Online from: 2009
Subject Area: Economics
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|Title:||The rise of middle class in rural China|
|Author(s):||Zhang Yuan, (China Center for Economic Studies, Fudan University, Shanghai, China), Guanghua Wan, (Asian Development Bank, Manila, Philippines), Niny Khor, (Asian Development Bank, Manila, Philippines)|
|Citation:||Zhang Yuan, Guanghua Wan, Niny Khor, (2012) "The rise of middle class in rural China", China Agricultural Economic Review, Vol. 4 Iss: 1, pp.36 - 51|
|Keywords:||China, Consumption, Development strategy, Income distribution, Middle class, Rural areas, Rural China, Urbanization, Wealth and income|
|Article type:||Research paper|
|DOI:||10.1108/17561371211196766 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||JEL classification – I310, Q000, D31The authors are grateful to Li Shi, Xin Xian and Iva Sebastian for various help and support. Financial support from the China Natural Science Foundation (No. 71063022), the Shanghai Leading Academic Discipline Project (B101), “Bairen Jihua (100 top scientists plan)” of Yunnan province, and support from the “985 Project” and Fudan Lab of China Development Studies at Fudan University are acknowledged. The authors take responsibility for any remaining errors.|
Purpose – Using official and household survey data, the purpose of this paper is to analyze the size of middle class in rural China, its trend and geographical distribution. Determinants or drivers of changes in the size of middle class are explored.
Design/methodology/approach – An absolute definition of middle class, adjusted by rural purchasing power parity (PPP) and spatial price index, is employed to measure the size and geographic distribution of rural middle class in 1988, 1995, 2002, and 2007. Biprobit models and OLS models are estimated to investigate the determinants and consumption behavior of middle class in rural China.
Findings – Major findings include: in 2007, as many as 398 million rural residents or almost 54 percent of China's rural population belonged to the middle class; the size estimate of China's rural middle class based on income is broadly consistent with that based on assets; factors enhancing the probability of a household entering the middle class include human capital, political capital and non-farming employment while industrialization, urbanization and development of TVEs also play significant roles; and the middle class not only consume more, but also consume more durables.
Research limitations/implications – A limitation of the paper is the use of 2002 data. However, more recent data are not available.
Originality/value – The size of the middle-class is crucial for the stability of China, and the growth of the middle class in rural China is crucial for rebalancing the Chinese and global economy. Thus, the measurement results, the identified drivers, and the consumption behavior of rural middle class revealed in this paper can help shed light on nurturing middle class and adjusting development strategy for China to achieve a more sustainable and balanced economic growth.
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