China’s Middle Class
An emerging social group
Middle Class
• Originally, those inhabitants of medieval
towns in France who occupied a position
somewhere between the peasants and the
landowning nobility were referred to as
Bourgeoisie
• The bourgeoisie later became
synonymous with the middle class.
Wealth & Democracy
• Independent middle class was associated
with democratization in history
• However, there is no necessary
connection between economic prosperity
and democracy
In China
• Modernization had already started well
before the reforms
– modernizing state system and bureaucracy
– most of GNP derived from industries
– substantial service sector in economy
By late 1950s
• Party-state controlled almost all industry
and commerce
• Petty commodity economy remained
– marginal
– low status
– legally tenuous
– politically risky
By 1970s
• Public versus private interests
• Public was increasingly dominated by
empty ideological rhetoric and ritualistic
action
• Private consisted in the promotion and
discussion of particularistic interests
through the back door and in the back
alleys of the system
In Reform Era
• Reform measures and economic growth
have since brought about
– endorsing the pursuit of private material
interests
– greater economic and social diversity and
political openness
– remarkable individual wealth to certain groups
of people
Late 1970s & Early 1980s
• Private production and commerce were
legalized
• Individual (or household) enterprises [geti]
– small operations (less than 8 employees)
– officially sanctioned as a “necessary
supplement to the socialist economy”
• 32 million geti employed 66 million people
by the end of 2009
Late 1980s
• Private enterprises [siying]
– each has more than 8 employees
– recognized and confirmed by Zhao Ziyang
– legalized by constitutional amendment in
1988 as a ``supplement to the publicly owned
economy”
– investors have property ownership and
inheritance rights
From 1999 to 2009
• Private enterprises [siying]
– increased from 1.5 million to 7.4 million
– investors increased from 3.2 million to 16.5
million
– employees increased from 20 million to 86
million
• Since 1992 siying GDP grows at 60% a
year and tax grows at 80% a year
Employees of Urban Household & Private Enterprises (in millions)
45
40
35
30
25
20
15
10
5
0
1978 1980 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Employees in Private &
Household Enterprises (2009)
Actual Size of Private Sector
• Official figures understate the real size and
significance of the private economy in
China today
– confusion in classification of township and
village enterprises
– intentional obfuscation by entrepreneurs or
officials
– difficulty in classifying new hybrid forms of
enterprises
New Middle Class
• Owner-operators
– private entrepreneurs
• Managers
– state capitalists
– social capitalists
– suburban executives
• Service providers
State & Middle Class
• Party-state remains central to China’s
economic development and to its
emerging new middle class
• Middle class of the reform era have
emerged from within the local
``establishment”
Socially & Culturally, ...
• Socially, the new middle class are
characterized by intense parochialism
– remarkably limited social mobility
– identification with native place
• Culturally, the new middle class are
trendsetters, especially in consumption
patterns
Politically, ...
• The new middle class are not alienated or
independent from the party-state
• They operate in close proximity and
through close cooperation with the party-
state
• In a 1997-1999 survey at 4 counties, 16%
of private entrepreneurs had run in village
elections
Private Business
• Change in the rhetoric:
– marginal => ``supplement” => ``necessary
supplement” => ``necessary component” =>
``organic part”
• Economic justification:
– create jobs (3/5 of new firms, 1/5 of new jobs)
– pay taxes
– donate to charitable causes
``Three Represents”
• A CCP document in 1989 barred private
entrepreneurs from entering the Party
• Difficulty of implementation at grassroots
– in a 1997-1999 survey only 27% of county
officials supported the ban
• In 2001, Jiang Zemin: CCP represents the
``requirements of the development of
advanced productive forces”
30%
30
CCP Members
25%
20%
20
17
17
15%
15
13
10%
8
5%
0%
1988 1990 1992 1994 1996 1998 2000 2002
1989 1991 1993 1995 1997 1999 2001