China’s affluent middle-class growing increasingly anxious as prices rise and yuan drops

The ‘Lucky Generation’, those who grew up in the midst of China’s spectacular economic rise and opening up, are worried about their shrinking purchasing power

Beijing is counting on consumer spending to help bolster economic growth amid the trade war with the United States, but purchasing power is under threat

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Published: 6:45am, 10 Sep 2019Updated: 12:30pm, 10 Sep 2019

An impending sense of fear and trouble is mounting within China’s urban middle class about the outlook for their prosperity and wealth amid the slowing economy, leading to one resident in the southern province of Guangdong to say that the “road ahead is a dark mystery”, a feeling which is likely to be replicated across the country.

Increasing restrictions on the flow of funds out of China and curbs on information from the outside world are also adding to the worries from the segment of society whose spending the government is counting on to boost the ailing economy, having gained the most from the country’s economic boom over the past decades.

The weakening of the yuan exchange rate amid the escalating trade war with the United States has further amplified the fear that the good times that middle class citizens have become used to – decent jobs and abundant business opportunities, constantly rising property values and incomes, as well as relatively easy personal and capital movement abroad – could be over, at least for the next several years.

“It’s just like watching our car enter a tunnel, but suddenly finding there is no way to turn on the headlights. And the road ahead, it’s a dark mystery. The political and social atmosphere is very tense now,” said Emma Jiang, a 40-year-old university teacher living in Guangzhou, the capital of Guangdong.

It’s just like watching our car enter a tunnel, but suddenly finding there is no way to turn on the headlights. And the road ahead, it’s a dark mystery. The political and social atmosphere is very tense now

Emma Jiang

Jiang is a typical “winner” from China’s economic development. After finishing her PhD in Shanghai, she moved to Guangzhou to take up a job with a university and was soon able to buy a 861 sq ft two-bedroom flat that cost 450,000 yuan (US$63,000) in 2014. The flat reached a peak value of 4.8 million yuan (US$675,000) in early 2018.

She bought a second flat in Guangzhou in 2017, but its market value has remained flat in the past few months, and Jiang is now unsure how to safeguard her hard-earned wealth and protect her urban lifestyle when the whole country seems to be at a crossroads.