China’s middle class to reach 48% in 10 years

Shanghai Morning Post reports that, according to Euromonitor International, by 2020, China’s middle class will expand to 700 million.

With China's impressive economic growth, the middle class in the country is expanding strongly.

China’s middle class currently accounts for roughly 23 percent of the whole population, based on comprehensive analysis of the 2005 1 percent National Population Sample Surveys, the China General Social Survey (CGSS) conducted by Renmin University of China and Hong Kong University of Science and Technology in 2005 as well as General Social Survey data (GSS) by National Academy of Social Sciences in 2006.

The middle class in China is defined as households with an annual income between RMB 60,000 and RMB 500,000.

Euromonitor International’s study shows China's middle class has grown from 65.5 million in January 2005 to 80 million in January 2007. It is forecasted to expand to 700 million by 2020, driven by continued strong economic growth. According to the Research Report on National Population Development Strategy, in 2020, China’s population is to reach 1.45 billion. So in ten years China’s middle class will account for 48 percent of the whole society.

The Euromonitor report also mentioned that Chinese economy was expected to expand at an annual rate of 10 percent in 2007 and 9.8 percent in 2008. Meanwhile, inflation was expected to be relatively low, at an annual rate of 1.8 percent in 2007 and 2.2 percent in 2008. This means that the purchasing power of the Chinese consumer as a consequence of rising incomes and economic expansion will hardly be eroded by inflation.

The study found that the Chinese middle class is concentrated mainly in urban areas where greater jobs and business opportunities exist. It comprises entrepreneurs and managers in high-tech companies, foreign firms and financial institutions as well as some self-employed private entrepreneurs

Euromonitor also notes that although the government is also exerting efforts to reduce poverty and narrow the wealth gap, the middle class will continue to congregate in towns and cities in the medium term. Thus, market potential will likely be found in urban areas.

By People's Daily Online