The 'forced' disappearance of the middle class

By Ren Zhongxi, Wang Mengru
0 CommentsPrint E-mail, January 21, 2010
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The middle class in big cities is feeling unprecedented pressure. Scholars say middle class Chinese are being forced to disappear by the current distribution of wealth. As Japanese writer Kenichi Ohmae describes in his book M-shaped Society: The Crisis and Opportunity of the Disappearing Middle Class, the poor in Japan are becoming poorer and the rich richer, while 80 percent of people in the middle class slide down to a lower social class. It seems to be exactly the same in China.

The saying "A house kills a middle-class citizen" came true in 2009. In Beijing, average housing prices increased 16.7 percent from October to November 2009. Soaring prices not only make the middle class feel less happy but also inhibits its consumption. What's more depressing is that the spiritual state of middle class people has been transferred from rational, casual and rich in mind to tense, fearful and uneasy. The so-called social stabilizers have become pressure-takers.

Rationalism is the most important characteristic of modern society. The rational middle class contributes a lot to every aspect of modern society in economics, politics and culture. A society with a disappearing middle class may face the huge danger of being irrational and backward.

Maybe this is why the government began regulating housing prices at the end of 2009. The "new 11 measures" and other policies [that provided incentives for first-time home buyers and restrictive measures on investment homes] may relieve some pressure off the middle class' shoulders. But its forced disappearance has deeper causes. For decades, the foremost goal of Chinese economic development is to increase wealth as quickly as possible. But most of the wealth went to the upper social class, eroding the soil for a middle class to grow. Restructuring the flow of people between economic classes is the ultimate solution to this problem.

Don't call me "middle class" any more

One day last December, 34-year-old Lin Haojie couldn't help but cry in his new apartment.

Lin, who has a bachelor degree in marketing from Renmin University of China, earns 12,000 yuan (US$1757) a month as a senior sales manager for a well-known foreign company. He has been an enviable white-collar worker living a middle-class lifestyle for the past 10 years. But his apartment purchase was the beginning of nightmare.

In 2005, a year in which housing prices increased 20 percent, Lin's middle-class lifestyle included a car purchase, dining out, purchasing luxury goods on sale and traveling around China with his girlfriend, Yufei, who makes 3,500 yuan (US$512) a month.

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