Middle classes and the Party: changing faces of power in China

Designer shopping in China can lead to an experience like no other. Flickr/Gadgetdan

Middle classes and the Party: changing faces of power in China

Designer shopping in China can lead to an experience like no other. Flickr/Gadgetdan

China’s phenomenal economic growth during the last three decades has significantly altered its pattern of social stratification. One of the most equal countries in the world has become one of the most unequal.

It is calculated that the Gini coefficient, which measures income inequality (0 is low,1 is high) has gone from 0.22 in 1978 to 0.49 in 2011.

It is also calculated that at any one time there are as many as 100 million rural migrant workers looking for work in urban areas, while at the same time deprived of local civil rights and access to services.

At the other end of the social scale, China’s media are full of stories about the lifestyles of the rich and the famous. A society of equal poverty has become one often characterised by excess.

The middle classes

Both inside and outside the People’s Republic the changes of the last thirty years are most usually described in terms of the rise of the Chinese middle class or middle classes.

The middle class is not a Marxist category though the Chinese Communist Party and theorists in China often use it as though it were.

The middle class is also not a precise term. Historically it has covered everything from the bourgeoisie of the industrial revolution (the middle in-between the court and the townspeople); to the professional and managerial middle classes that emerged in the early twentieth century to people the development of modern states and economic enterprises.

It is though a popular term, promising attractive markets (especially to those outside China) and greater equality as well as growth (to those within the People’s Republic.)

The middle classes in China are certainly growing in numbers. Many more people have access to more real disposable income than ever before.

The trappings of the middle classes

There are new generations of private house owners; consumption patterns that resonate closely with middle class behaviour elsewhere in the world; and the emergence of post-capitalist value sets, even though much of China remains at a fairly early stage of capitalist development.

There has also been a dramatic growth in the proportion of the workforce employed in professional and managerial roles to support economic activities and enterprises.

At the same time, the middle class aspects of China’s development and stratification need to be kept in perspective.

Where’s the money?

China has had three decades of growth but it is still not a rich economy, though it is a large country.

The average annual urban income in 2009 was 18,858 Chinese dollars (Renminbi) per capita; the average annual rural income 6,270 Chinese dollars.

Scale means that a small rise in income per capita in China can have serious ramifications for the rest of the world. But it has 1300 million people and gross national income per capita is only about US$6,890, based on Purchasing Power Parity.

Only about 11 per cent of the population has an annual income of 60,000 Chinese dollars or more. In purchasing terms those 60,000 Chinese dollars are approximately equivalent to an annual Australian income of AUD$60,000.

The goal for the regime is to grow this proportion so that 20 per cent of the population are in this category by 2020. And the ultimate objective is to achieve an “olive shaped distribution configuration … in which middle income workers are the majority.

Wealth creation, Communist style

While some occupations and activities that have developed during the last thirty years are new and did not really exist in the People’s Republic before the 1980s – notably entrepreneurs and lawyers – the earlier years had already seen the emergence of the professional and managerial middle classes.

Particularly during the 1950s a prime goal for the Chinese Communist Party was the creation of a modern nation state, and that entailed education, health, transport, finance, and security, all of which required managers and professionals.

The operation of state socialism also entailed managers and professionals to staff the state’s economic activities.

There was, in short, a substantial middle class even before 1978.

Social tensions

At times during the last thirty years there has been a tension between the interests and values of the new enterprise-oriented middle classes, and those whose occupations and maybe their own employment were more longer-term established and state-focussed.

This observation about differences amongst China’s middle classes leads inevitably to consideration of wealth and of the relationships between wealth and class, and wealth and power.

The entrepreneurial class that has emerged since 1978 has clearly driven wealth creation in the People’s Republic, but not every entrepreneur has been wildly successful.

In addition to the nationally famous and successful there are also not-so-fabulously wealthy and even poor entrepreneurs.

It may be politically desirable to describe entrepreneurs as middle class, but the description is unconvincing especially where the very wealthy are concerned: the latter in particular are increasingly part of the elite.

The super-rich

China’s captains of industry have lifestyles and opportunities that the middle classes may aspire to but certainly do not share.

Hurun, the Chinese research company that tracks the country’s rich and famous calculates that there are 825,000 people worth individually more than 10 million Chinese dollars each; and 51,000 with more than 100 million Chinese dollars (just over AUD$62million at today’s exchange rate.)

According to Hurun two-thirds of these super-rich spend 1 to 3 million a year, mainly in luxury goods, and a further one-fifth spend more than 3 million Chinese dollars a year the same way.

Politics and money

Though outside China the notion of wealth and entrepreneurship may be associated with independence from the political process, in the People’s Republic the relationship is close.

Successful entrepreneurs have either grown out of the Party-state or been accommodated into it in different roles.

The restructuring of state socialism meant that many state sector economic managements became, and were officially encouraged to become, entrepreneurs.

Necessarily they maintained their links with the Party-state both when they led state economic interests that were being commercialized and made to operate in the market, and when they and their economic activities were allowed to operate even more independently of the state sector.

Private entrepreneurs starting businesses have long found that continued growth requires a close relationship to the Party-state, maybe even involving shared equity with government, especially at the local level.

Even where that does not occur entrepreneurs are co-opted into public and political life in many ways, through being deputies to People’s Congresses, serving as local notables on various committees, and even being encouraged to join the Chinese Communist Party and sometimes assume local-level leadership roles.

Times have changed. It is now no surprise that the country’s leading entrepreneurs are to be seen increasingly in positions of power and influence nationally as well as locally.