China's middle class may be rising, but not in revolt

David Goodman rejects the simplistic equation of the rise of the middle class in China with that of the West, and thus the assumption that the former must lead to democracy as the latter did

PUBLISHED : Monday, 28 October, 2013, 3:26am
UPDATED : Monday, 28 October, 2013, 3:26am

Much is expected of China's growing middle class. Since 2002, the Communist Party has embraced the idea of expanding the middle class so that it becomes more than half the total population by 2050 in order to encourage consumption and ensure social stability.

For China's urban population, middle-class growth is the promise of increased prosperity. For the rest of the world, an expanding middle class in China suggests market demand to be fulfilled and, through their understanding of social history in Europe and North America, the prospect of a democratic China.

The common belief of the past 20 years outside China is that economic growth, a growing middle class and the rise of entrepreneurs inevitably leads to democracy. Everyone knows democratic countries do not go to war with each other, and that a democratic China means thereby less of a "China threat".

The China threat may indeed disappear, but this is unlikely to be because of a rising middle class. The problems with these various equations are that different meanings of the middle class have been elided, even though they may have nothing in common; that, however it is conceptualised, the middle class in China is actually small despite the current rhetoric; and, last but by no means least, that China's socio-political experience is not that of Europe or North America, so the middle class remains an essential part of the state from which it has emerged and is not very likely to be the Chinese equivalent of the European or North American bourgeoisie with whom they are often equated.

The middle class has at various times been many things, and it makes little sense to equate the bourgeoisie, the professional and managerial classes, the leisured classes and the comfortably well-off, though they clearly overlap.

The idea that the middle class leads to liberal democracy comes from two sources: one, Barrington Moore's interpretation of social and political change in Europe that centred on the well-known mantra of "no bourgeoisie, no democracy"; the other, Samuel Huntington's argument that complex societies generate middle classes demanding political pluralism.

Most usually and most recently, social scientists have generally distinguished the middle class in advanced industrial societies as those whose social position comes from their possession of skills, knowledge and experience, as opposed to the dominant class who possess or control economic wealth, and the subordinate classes dependent on their manual labour.

Despite appearances to the contrary, China is neither particularly advanced nor capitalist. Though economic growth has been spectacular since 1978, gross domestic product per capita in 2013 (in purchasing power parity) is still only US$9,300. This compares to US$50,700 for the US and US$37,500 for Britain. China's 2013 GDP per capita is roughly at the same level as the Soviet Union in 1989 - US$9,211 - at the height of its economic growth.

China is also not a capitalist system, despite elements of its development having capitalist characteristics. Since 1978, China has been a reforming socialist market economy. It has elements of a redistributive economy alongside and interacting with elements of a market economy. There is a vast and growing marketised sector of the urban economy, and market forces have affected the operation of the public sector. At the same time, though, the state sector and the redistributive economy have remained politically superior.

The public sector now only produces about 25 per cent of GDP, but the remainder of economic production is not private, though often regarded as such. There is some private enterprise, but the majority of enterprises are public-private hybrid enterprises. This is even true of the foreign-invested enterprises that contribute 15 per cent of GDP. And, even leaving the public-private enterprises aside, some 25 per cent of all enterprises registered as private are in fact owned by state-owned parent firms.

There is, of course, private wealth in China - some 212 US-dollar billionaires in 2012 and some one million-plus millionaires - but considerably less than sometimes suggested. St atistics identify 1.3 per cent of the workforce as private entrepreneurs, and 9.5 per cent as self-employed individual businesspeople.

The difference between the two categories is largely one of scale: individual businesses can hire up to eight people; anything bigger is a private enterprise. Most of the self-employed are not so much enterprise owners as part of the informal economy, working largely for themselves, with a preponderance of small shopkeepers, stall holders, peddlers and the like. Even many of the designated private entrepreneurs are rather small-scale and more part of the informal economy.

The profile of both entrepreneurs and the professional and managerial middle classes is remarkably similar, not least because the majority of the former were previously part of the latter. Repeated surveys have demonstrated not only that about two-thirds of private entrepreneurs previously worked in the party-state, but that about one in five previously held an official position of leadership in either the government or the party.

The majority of today's professional and managerial classes are largely to be found in the party-state, as before. Not just in the institutions of the government and the party, but in the health, education and welfare sectors, though there are increasing numbers in managerial positions in the expanding economy. The middle class has certainly grown, but the central role of the state acts as a check on greater growth, and the consequence is that it is currently relatively small, at about 12 per cent of the working population.

While the entrepreneurial, professional and managerial middle classes are close to the party-state, having emerged from within its ranks, the party-state has also certainly acted to ensure their loyalty. About 40 per cent of entrepreneurs are members of the Chinese Communist Party, and most participate in political activities in other ways, such as sitting on representative bodies and joining local government associations, not least because this is seen by businesspeople themselves as good business practice.

The state-employed professional and managerial classes have been effectively allowed to maintain their lifetime employment tenure, despite reforms to the contrary elsewhere in the economy. Moreover, they have been the prime beneficiaries of housing privatisation since the mid-1990s, gaining subsidised access to ownership of their previously public-owned housing.

Research on China's middle classes repeatedly demonstrates not just the lack of political opposition to the regime but (in their view) a degree of support for a party-state operating under difficult conditions. Where there is criticism, it is a desire for greater efficiency and social justice within the current system, not a change of regime.

David Goodman, professor of Chinese studies at the University of Sydney and Nanjing University, is co-author with Beatriz Carillo of China's Peasants and Workers: Changing Class Identities. Copyright: 2013 Global Viewpoint Network/Tribune Media Services