Credit Suisse’s new Global Wealth Report is getting a lot of attention for the finding that China’s middle class is now bigger than America’s. “China now has the largest number of middle-class adults by a wide margin—109 million compared to 92 million in the United States,” the report states. There are 664 million middle-class adults worldwide, which is about 14 percent of the total population, with 2 percent above middle class and a lot of people living in poverty.
This is a legitimately impressive development, but it’s also worth keeping in perspective. Only 11.3 percent of China is middle class or above, compared with 50 percent in the United States. Eighty-two million Chinese, more than a quarter of the total U.S. population, still live on less than $1 per day.
Also, as I discussed in an article last year, the “global middle class” is often defined broadly, in ways that overstate its size and prosperity. Many widely cited development reports peg it at incomes of above $2 or $4 dollars per day, still not very economically secure even by the standards of developing countries.
Credit Suisse’s report defines “middle class” differently depending on the country, which is reasonable as goods and services are cheaper in poorer countries. The middle-class Chinese identified in the report have at least US$28,000 in total wealth.
The emergence of the Chinese middle class is probably less interesting in terms of what it tells us about the country’s welfare relative to the United States than about the future of its own politics. With economic growth slowing and population growth plateauing, the Communist Party has promised to reorient the country’s economy away from manufacturing goods for export toward providing services to this growing population of upwardly mobile consumers. But the ham-handed response to China’s recent economic jitters has cast some doubt as to whether it will be able to pull this off. If things don’t get back on track, these 109 million people may start to get antsy.