Is China’s middle class slipping back into poverty?

As the group of people most sensitive to social change, the middle class is a yardstick for measuring the state of China’s current economy and a window into the future. At the moment, the signs are there that China’s middle class is not doing as well as before, leading to cutting down on spending and saving on daily expenses.

China’s latest revenue from personal income tax has added fuel to intense discussions on the fact that the country’s middle class is seemingly slipping back into poverty, a topic that has gained traction since the start of the year. Statistics released by China’s finance ministry on 21 March showed that the nation raked in 326.2 billion RMB (US$45.1 billion) in personal income taxes in January and February, a year-on-year decrease of 15.9%.

Put into context with the finance ministry’s statement that individuals earning an annual income of less than 100,000 RMB basically do not pay personal tax, the significant drop in personal taxes is mainly due to those with an annual income of more than 100,000 RMB, or what is generally considered as the middle class.

Read more