China’s middle class, key to Beijing’s economic recovery plan, put spending on hold over wealth, income concerns

Southwestern University of Finance and Economics household wealth and income indices remained in contraction in the fourth quarter of last year

Survey calls for more government action to revive household confidence, with the low-income and middle-aged households in need of the most support

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Beijing claims China has around 400 million people in its middle-income, representing a huge consumer market that is attractive for foreign investors and a foundation to drive economic growth. Photo: Bloomberg

Published: 6:00pm, 9 Feb 2024

China’s middle class continued to struggle in 2023 amid the ongoing property crisis and stock market slump, with rising household debt, lower self-indulgent spending and concerns over the future, according to a widely used measure of the key group.

A survey of household wealth and income from the Southwestern University of Finance and Economics in Chengdu, Sichuan province, painted a different picture from Beijing’s economic recovery narrative, despite the better-than-expected 5.2 per cent gross domestic product (GDP) growth last year.

China’s household wealth and income indices remained in contractionary territory at 96.1 and 94.1, respectively, in the fourth quarter of last year, indicating a fall from the previous three months, according to the survey results released earlier this week.

The indices gauged respondents’ sentiment through questionnaires, with a reading of 100 the division line between expansion and contraction.

Just over 61 per cent of the people surveyed said their family revenue had remained unchanged in the fourth quarter of last year, but about 10 per cent reported a large drop, while another 10 per cent said they suffered a small decline.

Overall, “household liabilities, including those used for consumption and businesses, continued to rise in 2023,” the survey showed.

The household debt index has remained high since the start of the coronavirus pandemic, with the fourth quarter reading of 103.4 down from the high of 113.7 in the fourth quarter of 2022.