Middle class a key factor in US-China ties, analyst says
Call made to promote view that stronger group on mainland will benefit American population
The country’s middle class is a group to which policymakers should be paying close attention, a prominent political scientist has said – both in terms of the demographic’s traditional role as a predictor of economic prosperity, and as a potential factor in helping preserve frayed relations with the United States.
“We should promote the view that a stronger Chinese middle class is beneficial for the US middle class,” Li Cheng, a politics professor at the University of Hong Kong (HKU), said at an event in Beijing promoting the launch of his book.
“China’s middle class has not only transformed the country’s economy, but the world’s,” said Li, arguing global markets’ demand for goods – the United States foremost among them – helped drive China’s economic growth and aided the country as it journeyed out of poverty.
Li cited the US’ recent issues with inflation as one area in which a healthy trade relationship with China could be helpful, appealing to a once-common view that strong ties were mutually beneficial. “Why can’t the US see China’s growing middle-class population as an opportunity to solve its [own] problems, instead of a challenge?”
Increasing restrictions on trade and tech from the US and its allies, slowing growth and low figures for domestic consumption have led economists to believe China is at risk of becoming ensnared in the middle-income trap – a phenomenon where a developing country’s growth stagnates and it is unable to enter the ranks of the advanced economies.
Boosting the country’s headcount for middle-income earners is a major target for the Communist Party in its vision for 2035 – the year in which leaders have pledged China will become “moderately developed” – and viewed as a prerequisite to avoid getting caught in the web.
But Li was not as pessimistic as those in his field predicting an indefinite stay in the middleincome club, saying “as long as there is no war, the middle class can still grow”.
The scholar is in Beijing this week to launch the Chinese version of his book, Middle Class Shanghai: Reshaping US-China Engagement. The book was initially published in English in May 2021, when Li was a senior fellow at the Brookings Institution think tank in Washington.
He began his current role last year, joining HKU as a professor and founding director of the Centre on Contemporary China and the World.
Li noted the middle class was an important economic bellwether as their consumption drove growth, and the expansion of the group would be highly determinant in whether China could meet its development goals.
The government appears to agree, with an explicit target to double China’s middle-income population – around 400 million in 10 years, reiterated by Premier Li Qiang in January at the World Economic Forum meeting in Davos, Switzerland.
Though there is no official definition of what constitutes such an income, a “middleincome group” is used as a unit of classification by the National Bureau of Statistics, describing a three-person household earning between 100,000 yuan and 500,000 yuan (HK$109,000 and HK$545,000) a year.
While Li said he was still optimistic China would reach its target, he noted “significant changes” had taken place for the middle-class population in the three years since the book was first published, their “mood” being one of the most drastic.
“China’s middle class has entered a stage of anxiousness driven by the price slump in the property market, which could continue to fall,” said Li, a Shanghai native who based his book on observations of the city.
“But this anxiety goes beyond finances and investment. It is also observed in areas such as career development, health and medical care, food safety, education and elderly care.”
China is currently categorised as an upper-middle income nation by the World Bank. With a gross national income of US$12,597 per capita last year, China was more than US$1,000 behind the threshold for high-income countries. And though the International Monetary Fund forecast China would meet its “around 5 per cent” target for gross domestic product growth this year, it had a more gloomy outlook in the long term, projecting annual GDP growth to fall to 3.4 per cent by 2028.
Li also predicted more challenges for China to come, particularly in its dealings with the US, as both major party candidates for this November’s presidential election are all but certain to continue previous policies of containment.
Democratic Party candidate and US Vice-President Kamala Harris would probably maintain current President Joe Biden’s strategy of pressuring China in critical areas, Li said, adding she was less likely to pursue a “complete decoupling” and would at least uphold human-tohuman exchanges.
However, were Republican Party candidate Donald Trump to win a second stay in the White House, Li said the prospects would be “extremely bad” for bilateral relations. To guard against this no-win scenario, he added, China should stay “more open, more focused on the economy and more confident”.
China’s middle class has not only transformed the country’s economy, but the world’s
LI CHENG, HKU POLITICS PROFESSOR