THE BLOG
10/22/2013 12:18 pm ET Updated Jan 23, 2014

Why China's Middle Class Supports the Communist Party

SYDNEY -- Much is expected of China's growing middle class. Since 2002, the Chinese Communist Party has embraced the idea of expanding the middle class so that it becomes more than half the total population by 2050 in order to encourage consumption and to ensure social stability. For China's urban population, middle-class growth is the promise of increased prosperity and a consumer society. For the rest of the world, an expanding middle class in China suggests market demand to be fulfilled and through their understanding of social history in Europe and North America, the prospect of a democratic China.

The common belief of the last 20 years outside China is that economic growth, a growing middle class and the rise of entrepreneurs inevitably leads to democracy. Everyone knows democratic countries do not go to war with each other, and that a democratic China means thereby less of a China Threat.

The China Threat may indeed disappear, but this is unlikely to be because of a rising middle class. The problems with these various equations are that different meanings of the middle class have been elided, even though they may have nothing in common; that however it is conceptualized, the middle class in China is actually small despite the current rhetoric; and last but by no means least, that China's socio-political experience is not that of Europe or North America, so the middle class remains an essential part of the state from which it has emerged and is not very likely to be the Chinese equivalent of the European or North American bourgeoisie with whom they are often equated.

The middle class has at various times been many things, and it makes little sense to equate the bourgeoisie, the professional and managerial classes, the leisured classes and the comfortably well-off, though they clearly overlap. The idea that the middle class leads to liberal democracy comes from two sources: one, Barrington Moore's interpretation of social and political change in Europe that centered on the well-known mantra of "no bourgeoisie, no democracy"; the other, Samuel Huntington's much later argument that complex societies generate middle classes who demand political pluralism. Most usually and most recently, social scientists have generally distinguished the middle class in advanced industrial societies as those whose social position comes from their possession of skills, knowledge and experience, as opposed to the dominant class who possess or control economic wealth, and the subordinate classes dependent on their manual labor.

Despite appearances to the contrary, China is neither particularly advanced nor capitalist. Though economic growth has been spectacular since 1978, GDP per capita in 2013 (in purchasing power parity) is still only $9,300 in U.S. dollars. This compares to $50,700 for the USA and $37,500 for the United Kingdom. The PRC's 2013 GDP per capita is roughly at the same level as the Soviet Union in 1989 -- $9,211 -- at the height of its economic growth. China is also not a capitalist system, despite elements of its development having capitalist characteristics. Since 1978, the PRC has been a reforming socialist market economy. It has elements of a redistributive economy alongside and interacting with elements of a market economy. There is a vast and growing marketized sector of the urban economy, and market forces have impacted the operation of the public sector. At the same time, though, the state sector and the redistributive economy have remained politically superior.

The public sector now only produces about 25 percent of GDP, but the remainder of economic production is not private, though often regarded as such. There is some private enterprise, but the majority of enterprises are public-private hybrid enterprises. This is even true of the foreign-invested enterprises that contribute 15 percent of GDP. And even leaving the public-private enterprises aside, some 25 percent of all enterprises registered as private enterprises are in fact owned by state-owned parent companies.

There is, of course, private wealth in China -- some 212 billionaires (in U.S. dollars) in 2012 and some 1 million-plus millionaires (defined in China for some reason in terms of 10 million Chinese dollars) -- but considerably less than sometimes suggested. Statistics identify 1.3 percent of the workforce as private entrepreneurs, and 9.5 percent as self-employed individual businesspeople. The difference between the two categories is largely one of scale: Individual businesses can hire up to eight people; anything bigger is a private enterprise. Most of the self-employed are not so much enterprise owners as part of the informal economy, working largely for themselves, with a preponderance of small shopkeepers, stall holders, peddlers and the like. Even many of the designated private entrepreneurs are rather small-scale and more part of the informal economy.

The profile of both entrepreneurs and the professional and managerial middle classes is remarkably similar, not least because the majority of the former were previously part of the latter. Repeated surveys have demonstrated not only that about two-thirds of private entrepreneurs previously worked in the Party-state, but that about one in five previously held an official position of leadership in either the government or the Party. The majority of today's professional and managerial classes are largely to be found in the Party-state, as before. Not just in the institutions of the government and the Party, but in the health, education and welfare sectors, though there are increasing numbers in managerial positions in the expanding economy. The middle class has certainly grown with the reform era and economic growth, but the central role of the state acts as a check on greater growth, and the consequence is that it is currently relatively small, at about 12 percent of the working population.

While the entrepreneurial, professional and managerial middle classes are close to the Party-state having emerged from within its ranks, the Party-state has also certainly acted to ensure their loyalty. About 40 percent of entrepreneurs are members of the Chinese Communist Party, and most participate in political activities in other ways, such as sitting on representative bodies and joining local government associations, not least because this is seen by businesspeople themselves as good business practice. The state-employed professional and managerial classes have been effectively allowed to maintain their lifetime employment tenure, despite reforms to the contrary elsewhere in the economy. Moreover, they have been the prime beneficiaries of housing privatization since the mid-1990s, gaining subsidized access to ownership of their previously public-owned housing.

Research on China's middle classes repeatedly demonstrates not just the lack of political opposition to the regime but (in their view) a degree of support for a Party-state operating under difficult conditions. Where there is criticism, it is a desire for greater efficiency and social justice within the current system, not a change of regime.

© 2013GLOBAL VIEWPOINT NETWORK/TRIBUNE MEDIA SERVICES