China once enjoyed an optimistic and confident middle class. It supported the economy’s growth path with sometimes exuberant spending and aggressive investing. Sadly, those millions are now losing ground, with many slipping back toward poverty.
This is no small problem for the Chinese Communist Party (CCP). It has long had an implicit contract with the Chinese people under which they will quietly tolerate the party in power and the party will deliver them prosperity. The authorities increasingly seem to be failing on their end of the bargain. So far, the public has taken a passive approach to the situation, cutting back on spending and trying, against the odds, to rebuild wealth. If things go to extremes, however, there is no telling how the Chinese people will react. There was after all considerable violence during the recession of 2009.
Nothing in this picture offers the least encouragement on China’s economic prospects. For the middle class, such as it is, the theme is to stay home, cut spending, and try to rebuild savings. For Xi Jinping and the rest of China’s leadership, who have implicitly promised the Chinese people prosperity, this troubling picture should be unsettling to say the least.
www.forbes.com/sites/miltonezrati/2024/06/07/chinas-middle-class-is-disappearing/