Middle-income group vital
- By Zhang Monan
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E-mail China Daily, July 22, 2013
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[By Jiao Haiyang/China.org.cn] |
Any great power's rise is closely related to its growing middle-income group, and, to some extent, the development maturity of the middle class determines a society's progress and prosperity. The middle-income group is also the key for China to attain an olive-shaped income distribution society, without which China cannot sustain its dynamic growth.
The middle-income group used to be the majority of the population in developed countries, but that has changed in recent years. With the acceleration of the globalization process, the income gap has widened in developed countries and the inequality in their societies has become more serious, which has led to the shrinking of the global middle-income population. Especially after the financial crisis in 2008, with continuously increasing unemployment and a growing debt burden, the middle-income group faces "collapse" in developed countries, and income distribution is changing from an olive-shaped pattern to a M-shaped one, a polarized society with an extremely rich group and an extreme poor group.
For example, the prosperity of US economy in the past two or three decades was largely based on the over-consumption of its middle class supported through credit and loans. That is why "saving the middle class" became an important part of the Obama administration's bailout plan. With the US real estate market reviving and its stock market soaring, the situation for the middle class has considerably improved.
China should not be so optimistic about its own situation. Although different organizations have made various statements about the size of its middle-income population, there is no authoritative data and the criteria for being middle class is still changing. According to the General Social Survey carried out by Chinese Academy of Social Sciences, the incomes of the middle class are $11,800 to $17,700 per year, which means the middle class makes up around 23 percent of China's total population, far lower than the percentage in developed countries, and lower even than some other emerging countries.
In fact, with the income distribution gap becoming wider in China, it is difficult for the middle-income population to increase rapidly. China's income disparity between the rich and the poor has become serious in the past decade. According to the World Bank, China's Gini coefficient has been more than 0.4, which is seen as the warning line, since 2000. Residents' incomes and labor payments as part of the national income distribution have declined, with the income gap widening between urban and rural residents and among different areas and industries.
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