March 15, 2018

China's Impending Middle Class Boom More Likely To Turn To Bust

In 2010, Brookings Institute offered a report stating that the global "middle class" was set to explode, almost entirely from the transition of China's and India's urban poor populations to the middle class (middle class meaning annual incomes per household of four from $14,600 to $146,000 in PPP (purchasing power parity)).

In 2017, the Institute updated the original work (HERE) reiterating that from 2015 to 2030, China, India, and the remainder of Asia-Pacific would add 2.1 billion or 89% of the new entrants to the already 3.2 billion person global middle class.  To round out Brookings' estimate for the middle class from '15 to '30; Europe would add just 9 million (less than 0.4%), N. America 19 million (about 0.8%), Central & S. America about 50 million (2.1%), MENA (Middle East/N. Africa) 90 million (3.9%), and sub-Saharan Africa adding 100 million (4.1%).

I have a major problem with the Brooking Institute's estimates.  Generally, I have major issues with the assumptions but specifically regarding China, I believe the Institute is somewhere from significantly wrong to totally wrong regarding future estimates for China's middle class...which is likely to reduce or undo the estimated growth throughout.

Births in China:

Let's begin with China's births, on an average basis per five years, since 1950 (chart below).  Peak births took place in the 1965-70 period at just over 30 million annually.  But with the introduction of the one-child policy in '71, the UN data makes it plain that China's births continued declining in spite of a continually larger childbearing population (aged 15-45 years old).  Even now with the one-child rollback, births are only set to further decline (detailed HERE).

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