Wednesday, January 15, 2014

China middle class not as big as US middle class

China’s economy could shift to being domestically driven if its middle class were big enough and inclined to spend freely. But Chinese consumers save a third of their income to cover old age, health and other costs no longer provided for by the government. The stock market bubble there attests to huge savings with few investment alternatives.

And although there are an estimated 110 million people in China’s middle and upper classes, that represents only 8 percent of the 1.4 billion population, and these elites control just 25 percent of GDP. In contrast, the U.S. middle and upper classes make up about 80 percent of our 300 million people, with incomes that equal 80 percent of GDP.