An interesting article on the class divisions in China, not only between the rich and the poor, but between the truly middle class and those caught somewhere in between (of whom I know quite a few).
In some ways, China’s money culture is spawning more avaricious – and unchecked – competition. There is a more intense game of keeping up with the Chans, but with no cushions like Rotary clubs, churches, or other civil or volunteer structures. Some 40 percent of wealth is controlled by 10 percent. Young people are getting diplomas in record numbers, but unemployment is 10 percent for those under 30. “Underemployment” is far higher.
Andrew Hu, educated at the University of Washington, says Chinese now have the same problems with stress and expectations as Westerners. “It’s our dream to have an easy life,” he says. “But we can’t because we have to take care of a family and compete with other people in our jobs. The pressure not only comes from family, but other people. We see people with a new car and we say we need a new car.”
“The gap between expectations and salary continues to grow, and psychologically a great number of [Chinese] feel under more pressure,” says Victor Yuan, director of Horizon Market Research in Beijing. “Expectations are high, but so are mortgages. The society is more consumerist, and many people are under heavy family pressure to satisfy demands. Some find it hard to maintain their jobs, let alone talk about expectations.”
Ma Jinliu, who speaks perfect English, got a graduate degree at a European university. But he came home to the same job at a German joint venture he left two years earlier. “I didn’t have a choice. The market is very tough … and I can’t take my money from the housing fund, which is irritating.”
An expectation crisis is less felt among the 3 percent of wealthy urban Chinese who hire drivers, send children to schools overseas, and make more than $1,200 a month. Rather, it is felt in a vastly broader category of urban Chinese who live in the new money culture, but don’t yet have a firm stake in it. They earn between $150 to $350 per month – typical for civil servants, academics, clerks, military officers, engineers, and teachers. Good houses and cars are hard to swing. On TV, they see others doing things they can’t afford. Instead, they sock away savings for health care, knowing the system is not serving them well.
I think a telling phrase is: “the 3 percent of wealthy urban Chinese who hire drivers, send children to schools overseas, and make more than $1,200 a month.” Did you get that? You are among the wealthy urban Chinese if you earn more than $1,200 a month. This is why I’ve referred in the past to the “myth of the Chinese middle class.” Yes, they truly are middle class in China, but by international standards they’re not quite there. So retailers drooling over the prospect of selling Mercedes and Prada bags to China’s wealthy 3 percent may be in for a shock when they learn the actual number who can afford such niceties is far lower than they’d hoped. (Considering China’s huge population, that number is nothing to sneeze at. But the world seems to think 3 percent or more of China’s population is ready to take trips abroad and buy mink coats, and that’s a fallacy. At least for now.)
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By Lao Lu
Richard,
Few points I want to make:
1. The per-month salary figure gives some indication on the level of wealth, but you are also well aware that there is more than meets the eye. I remember that the joint-venture we were working with in China in the top years beginning of the nineties paid 24 months of salary in one year, so that in itself would double the figure already.
2. The number of Chinese going abroad in absolute figures is quite tremendous already (20 million per year, from what I hear) but their spending habits are quite different from ours: accomodation can be very standard, but on their trips they do go for the luxury products such as watches, diamonds, bags …
January 18, 2006 @ 4:54 am | Comment
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By richard
I remember that the joint-venture we were working with in China in the top years beginning of the nineties paid 24 months of salary in one year, so that in itself would double the figure already.
I would really like to have an idea how many Chinese workers were paid 24 months worth of salary in a year. Is the number so high that it makes a difference?
The number of Chinese going abroad in absolute figures is quite tremendous already (20 million per year, from what I hear) but their spending habits are quite different from ours: accomodation can be very standard, but on their trips they do go for the luxury products such as watches, diamonds, bags
Yes, some certainly do. Again, any idea of what percentage of the Chinese population is off buying diamonds in Switzerland or wherever? I believe it is a low percentage, but still enough to delight certain lucky retailers. But this is not your average Chinese middle class citizen earning $1200 a month. This is a rare privileged few. Many, many Chinese are travelling overseas, but based on my own experience (as part of my job) I’d say most still travel in tour groups, stay at less than 4-star hotels and disappoint those retailers awaiting the thrilling purchases you’d think were coming based on the articles in the newspaper about China’s economic miracle and nouveau riche. But I’m willing to be corrected if this is wrong.
January 18, 2006 @ 6:27 am | Comment
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By Lao Lu
My experience, stretching over +/- 6 years in the nineties, in guiding these groups is that a majority of them was here (Europe) on invitation of European companies, mingling business with (a lot) of pleasure. Although the pure tourist groups are increasing in number, I believe the majority of those is still heading off to Sin-Ma-Thai. Depending on your companies business in China, these customer visits can be quite impressive in number as well. Again, without exaggeration, in the 6 years I referred to above, I have taken care of between eight and nine thousand (persons, not groups :- ) of them. The lot of them we put up in 2 or 3 star hotels, with very little complaints, but I assure you that, definitely in the later years, 80% of those guys went out to buy diamonds, with Nikon camera’s and Philips rasors trailing in 2nd and 3rd position. Reason why is easy to see: the inviting company has to provide these customers with living allowance during their trip, so they do have the money, but the fact that they are also actually spending it to me is proof that there is more in their pockets than the per-month salary figure they give you
Are these the privileged ? Of course, but their numbers are already important for the tourism industry. That’s the only point I want to make
January 18, 2006 @ 9:07 am | Comment
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By richard
I would agree with everything you say. Their numbers are important, as I said myself. Do they meet the expectations generated by the media? No, I think they don’t.
January 18, 2006 @ 9:47 am | Comment
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By Liu Yixi
The National Public Radio program “marketplace”(http://marketplace.publicradio.org/features/china2006/)
is broadcasting from China this week. From what I have heard it is largely the sort of sunny-side only, rising tide lifts all boats optimism that one would expect from the U.S. media. If you didn’t know better you would think that wealthy Shanghai businessmen comprise the majority of China’s population.
January 18, 2006 @ 12:08 pm | Comment
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By dougie acturus
‘ The number of Chinese going abroad in absolute figures is quite tremendous already (20 million per year, from what I hear) but their spending habits are quite different from ours’
Lao Lu,
Have to disagree on that. Granted yes, the number of China Chinese travelling abroad is a large number, but the majority of these travllers are in fact ‘zero-dollar’ tourists, whereby they spend virtually nothing in the countries that they visit.
January 18, 2006 @ 11:24 pm | Comment
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By kevin
The majority of locals that I know who go abroad on trips on a regular basis have some type of gov. job where they take a lot of bribes or embezzle money and then go spend it abroad.
On the other hand, I do have one friend who earned his own money and is now traveling across the US.
January 19, 2006 @ 12:06 am | Comment
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By Shanghai Slim
Something else to keep in mind, Chinese tourists may not be spending only their own money whie traveling, it is not unusual for relatives to give them money to buy things while they are abroad.
January 20, 2006 @ 9:28 pm | Comment