The expanding middle class of China: a game changer in the international system

Main Article Content

Juan Camilo Soto Marulanda

Keywords

Middle class, China, International System, Accumulation of Savings

Abstract

This research paper explores the economic implications of the expanding middle class in China for the international system. To achieve this, the study analyzes the three key arguments proposed by Chun et al (2017) that are linked to the middle class in literature: 1) There is the impact on entrepreneurial activity, 2) the accumulation of savings, 3) the expansion of the domestic market. Using secondary sources such as journals and statistics, the paper evaluates how these arguments are reflected in the Chinese middle class and what their effects are on the international system. Concluding that China's middle class possesses opportunities like extended trade and investment for the rest of the world. As well as threads, particularly, the lending capacity derived from the middle class gives China a strategic position that may cause economic imbalances in the international system and generate financial risk for other countries.  

Downloads

Download data is not yet available.
Abstract 259 | PDF (Español) Downloads 219

References

Achille, A., Z12ipser, D. (2021). A perspective on luxury goods companies during and after coronavirus. In McKinsey (Ed.), China Consumer Report 2021: Understanding Chinese Consumers: Growth Engine of the World (pp. 80-87). https://nextbn.ggvc.com/wp-content/uploads/2020/11/Mckinsey_China-Consumer-Report-2021_Understanding-Chinese-Consumers-Growth-Engine-of-the-world_Nov-2020-.pdf

Barton, D. (2013). The rise of the middle class in China and its impact on the Chinese and world economies. US-China Economic Relations in the Next, 10, 138-148. https://www.chinausfocus.com/2022/wp-content/uploads/Part+02-Chapter+07.pdf

Bertocco, G. (2014). Global saving glut and housing bubble: A critical analysis. Economia politica, 31(2), 195-218. Doi: 10.1428/77437

Bosma, N, Kelley, D. (2019). Global Entrepreneurship Monitor 2018/2019 Global Report. GEM. https://www.gemconsortium.org/report/gem-2018-2019-global-report

Buchholz, K. (2022). The Countries Most In Debt To China. Forbes. https://www.forbes.com/sites/katharinabuchholz/2022/08/19/the-countries-most-in-debt-to-china-infographic/?sh=361cac6661d8

Carmer-Flood, E. (2020). Global Ecommerce 2020. Ecommerce Decelerates amid Global Retail Contraction but Remains a Bright Spot. Insider Intelligence. https://www.insiderintelligence.com/content/global-ecommerce-2020#page-report

China Power Team. (2017). How Well-off is China’s Middle Class?" China Power. Updated September 30, 2021. Accessed April 13, 2023. https://chinapower.csis.org/china-middle-class/

Cheng, E. (2019). China’s giant middle class is still growing and companies from Walmart to start-ups are trying to cash in. CNBC. https://www.cnbc.com/2019/09/30/chinas-giant-middle-class-is-still-growing-and-companies-want-in.html

Chun, N., Hasan, R., Rahman, M. H., & Ulubaşoğlu, M. A. (2017). The Role of Middle Class in Economic Development: What Do Cross-Country Data Show? Review of Development Economics, 21(2), 404–424. https://doi-org.ezproxy.eafit.edu.co/10.1111/rode.12265

Ding. D, Mano, R. (2021). ¿Qué implica el reequilibramiento de China para América Latina?. Fondo Monetario Internacional. https://www.imf.org/es/Blogs/Articles/2021/09/08/blog-what-chinas-rebalancing-means-for-latin-america

Farrell, Dl. Ulrich, G., Stephenson E. (2006). The value of China's emerging middle class. McKinsey Quarterly 2, no. I (2006): 60. https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/China/The%20value%20of%20emerging%20middle%20class%20in%20China/The-value-of-Chinas-emerging-middle-class.pdf

Freitas, F., & Bielschowsky, R. (2018). La búsqueda de China de recursos naturales en América Latina. Revista Cepal N° 126, 9-29. https://repositorio.cepal.org/bitstream/handle/11362/44300/REV126_Rocha.pdf?sequence=1&isAllowed=y

Gálvez, R., Rosselot, S., Sáez, B. (2022). Inversiones de China en el Cono Sur de América Latina. Fundación Sol. ISSN 0719-6695. https://fundacionsol.cl/blog/estudios-2/post/inversiones-de-china-en-el-cono-sur-de-america-latina-6828

Gooch, E., & Gale, F. (2018). China’s foreign agriculture investments (No. 1476-2018-5461).https://www.ers.usda.gov/webdocs/publications/88572/eib-192.pdf

Horn, S., Reinhart C., and Trebesch, C. (2020). How Much Money Does the World Owe China? Harvard Business Review, 26. https://hbr.org/2020/02/how-much-money-does-the-world-owe-china

Hodgson, A. (2015). Top 5 Emerging Markets with the Best Middle Class Potential. Euromonitor international. https://www.euromonitor.com/article/top-5-emerging-markets-with-the-best-middle-class-potential

Lichtenstein, D. (2006). China y su estrategia del "Go Out": La disminución del rol del Estado y la emergencia del Mercado dentro de la política de reforma y apertura. Universidad de Belgrano, colecciones de licenciatura en Relaciones Internacionales. http://repositorio.ub.edu.ar/handle/123456789/145

McBride, J; Berman, N; Chatzky, A. (2023). China’s Massive Belt and Road Initiative. Council of Foreign Relations: Asia Program. https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative

Pettinger, T. (2017). Would an increase in savings help the economy? Economic. https://www.economicshelp.org/blog/7102/economics/would-an-increase-in-savings-help-theeconomy/#:~:text=In%20economics%2C%20we%20say%20the,more%20to%20firms%20for%20investment

Rehman, M. U., Zafar, S., & Amir-ud-Din, R. (2022). Size, Correlates and Consumption Patterns of the Middle Class: Evidence from Pakistan. Journal of Asian & African Studies (Sage Publications, Ltd.), 57(3), 462–480. https://doiorg.ezproxy.eafit.edu.co/10.1177/00219096211020489

Sicular, T., Yang, X., & Gustafsson, B. (2022). The Rise of China’s Global Middle Class in an International Context. China & World Economy, 30(1), 5–27. https://doi-org.ezproxy.eafit.edu.co/10.1111/cwe.12400

Seong, J., Ngai, J., Woetzel, J., & Leung, N. (Year). Fast forward China: How COVID-19 is accelerating 5 key trends shaping the Chinese economy. In McKinsey (Ed.), China Consumer Report 2021: Understanding Chinese Consumers: Growth Engine of the World (pp. 8-33). https://nextbn.ggvc.com/wp-content/uploads/2020/11/Mckinsey_China-Consumer-Report-2021_Understanding-Chinese-Consumers-Growth-Engine-of-the-world_Nov-2020-.pdf

Sutter, K. M., Schwarzenberg, A. B., & Sutherland, M. D. (2021). China’s ‘One Belt, One Road’Initiative: Economic Issues. Washington, DC: Congressional Research Service, IF11735. https://crsreports.congress.gov/product/pdf/IF/IF11735/3

Tse, E. (2016). The Rise of Entrepreneurship in China. Forbes. https://www.forbes.com/sites/tseedward/2016/04/05/the-rise-of-entrepreneurship-in-china/?sh=584eec523efc Tracxn Unicorn Corner (2023). Number of Unicorn Events. https://tracxn.com/d/unicorn-corner/china#Unicorn%20Trends

World Bank national accounts data (2023). Gross domestic savings (% of GDP). https://data.worldbank.org/indicator/NY.GDS.TOTL.ZS?locations=CN

Zeng, K. (2023). Gauging the Impact of the China-US Trade War. The Diplomat. https://thediplomat.com/2023/02/gauging-the-impact-of-the-china-us-trade-war/

Zhang, L., Brooks, R., Ding, D., Ding, H., He, H., Lu, J., & Mano, R. C. (2018). China's high savings: Drivers, prospects, and policies. IMF Working Paper, WP/18/264. https://www.imf.org/en/Publications/WP/Issues/2018/12/11/Chinas-High-Savings-Drivers-Prospects-and-Policies-46437