April 2023

Le Monde diplomatique

China’s frustrated middle class

A burgeoning middle class has been central to China’s economic growth since before Xi
Jinping came to power in 2012. But as he begins his historic third term, the Chinese dream
has stopped delivering.
by Jean-Louis Rocca

Province, 25 August 2019

In October, the Chinese Communist Party’s (CCP) 20th Congress re-appointed Xi

Jinping as its general secretary for a historic third term. One of the things he will need
to deal with is the position of China’s middle class (350-700 million people, depending
on how they are defined), who have greatly benefited from the reforms of the 1990s,
which gave them access to university education and well-paid jobs and allowed families
to provide education and material comfort for their one child, acquire property (87% of
households own an apartment, 20% own more than one) (1), and enjoy unconstrained
(if standardised) consumption — at the price of being forced into all-against-all
competition.

The middle class are an essential part of the CCP’s economic strategy, set out a few
years before Xi came to power in 2012. This aimed to reduce the role of foreign
investment and exports of low value-added products in China’s economic growth in
favour of domestic demand, hi-tech and finance. Only the middle class could drive
growth through consumption and provide the highly skilled labour the Chinese
economy needed (2).

Protest movements reflecting middle-class concerns are directed against China's capitalist
society rather than the government. Still, the middle class need reassuring

They were also intended to set an example to the (rural) working class. In today’s China,
middle class basically means urban class — those in a position to take advantage of new
opportunities in education, work and wealth accumulation. The only way to grow the middle
class is to incorporate the migrant workers of rural origin (mingong) who have flocked to the
big cities, providing labour for the ‘Chinese miracle’. The government wants to ‘civilise’
these migrants, in other words, teach them good behaviour, good taste and good manners.
Political discourse and the education system allot this task to the middle class (3).

The middle class are also expected to set a good example politically. They are allowed to
protest, in moderation. They are encouraged to participate in the continual improvement of
the legal system, as long as they don’t challenge the political system. They must be both
progressive (in favour of modernisation) and conservative (to maintain stability).

‘Common prosperity’
Yet the dream of an almost entirely middle-class society, reflected in the official watchwords
‘small prosperity’ and ‘common prosperity’, has run up against China’s economic problems,
the contradictions within its society and the emergence of alternative social visions. These
challenges, which appeared in the early 2000s, have been accentuated by the pandemic.

The new Chinese economy has been slow to develop and no longer satisfies aspirations
to upward mobility. Universities are producing ever more graduates but the jobs
market is saturated. Meanwhile, the old economy seems to be reaching its limits: both
Chinese and foreign manufacturers are offshoring their factories, and the construction
sector, which once led demand, is facing an oversupply crisis (4). Many potential
middle-class Chinese are unemployed or in low-paid jobs with marketing platforms or
as delivery drivers.

The class system is becoming more rigid, as new arrivals in the cities have trouble joining the
middle class, and those already part of it aren’t making any progress: incomes are no longer
growing, the cost of living is going up, and property prices have risen substantially since the
late 1990s, forcing young people to take on debt or their parents to sell an apartment (if they
have a spare one) to help their child buy their first home. The cost of education (including
extra tuition, though it’s officially banned) is going up, as is the cost of moving to an area
with good schools, and all this is driving up the price of new developments.

To be accepted as middle class you have to conform to certain standards of taste and
consumption. ‘Luxury’ (semi-luxury) has become a way of life. This applies to clothes,
furniture, cars and mobile phones, and to where you live, which restaurants you eat at, which
shows you see and where you holiday. You have to play sports and look after your health (yet
still take care of your elderly parents).

Healthcare is getting more expensive: collective medical insurance systems cover a

dwindling proportion of costs and private insurance is becoming essential. Civil
servants and employees of major corporations can keep their heads above water, but
that’s no longer the case for the self-employed or small business owners.

Opting out of the rat race

The pandemic, with its lockdowns and travel bans, has undermined the viability of millions
of small and medium enterprises whose profit margins were already narrow. Some small
business owners can no longer pay their bills.

Since the economic opening-up of the 1990s, the idea that each generation would be
better off than the last had taken root. People believed their standard of living would
rise indefinitely, or at least that social status would be maintained from one generation
to the next. Now that’s all gone: people feel trapped in a spiral of spending and debt,
and have lost any sense of security.

Property is the perfect illustration: the younger generation’s parents and grandparents
built up considerable capital in property, which is thought to account for 70% of
Chinese household assets (5). But their wealth is an illusion, as it depends on a steady
rise in the price of new housing with a knock-on effect on existing housing. This puts
home ownership out of reach for the younger generation, especially in major cities.
Everyone agrees the spiral must be stopped, but that would reduce the accumulated
wealth households have been using to help their children or counting on for their
retirement, given that public systems can’t guarantee a decent pension. Moreover, some
families who have bought apartments off plan find they have to go on paying the
instalments, although construction has stopped because the developers have run out of
money.

Of course, you can always move to a medium-sized city where the cost of living is lower.
But that also means accepting more limited career prospects and lower-quality schools;
and where living in a big city is a mark of success and social status, leaving it is seen as
failure.

The middle class don’t just express their concerns privately; they voice them on social media,
too, and sometimes through collective action. Cultural movements have emerged which reject
constant competition, the cult of work and pressure to succeed at any price. The best known,
the ‘Lying Down’ (Tangping) movement, advocates opting out of the rat race, working only
as much as you need to survive, remaining single, not having children and enjoying life.
According to sociologist Sun Liping, those who adopt this lifestyle are children of parents
who worked hard to build up substantial wealth; he condemns ‘lying down’ as a luxury (6).
Others see it as an expression of a deep malaise that society and the party must address. Why
work ‘996’ — 9am to 9pm, six days a week — if it doesn’t enable you to climb the social
ladder?

Rebellion of the ‘prosperous’

There have been protests. In April this year, five regional banks froze the accounts of
300,000 customers. The banks had lost their money onrisky investments, mostly in
property. Since the summer, a growing number of homebuyers across China have been
refusing to make mortgage payments unless construction of their homesresumes (in
some cases it has been halted for months); as of September, the boycott affects 342
residential developments in nearly a hundred cities.

The most surprising aspect of China’s predicament is not that the dream of building a largely
middle-class country seems ever more unattainable, nor that the middle class are rebelling,
but that the CCP seems to have understood the scale of the problem and is trying to contain it.
The party is naturally worried that there are young people who seem to lack any civic (or
national) conscience and don’t want to work.

At the same time, it allows academics to criticise government policies. They say the
government should improve healthcare and pension insurance funding, combat
inequality and extreme wealth, cut school tuition fees and bring down the price of
housing, make exams less competitive, prevent businesses from harassing their
employees, and encourage cooperation rather than competition. It’s clear some CCP
leaders feel the same.

So when the Henan Province authorities tried to prevent savers defrauded by banks from
protesting — arresting a few and cancelling the Covid passes of 1,300 to stop them from
traveling to demonstrations — the government quickly took action. A compensation scheme
was set up, bank directors were arrested and the officials who had ordered the cancellation of
Covid passes were disciplined. The provincial authorities were authorised to borrow funds to
revive the property sector and restart halted construction projects.
The issue of the middle class itself was not on the 20th Congress’s agenda. But it was surely
on the minds of all delegates and addressed in every debate. The challenges of economic
development, the fight against inequality and the quest for ‘common prosperity’ and social
stability all mean China’s ‘prosperous’ are one of the government’s key concerns. Local
authorities sometimes use the problems of the middle class as leverage when bargaining with
the central government. They are supposed to forestall protest movements, and they use the
central government’s fear of unrest to force it to help the middle class.

Yet these protest movements don’t mean that revolution or political destabilisation are on the
horizon. There is no sign of the CCP’s hold on power being challenged by any other political
system. Could China’s current social contract — which allows a single political party to
monopolise political power for the sake of prosperity — be advantageously replaced by a
form of democratic capitalism? That’s unlikely: protest movements reflecting middle-class
concerns are directed against China’s capitalist society rather than the government. But the
middle class need reassuring.

Jean-Louis Rocca
Jean-Louis Rocca is a sociologist and co-author (with Marc Blecher, David SG Goodman,
Yingjie Guo and Beibei Tang) of Class and the Communist Party of China, 1978-2021:
Reform and Market Socialism, Routledge, 2022.
Translated by Charles Goulden
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(1) William AV Clark, Huang Youqjin and Yi Diachun, ‘Can millennials access
homeownership in urban China?’, Journal of Housing and the Built Environment, no 1,
Springer, Berlin, January 2019, and ‘Multiple home ownership in Chinese cities: An
institutional perspective’, Cities, vol 97, Elsevier, Amsterdam, February 2020.

(2) See The Making of the Chinese Middle Class: Small Comfort and Great Expectations,
Palgrave Macmillan, London, 2017.

(3) See ‘The middle class in reforming China: the dream of classless society’ in Marc
Blecher, David SG Goodman, Yingjie Guo, Jean-Louis Rocca and Beibei Tang, Class and the
Communist Party of China, 1978-2021: Reform and Market Socialism, Routledge, 2022.

(4) Martine Bulard, ‘Xi Jinping’s challenges in historic third term’, Le Monde diplomatique,
English edition, October 2022.

(5) Dong Dengxin, ‘Houses account for about 70 pct of Chinese households’ assets, putting
pressure on consumption stimulation’, Global Times, Beijing, 29 April 2020.

(6) Sun Liping, ‘ “Lying Down” is not a working-class phenomenon’ (in Chinese), Weibo, 13
June 2021.
The longer view

China relaxes Covid rules, but it’s too little, too late
Martine Bulard, January 2023 Aperçu
Xi Jinping’s challenges in historic third term
M. B., October 2022
Fight to be world leader
Kishore Mahbubani, April 2019