CAIXINMEDIA

In Today's Asia, How Do We Define "Middle Class"?

The good life
The good life
Betty Ng*

We often hear about the rise of the middle class in Asia, and in particular in the fast developing countries such as China and India. However, what exactly is the “middle class”?

The term is widely cited around the world, applied without hesitation by all sorts of people. Nevertheless, it means different things to different people in different places.

In some countries, being middle class might mean owning a house and a car. In others, it may just represent having a roof over your head and a toilet.

Even within the same country, its implication can be different in different places. What “middle class” implies in Beijing could be very far indeed from what it means in Wuxi or Chaozhou.

The meaning of middle class will also naturally change over time. In the 1980s, when China had only just begun its economic reforms, people with a refrigerator and a TV set were to be envied, whereas today this is far from enough for many urban Chinese who expect a higher standard of living comparable to those in Singapore, Taiwan and Hong Kong.

Even more complex is the fact that “middle class” also contains other layers. In many places of Asia, such as Hong Kong, Taiwan, Singapore or South Korea, it is almost a synonym of “middle-income”. Whereas in India, “class” implies one’s social status, education, or caste lineage.

Therefore, if a comparison is to be made between places, it’s probably better to be made using “middle-income” from the purely economic point of view. But even so, the problem persists. Within one country or city, each individual may draw a different boundary. Even if we use reliable data, it is still difficult to define middle-income. Should it be 50% of the households in the city or 68%?

The market's definition

Just as the market can determine the prices of stocks or properties, we can also use it to define middle income.

We posed two identical questions in ten Asian cities where we conducted surveys. First, for a typical family consisting of a couple with a school-age child, what levels of income belong to the “low-income” and the “high-income” groups? With the boundaries of high and low, we’d be able to find the “middle.”

We investigated more than 500 respondents in each city following statistical indicators. This sampling size is sufficient in providing representative results. Inevitably, online questionnaires ignore inhabitants with particularly low or high incomes within these cities. This is because the ones with very low income may not have Internet access, whereas the rich are less likely to participate in such a survey. However, our method still covers a wide range of incomes (from the lowest 10% to the highest 10%), professions, and age groups (18-54 years-old).

The results of the survey were a surprise. None of the cities can define clearly what the low, middle or high income is. All the investigated cities lack a definition that a majority of people would agree with.

For instance, in Beijing and Shanghai, the most common definition for a “low-income household” is to have a monthly income of 5,000-7,499 RMB ($615 to $923), however, this represents 33% of all respondents. The answer that comes second, with 25%, is of 2,500-4,999 RMB ($308 to $616) for a monthly household income. The most common definition for a “high-income household” is a monthly income of 20,000-29,999 RMB ($2,463 to $3,695), but this also represents only 27% of all respondents.

If there is a lack of a consensus about what rich and poor is, then can a “middle-class” or “middle-income” really exist? Or do Asians somehow live in a classless society? These questions are worth thinking about.

According to our survey, people usually define levels of income in relation to their own household income. The more one household earns, the higher their definition of what a high income is.

Many people’s income will change with age, experience, education and environment. Their definition of rich and poor will also evolve accordingly as time goes by. Some might always feel they don’t have an adequate amount of money. Even if one has made a fortune, one’s standard of wealth might go up at the same time.

This also explains why some people take significant investment risks. The taste of success will yield even greater expectations. Unfortunately, excessive expectation may result in substantial losses. The spread of this kind of mentality may also increase market volatility.

In the developed world, people generally attach more importance to preparing for one’s retirement. Market volatility thus tends to be lower in general. Often, people’s financial management behavior is based on their need rather than their desire, which are two very different concepts. To many Asians, at a personal level, it’s perhaps easier to differentiate the “need” and the “desire” than to obtain a consensus on the definition of the middle-class. This would also be more helpful.

*Betty Ng is director of Fidelity's Asia-Pacific investment communications, and a columnist for Caixin media

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Spencer Tunick Nude Installation in Israel

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Salam!*

Welcome to Monday, where the UK pays homage to slain MP David Amess, Myanmar frees thousands of prisoners, and Facebook gets ready to build its "metaverse." Please fasten your seatbelts: Worldcrunch also takes stock of the long-lasting effects — good and bad — the pandemic has had on the air travel industry.

[*Azeri - Azerbaijan]

🌎  7 THINGS TO KNOW RIGHT NOW

Myanmar to free political prisoners: Myanmar's junta chief Min Aung Hlaing has announced the release of 5,636 prisoners who had been jailed for protesting the coup that ousted the civilian government in February 2021.

• Powerful Haiti gang behind the kidnapping of U.S. missionaries: The notorious 400 Mawozo gang is believed to be behind the kidnapping in Haiti of a group of Christian missionaries, including 16 U.S. citizens and one Canadian. The brazen kidnapping on Saturday comes as crime is spiking since the killing of President Jovenel Moise in July.

• UK to pay tribute to David Amess: British lawmakers will pay homage in parliament to colleague David Amess, who was stabbed to death Friday in what was described by the police as a "terrorist incident." Officers arrested a 25-year-old suspect whose father, Harbi Ali Kullane, worked as a media adviser to a former prime minister of Somalia.

• COVID update: Russia has registered more than 34,000 cases of new infections in the past 24 hours, a new record since the start of the pandemic. Meanwhile, police in the northeast Italian city of Trieste used water cannons to clear striking dockworkers protesting Italy's new requirements that all employees be vaccinated.

• At least 26 killed in floods in India: Torrential rain has triggered floods and landslides in India's southern coastal state of Kerala, killing at least 26 people.

• Facebook to hire 10,000 in EU to develop "metaverse": The U.S. social media giant plans to hire 10,000 workers in the European Union over the next five years to build a "metaverse," a virtual reality version of the internet that the company touts as the future.

Punishing parents for children's bad behavior: After limiting gaming hours for minors, China is now considering legislation to reprimand parents if their children exhibit "very bad behavior" or commit crimes.

🗞️  FRONT PAGE

Colombian daily El Espectador dedicates its front page to Alex Saab, "owner of the secrets" of Venezuelan President Nicolas Maduro. The Colombian businessman, wanted by U.S. authorities for allegedly laundering money on behalf of Venezuela's government, has been extradited from Cape Verde to the U.S. where he is scheduled to appear in court today.

#️⃣  BY THE NUMBERS

4.9%

China's economy registered its slowest pace in a year as the country faces a looming energy crisis with power shortages and increasing pressure on its property sector. Gross Domestic Product (GDP) for the period between July-September rose 4.9%, the weakest numbers since the third quarter of 2020 and significantly lower than forecasts. The world's second-largest economy faces a debt crisis linked to the China Evergrande Group debt crisis, while energy shortfalls have dropped factory output to its weakest since early 2020, when heavy COVID-19 curbs were in place.

📰  STORY OF THE DAY

7 ways the pandemic may change the airline industry for good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

⛽ Cleaner aviation fuel: With air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel. In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials

.🛃 Smoother check-in: The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

✈️ The billion-dollar question: Will we fly less? At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel, in particular, is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.


➡️ Read more on Worldcrunch.com

📣 VERBATIM

"The crimes committed that night are unforgivable for the Republic."

— Emmanuel Macron became the first French president to commemorate the killing of as many as 200 Algerian independence protesters by Parisian police in 1961. For 40 years, French officials ignored the massacre, which took place a year before Algeria gained its independence from France after an eight-year war. In 2012, French President François Hollande acknowledged the killings for the first time on a visit to Algeria, and Macron took it further by attending Sunday's commemoration at the site where the events happened in the French capital. Still, many had hoped the French President would go further and take responsibility for a "state massacre," for a crime many historians consider the most violent repression of a peaceful demonstration in post-War Europe.

📈💥  IN OTHER NEWS

​Low trust, high risk: The global rise of violence targeting politicians

The deadly stabbing of British Parliament Member David Amess confirms an ongoing study on trust and governance in democracies around the world: It's bad. In The Conversation, James Weinberg — the study's author and a lecturer in Political Behavior at the University of Sheffield — writes:

⏪ The assassination of Amess, who was stabbed to death in his constituency on Friday, is a tragic moment for democracy. What makes it even more devastating is that such a catastrophic failure is not without precedent or predictability. Labour MP Jo Cox was shot at her constituency surgery in 2016. Before her, another Labour MP, Stephen Timms, survived a stabbing in 2010. And Andrew Pennington, a Gloucestershire county councilor, died in a frenzied attack in 2001 while trying to protect local Liberal Democrat MP Nigel Jones.

☝️ Beyond these critical junctures in the public debate about politicians' safety, elected representatives must live with an increasingly insidious level of popular cynicism that threatens violence on an almost daily basis.

🇬🇧🇳🇿🇿🇦 Not only are these experiences of abuse or threats of physical violence felt across both sides of the political aisle in the UK — they also appear to be growing more common in other democratic contexts where the climate of politics has been presumed to be both calmer and more volatile, from New Zealand to South Africa.


Read the full piece from The Conversation, now on Worldcrunch.com

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

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