A path to expand middle-class group

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A December 2009 survey of 1,658 people showed that the average period that they expected to become middle-class was 5.85 years. Almost 70 percent said they wanted to become middle class within 5 years.

The government can help shape and develop the middle class by reforming and improving the wealth redistribution, said Su Hainan, director of the Wage Institute under the Ministry of Human Resources and Social Security.

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The middle class is currently 13 percent of China's population, a far lower proportion than in developed countries whose middle class comprises about 60 percent of the population.

The government has focused wealth redistribution on limiting high income, expanding the middle income group and raising earnings of those in the low-income group. It limited the salaries of high-income people, especially those in senior leadership positions of financial companies last April. To expand the middle-income group, the government has made reforming the salary system of public institutions a priority.

Su said raising the earnings of people in the low-income group was most important for the new wealth redistribution system.

"In China, 60 to 70 percent of people are rural residents or low-income, so expanding the middle-income group should be on the premise that the low-income group realizes a higher living standard," Su said.

Soaring housing prices have hindered the development of the middle class. Chinese people will pay half of their income to buy an apartment this year, said Gu Yunchang, deputy director of China Real Estate Research Association. Experts expect more government regulation and control on the real estate industry in 2010.

The government also has begun reforming the household registration system, which has slowed the development of China's middle-class group. People from other cities who hold a Shanghai residence card can get a real Shanghai household registration after February 2009. Beijing also has started researching for an easier but practicable household registration policy. The government also has started programs to help expand the middle class, such as offering medical treatment and schools. It will also allocate 850 billion yuan to the Basic Medical Security System over the next three years to build a better social security system.

(The Chinese version of this story was published in the latest issue of China Newsweek, and was translated and edited by Wu Huanshu.)


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