China’s middle-income population passes 500 million mark, state-owned newspaper says

The figure, which marks a rise of 100 million over five years, was released at a time when the authorities are looking to domestic consumption to boost growth
Claim was published in the Economic Daily under a pen name linked to a Communist Party office as part of a series designed to boost confidence in the economy

China's economic recovery

Mandy Zuoin Shanghai

Published: 7:00pm, 3 Mar 2024

Why you can trust SCMP

China’s middle-income population has passed the 500 million mark, according to a commentary in a state-owned newspaper published on Sunday.

The country is currently trying to boost domestic consumption and the front-page article in Economic Daily – published under the byline Zhao Caiwen, a pen name linked to the Communist Party’s Central Financial and Economic Affairs Commission – said the buying power of this group, along with urbanisation and technological innovation, will be major forces driving China in the future.

It was published as part of a series billed as “how China is going to maintain relatively fast long-term growth” in an apparent effort to lift market confidence in the world’s second biggest economy amid faltering growth.

In a reference to the American economist Walt Rostow’s stages of growth theory, the article said China is “in what Rostow calls a stage of high mass consumption, and the Chinese market has huge development potential and global appeal”.

The previous official estimate had put the total middle-income population at 400 million as of 2019, but the article did not provide a source for the 500 million figure and there is no official definition for what constitutes this group.

Why China may have to ‘push harder’ to maintain its economic growth in 2024

The authorities are counting on the spending power of China’s 1.4 billion people to drive economic growth following the property market crisis and a fall in external demand.

Last month, the vice-minister of commerce Sheng Qiuping said the government would announce a series of measures to boost consumption by encouraging consumers to renovate their homes and upgrade their household appliances, furnishings and cars.

The most recent incentives of this sort were unveiled in Shanghai over the weekend, when the authorities announced subsidies of up to 10,000 yuan (US$1,389) for buying new cars and 1,000 yuan for home appliances.

Consumption was a primary growth driver in 2023, accounting for 82 per cent of last year’s rise in gross domestic product. Meanwhile, the country’s disposable income per capita stood at 39,218 yuan (US$5,449 yuan), a real increase of 6.1 per cent from 2022 after accounting for price factors, according to the National Bureau of Statistics.

08:36

A vanishing fairyland dream: how China Evergrande rose, then crashed

However, there are many analysts who are concerned that China risks “slowing down before getting rich”.

Zhang Wenkui, a researcher at the Development Research Centre of the State Council, repeated that warning in December in an interview with online media outlet, lanjinger.com, saying it was “very necessary” to keep annual growth above 5 per cent.

He cited the experience of mature economies such as Japan and in Western European countries as they rebuilt after the Second World War, saying: “Basically their economic growth rates fell to a range around 4 or 3 per cent only when the per capita GDP was relatively high, that is, when the country became relatively wealthy.”

Chinese investment bank joins growing chorus calling for direct fiscal stimulus

The Chinese economy officially grew by 5.2 per cent in 2023, but growth was estimated to be much lower by many independent researchers. Its per capita GDP was 89,358 yuan, around 17 per cent of that in the United States.

“Even if China can become a high-income country as defined by the World Bank within the next two or three years, it will still not be considered a truly wealthy country,” said Zhang.