China’s “Middle Class,” or Lack Thereof

Gordon Styles, British owner of Star Prototype China Limited, a high-quality rapid prototyping and rapid manufacturing supplier in China, wrote the following response to the April 19, swarfblog, “Is China the Next Enron?”

China as a subject is far more complex than most people realize who do not live here.

The term “Middle Class” is unhelpful in China. There are just people. Many have no money; some have money; a few have a lot of money. I say it like that because that is how it is said in Chinese:  you qian ren – has money person.

It is generally accepted in China that once your earn above RMB 10,000 per month, you have kind-of reached that special place that you might refer to as Middle Class. It’s enough to buy a moderate apartment and have a very cheap automobile.

Price of property in Shanghai and Shenzhen is through the roof, but the majority of people don’t live in those places – so you cannot really say that Beijing, Shanghai, Guangzhou or Shenzhen are representative.  For sure there are some speculative bubbles in those places; and you are right, the Government is taking drastic action to cool the market. Hong Kong is part of the PRC, but in reality it operates outside of the PRC system except for Defence and Foreign Policy. Hong Kong cannot be used when talking about China.

I live in Zhongshan, which is only about 2 hours from Shenzhen by Car, and 2 hours from Hong Kong by boat. Zhongshan is famous because it was the birth place of China’s most famous and revered political figure Sun Zhong-Shan. He was the first President in China.  Zhongshan is widely considered to be one of the top 3 “best cities for living” in China. Zhongshan is far more representative of the typical medium sized City.

China, like Germany, knows that to make real wealth in a country you have to create things that are of long-term use and value. They know that humans measure wealth by the amount of REAL stuff a country has. All of the money and cash equivalents are merely an alternate bartering system. When you send your people into the fields to dig up raw materials; process them in factories; assemble them in the form of railways, roads, factories, airports, houses, public buildings etc., you are creating real tangible balance sheet value.

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