Beefing up the middle-class meat in the economic sandwich

For the last few weeks, Chinese leaders and US politicians have been addressing their chief domestic audiences. The main difference is that while the Americans see their middle class as an endangered species, Chinese leaders see them as saviours of the nation.

Last week the Communist Party journal Qiushi published a commentary by Vice-Premier Li Keqiang , widely expected to become China's premier next year. In it, Li stressed the need for China to enlarge its share of 'middle-income earners'.

The phrase 'middle class' is still something of a heresy to the old school of Marxism-Leninism, so official documents and propaganda use the easy replacement of 'middle-income earners'. And, implicitly, whether the middle class constitutes a social stratum is not an issue officials want to discuss now.

They prefer to treat it as an economic issue, as does Li. He calls for officials to be more aware of the importance of consumption - whether to help tide China over its present difficulties or to boost its long-term economic health.

For too long, Li argues, China's economic growth has been 'passively' pulled along by investment, rather than driven by consumption. As a result, consumption's share of GDP was 47 per cent in 2010 - markedly lower than many other countries, not only the US (88 per cent) and Japan (79 per cent), but also the average of the world's middle-income countries (about 67 per cent).

Li argues that this situation 'must be redressed'. China should design various ways for low-income people to earn more, so that the middle-income earners can become a larger part of the population.

Li suggests many remedies: more wage rises, a larger social security network, business incentives, subsidised housing and more affordable medical care.