Catching Up with the West: Chinese Pathways to the Global Middle Class

Abstract

Using nationwide household survey data for 2002 and 2013, we investigate how widely Chinese household incomes had caught up to those of the middle class in the developed world by 2013, the year Xi Jinping came to power. Based on the living standards of the middle-income class in the European Union as our standard of comparison, we estimate that China’s “global middle class” with a similar living standard grew rapidly after 2002, reaching 254 million in 2013. We project that it had grown further to over 450 million by 2018. We describe the characteristics of this middle class, which is predominately urban, largely resides in China’s eastern region, and mainly depends on a wage income. A distinct business middle class exists but is relatively small. Analysis of the chances of attaining a middle-class income reveals the importance of an individual’s circumstances at birth. Parents’ education and occupation matter, and being born with an urban registration (hukou) provides a large advantage. For those born with a rural hukou, the most effective pathways to the middle class are migration and, if possible, obtaining an urban hukou.