Credit Suisse has published its 2015 Global Wealth Report. It is one of the most comprehensive tools analysing the distribution and changing nature of wealth across the world.
Much of the response to the report has focused on the news that the global top one per cent are still rich and appear to be getting richer. For those who view wealth inequality as the issue of our time (and by the way, it isn’t) these easily tweetable figures are a boon.
But there’s another, more important story to be found among the stats. China has overtaken the US as the country with the largest middle class.
Credit Suisse defines the middle class as those with wealth (not income) of between $50,000 and $500,000. Almost 110m people fit this criteria in China, compared with 92m in the US.
How China adapts to this new demographic will be one of the defining challenges of the next five years.
The slowdown in China’s growth rate is causing concern around the world, from African countries that relied on the Asian powerhouse for investment to commodities markets coping with a new normal.
But behind these consequences of China’s growing pains lies an expanding middle class whose tastes and expectations will begin to shift.
How will China respond to a population with a growing thirst for capital, information and consumer choice? China’s authorities have strengthened their control over traditional media, largely in response to the growing number of Chinese bloggers who have millions of followers between them.
Current efforts to crack down on “unverified online information” (in other words, online dissent and debate) have resulted in the arrest and detention of scores of Chinese students. A Chinese journalist who reported on last month’s stock market turmoil was paraded on state TV and forced to apologise for his “rumour mongering”.
It seems two forces are at play in modern China: an increasingly authoritarian state and an increasingly middle class populace.
Optimists maintain that where free markets lead, other freedoms follow. It was market economics that allowed millions of Chinese to escape poverty in recent years and propelled them into the middle class.
Despite this progress, the strong arm of the state shows no signs of yielding to the hidden hand of market forces.