exemplified in a quote by student David Zhang: "I used to want to move to the US and have a beautiful house with green grass in front of it. But now I think this kind of thing can be achieved in China." (BBC News Online,10/11/04)
Apparently the term "middle class" is not popular in China. Some of the terms used for the up-and-coming are: white collar, entrepreneurs, business men, middle-income or middle stratum. The Chinese Academy of Social Sciences released the results of a three-year study where those referred to as middle class would be the managers, professionals, skilled technicians and service workers who earn between $2,500 to $10,000 a year. A study by the Chinese Academy of Social Sciences (CASS) found the middle class to be 19% of the population in 2003, up from 15% at the end of 1999. Using CASS criteria, in 2003, the middle class included 247 million people out of a population of 1.3 billion. (More recent statistics are not yet available.)
Morgan Stanley-which projects 300 million, or 40% of the Chinese population to be in the middle class by 2020-sees this as offering great business prospects. It now projects Chinese retail sales for 2005 at $625 billion. Overall retail sales in China ten years ago were $190 billion.
Regardless of who is figuring the statistics, the west measures the Chinese middle class by the foreign products being purchased. According to Robyn Meredith, writing for Forbes.com: "...newly able to afford vacations and the snapshots that go with them, Kodak has found a solid market there for digital cameras costing between $150 and $550. Mc Donald's is selling more $2 Happy Meals. Starbucks is selling more $3 grand lattes."
Meredith adds, "What is happening in China is a new illustration of the economies of scale. Many Western and Japanese companies already have factories in China exporting goods. Now that there's a domestic market to go along with the export market, those factories can crank up their output at little cost. That's one reason many foreign companies' profits in China have been so strong in recent years." As Meredith points out, "not only are cameras made in China, they are now made for China."
According to the World Bank, China's per capita GDP is still below that of Thailand, Turkey and Peru. Whether the new privileged class will attempt to change the political system or simply play along with it remains to be seen. Steven Xu, an economic consultant born and bred in the mainland opines, "We're not talking about a standard of living comparable to the West, but if we continue to pursue the current reforms we will have a massive middle class, with more accountability and a more open and tolerant civil society. If China can succeed in this, it would be a shining example for other developing countries and a tremendous contribution to mankind."
Time Asia's Jim Frederick poses some interesting questions: "Will the middle class live up to its promise, becoming the root of sweeping social change, the touchstone from which a civil society-or even democracy-springs? Or will it become a politically docile government factotum, a willing participant in the state capitalism that the Communist Party seems intent on establishing where everything is up for grabs-except the power to rule?"
SOURCES
"China's middle class revolution." BBC News Online, October 11, 2004. http://news.bbc.co.uk/go/pr/fr/-/2/hi/asia-pacific/3732914.stm
"China's middle class growing fast." BBC News Online, March 30, 2003. http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/3582015.stm
Beech, Hannah. "Let One Hundred Cultures Bloom." TimeAsia, November 11, 2002. Brennan, Phil. "Middle Class Begins to Alter China." NewsMax.com, February 5, 2002.
Forney, Matthew. "How Nike Figured Out China." Time, October 25, 2004.
Frederick, Jim. "Thriving in the Middle Kingdom." TimeAsia, November 11, 2002.
Meredith, Robyn. "Middle Kingdom, Middle Class." Forbes.com, November 29, 2004.
LESSON PLAN
GRADE LEVEL/SUBJECT:
10-12 grade Economics, International Relations, World History, Geography, International Baccalaureate Programs (IB), Current Events.
PURPOSE:
To present activities to be used in a variety of classroom situations in order to enhance student understanding of the Asian economy and its significance globally.
OBJECTIVES:
Students will be able to:
- Describe the Chinese middle class.
- Predict the growth of the Chinese middle class in the near future.
- Analyze the effect of the growing middle class on China's economy.
- Analyze the effect of a growing Chinese middle class on China's role in the global economy.
- Evaluate the impact of this segment of the economy on Chinese politics
MATERIALS:
- Background information provided.
- Resources on China available at your school's Media Center and the Public Library System in your area.
- Background information available through Internet "search engines."
ACTIVITIES:
May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.
- Use charts and graphs to illustrate the growth of the Chinese middle class.
- Create a timeline of events to illustrate the effect of the middle class on China's economy.
- Research specific cases of foreign companies in China which have profited from the middle class' buying power.
- Use a Venn diagram to compare and contrast the Chinese middle class with that of the U.S.
- Write an editorial supporting your views about the effect that the growing Chinese middle class will have on Chinese politics.
EVALUATION:
Individual assignments should be graded by the teacher using established criteria.
Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale: Content 1 = Superior (A) Creativity 2 = Excellent (B) Clarity 3 = Good (C) 4 = Fair (D) 5 = Poor (F)
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