China looks to boost middle class as it wraps up Xi Jinping’s anti-poverty drive

The Communist Party has not specified the target in its 2035 vision – vowing only to “significantly expand the middle income group” – but the message is clear among top policymakers: China must increase its middle class to avoid the middle income trap, where a developing country’s growth stagnates because of structural obstacles that impede development.

Boosting the number of middle-income earners would also help the government implement its new “dual circulation” economic strategy that focuses on developing the domestic market to offset external uncertainty.

Officially about 400 million Chinese are categorised as middle income, which is generally defined by the National Bureau of Statistics as a family of three earning between 100,000 yuan (US$15,200) to 500,000 yuan annually, though the definition is not always consistent.

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Demand for professional home cleaning services growing rapidly among China’s middle class

Demand for professional home cleaning services growing rapidly among China’s middle class

That represents less than a third of China’s total population. Japan counts two thirds of its population as middle income and the US about a half.

If China were to increase its middle-income population to near 60 per cent, some 800 million people would fall into the category, creating a consumer market larger than the populations of the US and European Union combined, and giving it huge economic leverage on the international stage.

Vice-Premier Liu He, the top economic aide to Xi, wrote in the state-backed People’s Daily last week that the “expansion of middle-income groups has a fundamental role in forming a strong domestic market” and so China must “expand the middle-income group and strive to make per capita income grow faster than the broader economic growth rate.”