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UPDATED: September 5, 2011 NO. 36 SEPTEMBER 8, 2011
Stuck in the Middle
Better-paid urban residents aren't enjoying the life they have expected

An uncertain future

The Beijing-based China Newsweek magazine conducted a survey among 1,658 residents in 10 cities in 2009. It found 61.6 percent of homeowners paid 30 percent or more of their income to make mortgage payments and 20.5 percent spent more than half of their income for this purpose. Among the respondents, 43.8 percent were extremely worried about loan defaults.

According to accepted international standards, a reasonable mortgage should consume about 20 to 30 percent of a family's income. The price of a house should be three to six times a family's annual income yet housing prices in China cost more than 10 times the average family's income, according to the 2010 China Statistical Yearbook. In Beijing, prices are 15 times more than average wages.

And these prices are continuing to increase. Statistics show housing prices in China's cities rose more than 30 percent in 2010. In Beijing, the price of many apartments rose by more than 50 percent.

Li Kaifa, Executive Director of China Enterprise Reform and Development Society, said buying an apartment could destroy a middle-class family's lifestyle.

The middle class in China is worried about mounting home prices and the high cost of living, hectic work schedules and uncertainties about the future, said the People's Daily, a leading newspaper in China.

"They will be immediately kicked out of the middle class category if they have any problems with their employment, health care or children's education," it said.

The overall mindset of China's middle class is one of massive anxiety and fear. A stratum that is generally believed to function as a social stabilizer is finding itself in an unstable position.

Li Shi, a scholar at Beijing Normal University, said China's growing economy alone was not sufficient to defuse anxieties of the middle class, as surging inflation and unfair income distribution had made it even harder for people to maintain their lifestyles.

Facing the burdens of income taxation, rising housing prices and expensive health care and education, some Chinese middle-class citizens are choosing to migrate to developed countries.

Zhou Yuan works at a Fortune 500 company based in Beijing and earns 500,000 ($78,100) yuan a year. She is applying to migrate to Singapore.

According to Zhou, long-term security and high-quality education for her children are the two main motivators driving her decision.

"In Singapore, any children I have will enjoy at least 10 years of free education in public schools," she said.

With increasing rates of emigration, China has lost many of its most able middle-class citizens. "China cannot provide adequate opportunities for them to realize their values," said Zhou Xiaohong, Dean of the School of Social Sciences of Nanjing University.

For decades, the foremost goal of China's economic development was to increase the nation's wealth as quickly as possible. But most of the wealth went to emerging elites, eroding the soil for a middle class to grow.

"Streamlining the flow of people between different strata is the ultimate solution to this problem," Zhou said.

Some other scholars said their anxieties are related to "money worship," a growing over-reliance in China on money, which is tied to the GDP-oriented development in society.

As a consequence, members of the Chinese middle class have not yet obtained the power to serve as a stabilizing force in society and act as buffer between the rich and the poor.

"To build a happy middle class and a harmonious society, a fair income distribution system and an efficient social security system have to be established," Li said.

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