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The View | China’s middle class crying out for reform to restore confidence
- The middle class has long been seen as the core of China’s future prosperity, but a depressed stock market and home values are sapping their confidence
- The nation is at a critical juncture when effective reforms are needed to channel the energy of the middle class into driving economic recovery
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In the narrative of China’s rise, the middle class stands at the core of national rejuvenation – a crucible where aspirations, hard work and consumerism meld to forge progress. Yet, in the shadow of a once-burgeoning economy, this foundational group is dealing with the harsh realities of a depressed property market and wild stock fluctuations.
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This economic turbulence has stripped wealth from those previously deemed pillars of China’s rapid ascent. Among polled middle-class families, about 40 per cent suffered a wealth reduction of at least 10 per cent in 2023. Eroding consumer confidence and shrinking net worth mark a stark departure from the prior engines of growth and threaten to derail the nation’s march towards prosperity.
Nowhere is this shift more visible than in the collapsing piano market, a symbol of cultural ambition now discarded as middle-class families recalibrate their finances. The trend extends to international schools, where once-abundant applications from an aspirational middle class are replaced with dwindling enrolments. Costly education and enrichment programmes, once seen as smart investments or status symbols, are now closing amid the throes of financial uncertainties.
Owning a home has long stood as a bastion of middle-class identity in China and an emblem of financial security. Yet as property values fall in an unprecedented market downturn, the once-coveted dream of owning a home has paradoxically drifted within reach, only to be met with ambivalence and economic apprehensions.
Luxury vehicles have lost their allure to electric vehicles’ fuel savings. Discount marketplaces are outpacing luxury item sales. These developments point to a distressed middle class grappling with diminished economic prospects. Their deep-seated economic anxiety is precipitating a downward spiral where diminished spending could further stifle growth.
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The nation is at a critical juncture when effective reforms are needed to channel the energy of the middle class into driving economic recovery. Without such changes, China’s middle-class population – estimated to number more than 400 million people – could begin to dwindle.
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