The emergence of the Chinese "middle-class wannabes" and their race towards a higher social status

I met 29-year-old salesperson Liu Yuan at a Western light food restaurant in downtown Beijing, a location he picked. He arrived with a friend and ordered a healthy beef salad bowl and a cup of freshly squeezed fruit juice. He rushed to the cashier, insisting on treating the three of us this meal that cost approximately 200 RMB (approximately 40 SGD).

Mr Liu has always been generous, spending as he pleases even if it comes with a hefty price tag. Sharing about his spending habits with me, he joked that, "I've been a part of the 'moonlight clan' (a term to describe Chinese youths who spend all of their monthly salary) for a long time. 'Saving up' doesn't exist in my dictionary."

Mr Liu moved to Beijing from Shandong early last year and worked as a salesperson at an E-commerce enterprise. Last month, he job-hopped to another company and continued doing sales there. The difference? His pay has increased from 16,000 to 20,000 RMB per month.

Enjoying an above-average pay, Mr Liu is your regular fitness guy who hangs out at the gym and also an occasional patron of spray tanning beauty salons to achieve that golden fake tan. He loves fashion, but only accepts brands no less than Uniqlo. He's also a vainpot, spending thousands of dollars on Japan skincare brand SK-II products bought from Taobao.

He leads a comfortable life; there's nothing to complain about, really. Well, the only catch is that he's without savings and assets. He also co-rents a room with his friend for 3500 RMB per person. "I am a middle-class wannabe," he self-mockingly admits.

Also residing in Beijing is 36-year-old Wu Cui Shan who works in the media industry. She brings home roughly 10,000 RMB per month, and lives with her husband, an interior designer earning approximately 20,000 RMB a month. Compared to Mr Liu, Ms Wu, who's older, already has assets under her name. In 2013, she managed to buy a house with the help of her parents. Later, she and her husband purchased a 500,000 RMB Mercedes luxury sedan. Having a passion for travelling, she went to America, New Zealand, and Japan (twice!) last year. Talk about being the envy of everyone.

Yet, Ms Wu made a shocking confession about her finances, "I can't even splurge on a cup of coffee!" She laments that a cup of cold brew from Beijing coffee chains costs 40 RMB, so she often has to settle for coffee dispensed from vending machines at convenience stores, which cost ten RMB.

Ms Wu admits that she is a middle-class wannabe: "It describes me to a T!" Minus the housing loan, car loan, and traveling fees, Ms Wu reveals that living expenses are quite tight. You can easily go from zero to a hundred with that stylish Mercedes, but your bank account also goes to zero equally as quick.

The term "middle-class wannabes" (伪中产) that Mr Liu and Ms Wu kept talking about, is a Chinese term that went viral in the recent years. Encyclopedic website Baike.com's definition of the term gained much resonance among netizens: they are a glamorous bunch who graduated from reputable universities and hold decent jobs. They settled down in the big cities and are after the finer things in life. Yet, they are also vulnerable and worry about a roof over their heads, their children's education and their families' health.

Self-proclaimed "middle-class wannabes" Mr Liu and Ms Wu are white collar professionals who lead very different lives but are in the same boat: it may look like a luxurious yacht to outsiders, but it's hardly stable. Financial instability threatens to rock the boat and those in it are using it as a guise to hide their insecurities.

China's economic reforms since 1978 not only opened China to the world, but also propelled the growth of China's middle class-a vital force in driving China's modernisation efforts. Yet, there isn't a single unified definition of the "middle class".

Last year, the National Bureau of Statistics of China's report states that more than 400 million people fall into the "middle income bracket", which meant that they brought home 2000 to 5000 RMB a month. However, other global reports adopted a much higher standard. Forbes, for example, classified the middle class as those with an annual income of 10,000 to 60,000 USD (approximately 14,000 to 83,000 SGD). Based on this definition, only approximately 200 million Chinese nationals belong to the middle class.

According to the Chinese standards depicted above, many Chinese have been promoted to the middle class, but it hardly feels realistic. There's an online saying that hits the nail on the head, "before you know it, you're a middle class".

To self-mock as a middle-class wannabe is to connote a lack of belonging to the middle class. Professor Chen Zhiwu, Director of the Asia Global Institute at the University of Hong Kong, believes that the identity crisis of the middle-class wannabes stems from their fear for the future and their wallets. This is closely tied to a general lack of private property income in China.

Prof Chen analyses that as compared to a country like the US, where citizens enjoy private ownership to their properties, properties and assets in China are still very much state-owned. Even if there's an increase in asset value, it does not benefit the average person. "Many Chinese take home an annual income of 200,000 to 300,000 RMB, and keep their money in the bank where returns are very low. Yet, they hardly feel secure because they lack property income," Prof Chen explains.

Moreover, China's financial market is underdeveloped, with risks and problems abound in questionable financial products. These are of no use in helping the middle-class build savings for a rainy day.

Many families are also growing a snowball of debt. The debt asset ratio of Chinese citizens hit 53.2% in 2018, and was up 3.8% in the entire year. It has been increasing by 3.5% per annum since 2008. The increase in housing loan is especially prominent, with personal housing loans rising from three trillion in 2008 to 21.9 trillion in 2017. The entire society also placed half of new saving resources into real estate. Such high debt asset ratios mean that it'd be the consumers who'll suffer from its consequences. Not only will there be a drop in quality of life, if anything happens to the capital chain, these families could possibly face bankruptcy.

Prof Chen reveals that property prices in China have been on the rise in the past 20 years. The middle class is left with no choice but to save even more to afford a house in the future. It feels like a disguised form of collecting more tax, squeezing their spendable income dry, and leaving them helpless as middle-class wannabes.

People may have little income and assets, but in a consumerist society, material possessions take charge and propel the thirst for consumption. Consumerism is a trap, especially for the middle-class wannabes.

Mr Liu calculated that he spends approximately 7000 RMB per month on fitness training, shopping, and entertainment. That's half of his salary. The remaining is spent on rental and daily necessities. As a member of the 'moonlight clan' since stepping into the workforce, Mr Liu declares that, "Savings come after I've satisfied my desires."

Central Bank statistical report notes, China credit card loans overdue by six months amounted to a whopping 88.1 billion, approximately ten times the amount eight years ago.

Targeting the young middle class and leveraging on their purchasing desire, small-scale consumer credit services like Ant Credit Pay (花呗) have sprouted in recent years. A 2017 report by the company states that, among the Post-90s generation of approximately 170 million people, 45 million of them are using Ant Credit Pay. This means that one in four Post-90s is using the service.

And then there's another group of people who spend all their money on household expenses. Earlier on, the article "My monthly salary of 30,000 can't afford my kid's summer vacation" went viral on the internet. In the article, executive-level mom draws a monthly salary of 30,000 RMB, but can't pay for her daughter's summer vacation plans: visiting the US on a study tour costs 20,000 RMB; enrichment classes, 8,000 RMB; hiring a helper to care for her, 5,000 RMB. Wait, what was her pay again? The poor mom was too scared to even buy a new dress!

Associate Professor Yang Liu from Nanjing University School of Liberal Arts thinks that the China society is in transition. If you can't keep up in a fast-paced society, you'll be left behind. It is no wonder the middle class is insecure and haphazard. They're in need of an outward symbol to define themselves, and many have found comfort, albeit temporarily, in material possessions.

Prof Yang explains that many middle-class wannabes desire to be looked up to but lack economic capital. Searching for an easy way out, they sought after status symbols to be seen as wealthy, happy, healthy, and beautiful.

Look online and you'll find countless versions of "The Wannabes Guide to Becoming a Middle-Class". They teach you how to behave like a middle class, sarcastically. An article writes, "To shop like a middle-class wannabe, you have to visit MUJI and Ralph Lauren. See a newly-minted viral store, be sure to patronise it. How to travel in style? Rent a car online or share-a-bike for convenience..."

Professor Yu Hai of Fudan University's Sociology Department, comments that such consumer habits actually point to the mobility of China's social classes. "The social classes of China is developing, and the middle class is rapidly on the rise. Young people nowadays want to go to Beijing or work at a Global 500 corporation because they believe that's how they can attain a higher social status. Thus, they work hard, but also consume hard," Prof Yu explains.

Prof Yu says that these concerns are not unique to China. However, the uniqueness of Chinese society is in its burning desire on having 'face' (有面子) and making it big. This is one of the main driving forces of middle-class consumerism.

Prof Yang believes that if one has a weak financial position, limited career prospects, and a social class barrier that is hard to breakthrough, it will be difficult for some middle-class wannabes to turn anxiety into thrust for self-improvement. They will be stuck.

She elaborates: China's compulsory education system is controlled by the school district houses policy. This means that wealthy, elitist, privileged families have the means (they possess stronger political and social capitals) to live in a district as near to top schools as possible, securing a spot in that school for their child.

The same applies to healthcare benefits. Although the present healthcare insurance covers a wide range of services, the actual reimbursement ratio is very limited. Many imported medicines or patient aftercare services may not be reimbursed. Once a family member is stricken with a major illness, financial burden weighs down; a true middle class could become a wannabe in the next second.

In other words, extravagant and wasteful spending could be a cultural phenomenon driven by the unequal allocation of resources. There's no lack in mockery of the middle-class wannabes online: they're seen as show-offs, flashy and fake. Yet, Prof Yang believes that the middle-class wannabes' way of life is not solely driven by personal vanity. She's convinced that the middle-class wannabes need more than just material possessions. They need dignity, security, and a sense of belonging.

Prof Chen reminds us not to condemn the middle-class wannabes' spending habits entirely. He feels that having a monthly financial pressure is actually beneficial to them, as it teaches them to start exercising financial discipline at a young age and learn to provide for themselves. America is a good role model in this aspect: American youth's consumerist and credit culture created the American's independent and entrepreneurial spirit.

In light of the China-US trade war and the downturn of China's economy, China's economy is in desperate need of a boost in its domestic demand to catalyse growth. Prof Chen feels that China's attitude towards its consumerist and credit culture should be "more neutral" instead of disapproving it solely from the cultural perspective.

The continuous growth of China's middle class is seen as the key to China's, and even the world's economic development. A report delivered at the 19th National Congress of the Communist Party of China stated that in the period of 2020 to 2035, the ratio of middle-income citizens will increase in a bid to grant citizens a better life.

In this process, national leaders have to find solutions that can alleviate the stress on the middle class, including how middle-class wannabes can become true middle classes. Prof Chen notes that while it is undeniable that China's middle class experienced a significant growth in numbers since the economic reforms, the question remains as to whether their true potential has been realised.

He explains that while many people had high hopes on a Chinese economy that will shift from a reliance on foreign investors to dependence on domestic consumerism, the emergence of the middle-class wannabes with limited purchasing power may just burst that bubble.

Prof Yu believes that if the majority of middle classes are convinced that they're just wannabes, that they're poor, dissatisfied and unhappy, their ability to be a vital force in the economy or their capabilities to assume lead roles in society becomes questionable.

How do we turn middle-class wannabes into true-blue middle classes? Prof Chen believes that the key lies in allowing more people, including the working class, to possess more property incomes and assets.

Secondly, the financial, insurance, and pension funds markets should be better developed to build the people's security in these areas. With more control over their lives, people need not worry so much for the future.

To some people, being a middle-class wannabe is the first step to becoming a true middle-classer. Prof Yu shares that popular American magazine, Life, of the 50s and 60s propelled ideas that pushed for the idealistic life of being a middle-class American or a white-collar professional to encourage youths climbing the social ladder to work hard for their dreams. This shaped the dreams of many, and they eventually became middle-class Americans themselves.

With China experiencing a trade war and an economic downturn, self-proclaimed middle-class wannabe Mr Liu admits to carefully evaluating his options and avoiding high-risk industries like foreign trade. However, it seems that a downturning economy has not affected his pay yet. Fresh to his new job with a higher paycheck, Mr Liu is still optimistic about his future. "Young people like me grew up in a good environment. Optimism is in our bones. We're not that aware of imminent crises. Or else, do you think I'd still dare to spend the way I do?" he says.

This article was first published in Lianhe Zaobao on 11 August 2019.