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Can the expansion of a prosperous middle class help China to rebalance to consumption-led growth? We address this question through analysis of macro- and micro-level data. Using macro statistics, we examine trends in national aggregate consumption and GDP growth from 2000 through 2019. We observe growth in aggregate consumption but do not find convincing evidence of consumption-led growth. Using micro-level household survey data from 2002, 2007, 2013 and 2018, we estimate the size of China's prosperous middle class and its contribution to aggregate consumption growth. We find that the prosperous middle class expanded rapidly but contributed less to aggregate consumption growth than expected. We discuss features of this class that diminished its contribution to consumption-led growth, including its low propensity to consume out of income and its limited expansion beyond urban subgroups. We conclude that the expansion of the prosperous middle class is necessary but not sufficient to bring about rebalancing. [ABSTRACT FROM AUTHOR]

We estimate the size of the global middle class in China and 33 other countries and analyze China's expanding middle class in an international context. The "global middle class" is defined in terms of being neither poor nor rich in the developed world. China's global middle class has grown rapidly and has been catching up with the middle class in developed countries. By 2018 China's global middle class constituted 25 percent of China's population; in absolute size it was nearly double the size of the global middle class in the US and was similar in size to that of Europe. Cross‐country analysis of the relationship between the middle‐class share of the total population and GDP per capita reveals an inverted‐U pattern. China is not an outlier from the cross‐country pattern but the speed with which its middle‐class has expanded is unusual. The only other countries with similarly large, rapid expansions of the middle class are transition economies. [ABSTRACT FROM AUTHOR]

Using nationwide household survey data for 2002 and 2013, we investigate how widely Chinese household incomes had caught up to those of the middle class in the developed world by 2013, the year Xi Jinping came to power. Based on the living standards of the middle-income class in the European Union as our standard of comparison, we estimate that China's "global middle class" with a similar living standard grew rapidly after 2002, reaching 254 million in 2013. We project that it had grown further to over 450 million by 2018. We describe the characteristics of this middle class, which is predominately urban, largely resides in China's eastern region, and mainly depends on a wage income. A distinct business middle class exists but is relatively small. Analysis of the chances of attaining a middle-class income reveals the importance of an individual's circumstances at birth. Parents' education and occupation matter, and being born with an urban registration (hukou) provides a large advantage. For those born with a rural hukou , the most effective pathways to the middle class are migration and, if possible, obtaining an urban hukou. [ABSTRACT FROM AUTHOR]