Behind China's recent 6.9 per cent growth in GDP lies a bigger fact: between 2009 and 2030 the country will add 850 million to its middle class. I would call that a killer fact.
Nothing else on Canberra's agenda – talk about innovation relations with India or tax cuts for business – competes with that statistic for its potential impact on Australian living standards. It is equivalent to a new continent emerging somewhere to Australia's north with 850 million more consumers asking Australia to fill its supermarkets sell them places in our schools and universities invest our expertise in aged and health care and let them come as tourists investors and cashed-up migrants.
A killer fact that sweet deserves to be interrogated. To what extent can we trust it?
It was presented in a 2010 OECD working paper by Dr Homi Kharas now co-director in the Global Economy and Development program at the Brookings Institution. His prediction was that by 2030 Europe would add only 16 million to its middle class. Small stuff and North America's middle class was set to shrink by 16 million. In this context 850 million more middle-class Chinese dominate world economic prospects. That means the Chinese middle class will grow from 12 per cent of its population in 2009 to 73 per cent in 2030. By middle class Kharas means household income equivalent to between $US16000 ($20254) and $US160000 per year a widely used definition.
由Homi Kharas博士即布鲁金斯学会全球经济和发展项目的共同主任所编写的关于2012经合组织的工作论文。他的预测是，到了2030，欧洲中产阶级只会增加1600万人。北美洲的中产阶级将缩减1600万人。在这一背景下，新增8.5亿人的中国中产阶级将主宰世界经济前景。这意味着中国新兴中产阶级将从2009的占人口12%增长到2030的73%，每个家庭收入在16000美元 (20254澳元)和160000美元之间。
I recently learnt that Kharas had released a new report this one for Brookings. He has had access to more accurate data. For that first survey China had provided price data for only 11 cities or provinces. The latest was able to cover all provinces. This has enabled a more accurate mapping of the middle-class explosion.
The new report confirms China's middle class growth is on track.
Kharas has however upxed one essential: the spending of this expanded middle class is already much greater than in his original study.
The original study forecast that China would account for $US10 trillion in consumption or 18 per cent of the global total. That compares with $US4 trillion and 7 per cent in the US and $12.8 trillion and 23 per cent in India.
The new study shows China's spending will reach $US14.3 trillion accounting for 22 per cent of the global total. By contrast projections for India's share have contracted: middle-class spending there will be worth $US10.7 trillion and 17 per cent. When I spoke to Kharas about his latest findings he told me India's performance was disappointing: "We reduced our estimates of India's growth. It's not doing as well as China and South Korea did at comparable stages. It should be growing at double digit rates."
The projections for the US middle class have not changed: it will account for just 7 per cent of global spending.
gavJul 27 2017 at 12:33am
We still have people who think its fine for our high schools to pump out uneducated monolingual graduates though.
AEGISJul 27 2017 at 5:00am
This is soft power outreach on the part of the Chinese Government. This narrative is part of shaping opinion in favour of things like the current Belt and Road Initiative (new Silk Road) and normalising Mainland Chinese activities in the South China Sea and Antartica.
What it misses out on is where the money to support this spending is coming from. The new Chinese middle class has never known a recession let it is living on higher levels of debt than we would be comfortable with.
There will be a crash - that is economic reality. Then the Chinese middle class will have to revisit its wants and needs.
fizzybeerBAN ALL DONORSJul 27 2017 at 5:05am
I do believe the Chinese are donating to the school system in some way.
It is also a matter of fact that they are donating to the Australian political process in some way.
Dastyari may be one who is well placed to explain exactly how that works but I have no doubt other politicians and ex politicians would also be in a position to help us with our understanding of all that entails.