China's middle class and the US prepare for a challenging 2023.
China's middle class and the US prepare for a challenging 2023.
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USA: Middle-class families in China and the US are tightening their belts as 2023 approaches, burdened by the financial difficulties of the previous year brought on by the widespread coronavirus as well as the effects of the conflict in Ukraine.

Director of a media company in China, Emily Hong, is staring into an endless abyss. The 30-year-old still has a mortgage to pay even though her income has decreased twice since late 2021. Shenzhen, in southern China, is a short distance from Hong Kong. The mother of two, who had to sell one of her two apartments in 2021 for less than market value, had turned to friends for loans and now resides with her parents.

After making significant cuts to her personal budget, Hong stated, "To make matters worse, I think the financial situation in the following few years will be worse than in 2022."

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In Gresham, Oregon, a suburban city in the Pacific Northwest state of Oregon, on the other side of the Pacific Ocean, American Gabe Franklin, his wife, and their five children are also planning a tighter 2023 after high gas and grocery prices last year.

The Franklins have cut their Christmas spending and will also reduce their holiday spending, but they are handling everything well.

"If there's a recession, things might get a little tighter, but not to the point where I'd have to take a second job," said Gabe, a 45-year-old teacher at a private Christian school who has worked there for 19 years.
I suppose I would say that perhaps we would eat out less frequently and perhaps we would spend less on birthdays.
Although it has long been assumed that the economies of China and the United States are interdependent, middle-class Chinese are now thought to be less likely to view their American peers as their economic role models than they were a decade ago.

According to analysts, the US middle class, which has endured numerous recessions over the past 90 years, is more confident in its position than China's middle class, which is less established and some of which are worried about an impending experience with poverty.

While the middle class in America prioritises maintaining its status, the emergence of a middle class in China is a relatively recent phenomenon, according to Zhu Zhiqun, a political science and international relations professor at Bucknell University in Lewisburg, Pennsylvania.

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While The Economist Intelligence Unit predicts that China will have a relatively weak first half of the year after its economic growth slowed to 3% last year due to lockdowns and supply chain disruptions, Fitch Ratings predicts a mild recession in the US in the second quarter of 2023.

Many members of China's middle class have reduced their expectations for wealth growth in 2022 as a result of the country's weak economy, which has also been exacerbated by declining demand for goods on the domestic, European, and US markets.

According to the independent financial media outlet Wu Xiaobo Channel's "2022 White Paper on the New Middle Class," only 29% of respondents said their wealth increased in 2022, down from 55% a year earlier.

But the middle class in China is now thought to be less inclined than ever to aspire to a middle-class lifestyle in the US.

According to a Pew Research Centre analysis of government data, the middle class' share in the US has decreased from 61% in 1971 to 50% last year, with both the wealthy and the poor growing over the past five decades.
According to Pew, the median household income in the US reached a record-high level of close to US$65,000 per year last year.

The common prosperity goal of President Xi Jinping, which seeks to close the wealth gap in China, is currently the country's main development goal and has the potential to increase the middle class.

According to Ning Jizhe, commissioner of the National Bureau of Statistics, China's 1.4 billion people include more than 400 million middle-class individuals, or 140 million families.

According to Ning, a typical three-person middle-class Chinese family makes between 100,000 and 500,000 yuan (US$14,772 and RMB) annually. Hong from Shenzhen has stopped purchasing Bottega Veneta handbags in favour of less expensive "white-label goods" that are still of "good quality," as the coronavirus has been devastating China's middle class with widespread layoffs, salary reductions, and a decline in the value of tangible assets.

She predicted that most middle-class families would be unable to make investments in the upcoming years. Children's education is our biggest expenditure and top priority in order to secure their future and keep them in the middle class, at the very least.

Gabe Franklin is unafraid of ever being poor in Gresham because of his US$60,000 annual salary, his ownership of a home, and the tuition discounts he receives for his kids while working as a teacher at their school.

He has noticed that he is spending two-thirds more on groceries now than he did five years ago, and the stock market continues to be a worry.
I guess I'm not in a situation where I need to make more money, he said, because my job is more about having an impact on people's lives.

Ann Hsu, a 55-year-old San Francisco mother of two, describes her own middle-class way of life as one that forgoes luxuries.

The widow relies on state assistance and the rental income from a home she owns in a bayside city close to the airport to support herself and her twin teenage boys, who she sends to the city's public schools.

Hsu anticipates no lifestyle changes even if 2023 turns out to be a difficult economic year in her extremely wealthy part of the US, while others scale back.

The former tech entrepreneur, who now devotes her time to local politics and education, claimed, "I've never been really rich or really poor, so I never pay much attention." I personally don't have many extravagant desires or wants, so I can generally afford whatever I want. I don't have to make any cuts because I don't have expensive tastes.

The Wu Xiaobo Channel white paper states that over the past 20 years, property investment has emerged as one of the best methods for raising household wealth in China, with the average share of home equity in the wealth of middle-class households being around 56%.

Dexter Roberts, a former Beijing-based author, said: "You're nobody if you don't own an apartment."

Dexter Roberts, a former Beijing-based writer who is currently a senior fellow at the Atlantic Council's Asia Security Initiative in the US, said: "You're nobody if you don't own an apartment."

According to him, "people are very protective of what they have and for good reason" because laws favouring urban residents over migrants from the countryside make the status of many middle-class people precarious.

Nick Liang, a foreigner from the Guangdong province, started an advertising agency after spending years working for global fast-moving consumer goods companies.

However, since last year, the value of the 44-year-three old's properties in the province has decreased by about 20%, and his collection of Japanese whiskies and Rolex watch have also decreased in value, "because everyone's income has plummeted."

According to Stephen Pau, chief information officer of Hefeng Family Office in Guangzhou, which makes investments for families whose elders are looking for ways to keep money safe for their children, China is eager to maintain its middle class after decades of work to alleviate extreme poverty.

According to Scott Savitt, an American author and teacher who lived in China for 18 years before 2000, many Chinese people aspire to improve their socioeconomic standing by immigrating to the US.

He claimed that changes in American politics over the previous five years have discouraged them from considering the US as a component of their objective. Savitt, who now resides in the US state of Michigan, recalled that back then, parents' top priority was to send their children to Harvard. Maybe it will come back eventually.

According to Ker Gibbs, the former president of the American Chamber of Commerce in Shanghai, modern US politics favour the wealthy because they can pay influential people, while members of the lower classes frequently have to take time off work to cast their ballots.

Chinese state-controlled media has emphasised domestic economic progress while exaggerating American problems, encouraging people to look for rewards at home.

The younger generation used to be envious of America's freedom and style, but that has changed, according to Guangzhou entrepreneur Jenny Zhong, who owns an arts and crafts store.

"We adored the Sex and the City characters and the aesthetic of New York in the 2000s. Young white-collar Chinese people rarely use VPNs these days to watch American television shows and movies. They take greater pride in their pastimes and way of life, which are popular on domestic social media and in China's sophisticated infrastructure.

Within the last ten years, Guangdong, the focus has shifted back to China rather than the US.

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He recalled a time when middle-class Chinese people would strive for a civil society in the West, with the intention of investing in overseas real estate and purchasing foreign goods.

The growth of the so-called middle class of our kind must now focus on the domestic market, follow Chinese trends, and make cautious investments as we can feel that globalisation is almost at a standstill.

He continued by citing developments in the entertainment and advertising sectors as an alternative to "following the economic and political system in the United States like before."

The impact of "decoupling," according to Raymond Lu, a 40-something employee of a medical equipment company in Jiangsu province, is still unknown. He still does not think the middle classes in China and the US can be compared in terms of disposable income.

In the tech and energy competition, he said, "We know the two countries are decoupling, but it's too early to say who would win and stand out."

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