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25 October 2020

China’s influence on the global middle class

Homi Kharas and Meagan Dooley

EXECUTIVE SUMMARY

In the 1950s, over 90% of the global middle class resided in Europe and North America. Today, over 20% live in China. China is experiencing the fastest expansion of the middle class the world has ever seen, during a period when the global middle class is already expanding at a historically unprecedented rate thanks in part to some of its neighbors like India. By 2027, we estimate that 1.2 billion Chinese will be in the middle class, making up one quarter of the world total.

China already makes up the largest middle-class consumption market segment in the world and is a priority market for major multinational firms. Chinese middle-class consumption initially followed the growth path of the Western middle class, with increasing consumer demand for higher quality products, large investments in home ownership, and vehicle purchases. It is now setting its own middle-class trends. Chinese fintech and e-commerce platforms are changing the way consumers and sellers interact, and they are exporting this knowledge to other developing countries.

In light of this new dynamic, we explore the ways in which the Chinese middle class is likely to impact the global middle class moving forward. First, will the world be able to sustain such a large consumer class within its planetary boundaries? Second, does China’s middle class pose a competitive threat to other countries, or is it a positive force promoting global growth? Finally, how will a growing Chinese middle class impact global politics, when democracy is no longer the only way to achieve a stable middle-class lifestyle?

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