China’s middle-income population has passed the 500 million mark, according to a commentary in the Economic Daily, published under the byline Zhao Caiwen, a pen name linked to the Communist Party’s Central Financial and Economic Affairs Commission. The country is currently trying to boost domestic consumption, and the author of the article said the buying power of this group, along with urbanization and technological innovation, will be major forces driving China in the future. It was published as part of a series on “how China is going to maintain relatively fast long-term growth” in an apparent effort to lift market confidence. 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.
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, 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, when the authorities announced subsidies of up to CNY10,000 for buying new cars and CNY1,000 for home appliances.
Consumption was a primary growth driver in 2023, accounting for 82% of last year’s rise in gross domestic product (GDP). Meanwhile, the country’s disposable income per capita stood at CNY39,218, a real increase of 6.1% from 2022 after accounting for price factors, according to the National Bureau of Statistics (NBS). However, there are many analysts who are concerned that China risks “slowing down before getting rich”. Zhang Wenkui, Researcher at the Development Research Center of the State Council, repeated that warning in December in an interview with an online media outlet, saying it was “very necessary” to keep annual growth above 5%, the South China Morning Post reports.
