China's middle class 10 times larger than that in India

[SledgeHammer]

You are assuming the average number people in an Indian household is the same as a Chinese household. You do remember China still has a one child policy.

"Currently India has 31.4 million middle class households (160 million individuals)."

I have quoted absolute numbers, the thread also mentions population, not households, households don't count here.

 

[Kloitra]

I have quoted absolute numbers, the thread also mentions population, not households, households don't count here.

31.4 million Indian households indicate 160 million people, but for China that would probably be about 100 million. That means 10 times the households would be a billion people.

This is almost consistent with credit suisse report that India has nearly 1/7 of Chinese middle class:
https://publications.credit-suisse.com/tasks/render/file/?fileID=60931FDE-A2D2-F568-B041B58C5EA591A4

China is home to 35.4% middle class population of the world vs little over 5% Indian.

The title is misleading in the sense it seams to indicate China has 10 times more people in middle class, while it is talking about households.

Surprisingly, in total wealth, China is like 1970s of US. Even Eurozone is at the level of 2004 US. I thought Europeans would be richer!

 

[LeveragedBuyout]

No this is not about distribution and welfare. What I've meant was there is huge wealth increase in US after 2009 crisis. In 2000-2009 period the wealth increase was in much more slower rate. And suddenly after 2009 US sees a huge peak.

I mean in the period which people think US Economy is stagnating and losing it's global competition power, we see a huge peak on the increase of the total wealth (Think of this like the first derivative of the total wealth graph). That's really interesting. Their GDP didn't grow that fast. There must be something else.

Can this be a result of Quantitative Easing policy?

The Source of the Data : National wealth - Wikipedia, the free encyclopedia

@LeveragedBuyout What do you think about that?

As I suspected, the report itself provides clues:

1) p. 18 shows a table with 10 year predicted wealth growth rates by region, and North America is predicted to grow at a slower rate than the world, so the recent increase in "market share" for the US appears to have been temporary
2) As @Keel speculated, stock market performance has much to do with this spike in wealth market share:

The red line is US stock market capitalization/US GDP, the blue line is world stock market capitalization/world GDP. The US number was 141.725% in 2007, and fell to 110.1612% in 2011, or a decline of 22.2% over those four years. Meanwhile, the world number fell from 53% to 32.7%, or a decline of 38.3%. So the US lost less stock market wealth than the world did, even as the world outgrew the US. Furthermore, the US stock market has generally been a world-beater since the financial crisis. As a shorthand proxy for the markets, I used SPY (S&P 500 ETF) for the US, and VEU (Vanguard FTSE All-World ex-US ETF) to represent the US and the world, respectively:

So less downside, and more upside--that translates into a gain of wealth market share.

3) Meanwhile, the other major asset of most households, the home, has largely recovered in the US:

U.S. Home Prices Are Now Just 6.4% Below All-Time High - Real Time Economics - WSJ

This certainly can't be said of most of Europe, which has been the loser of market share since the crisis.


In short, this is a financial asset recovery, not a spectacular economic recovery--thus explaining the growing wealth disparity in the US, between the financial asset "haves" and the generally working-class "have-nots."

However, I have to point out vis-a-vis @Keel 's speculation about money flows, that foreign investment in the US does not belong to the US, it belongs to the foreigners who invested. So while I am happy to have foreigners invest and grow wealthy from the US financial recovery, foreign inflows do not factor into the spike in US wealth market share.

 

[bobsm]

I have quoted absolute numbers, the thread also mentions population, not households, households don't count here.

If you read back, one of the member stated there was no mention of one third of global middle class being Chinese in the article, which was false. Now the author could very well mixed up some figures, but he did stated the one third figure.

 

[SledgeHammer]

31.4 million Indian households indicate 160 million people, but for China that would probably be about 100 million. That means 10 times the households would be a billion people.

This is almost consistent with credit suisse report that India has nearly 1/7 of Chinese middle class:
https://publications.credit-suisse.com/tasks/render/file/?fileID=60931FDE-A2D2-F568-B041B58C5EA591A4

China is home to 35.4% middle class population of the world vs little over 5% Indian.

The title is misleading in the sense it seams to indicate China has 10 times more people in middle class, while it is talking about households.

Surprisingly, in total wealth, China is like 1970s of US. Even Eurozone is at the level of 2004 US. I thought Europeans would be richer!

What percentage of chinese population is middle class? A billion people means 80% of chinese population.

 

[Kloitra]

What percentage of chinese population is middle class? A billion people means 80% of chinese population.

I can't relate the article to credit suisse report at all.
From what I gathered, from the report and other sources, the Chinese middle class population is around 350 million, while for India it is around 35 million. Check on it to be sure.

I am not certain how they calculated the numbers though. How do they value wealth in developing country - when most of it is in real estate?

 

[Lure]

As I suspected, the report itself provides clues:

1) p. 18 shows a table with 10 year predicted wealth growth rates by region, and North America is predicted to grow at a slower rate than the world, so the recent increase in "market share" for the US appears to have been temporary
2) As @Keel speculated, stock market performance has much to do with this spike in wealth market share:

The red line is US stock market capitalization/US GDP, the blue line is world stock market capitalization/world GDP. The US number was 141.725% in 2007, and fell to 110.1612% in 2011, or a decline of 22.2% over those four years. Meanwhile, the world number fell from 53% to 32.7%, or a decline of 38.3%. So the US lost less stock market wealth than the world did, even as the world outgrew the US. Furthermore, the US stock market has generally been a world-beater since the financial crisis. As a shorthand proxy for the markets, I used SPY (S&P 500 ETF) for the US, and VEU (Vanguard FTSE All-World ex-US ETF) to represent the US and the world, respectively:

So less downside, and more upside--that translates into a gain of wealth market share.

3) Meanwhile, the other major asset of most households, the home, has largely recovered in the US:

U.S. Home Prices Are Now Just 6.4% Below All-Time High - Real Time Economics - WSJ

This certainly can't be said of most of Europe, which has been the loser of market share since the crisis.


In short, this is a financial asset recovery, not a spectacular economic recovery--thus explaining the growing wealth disparity in the US, between the financial asset "haves" and the generally working-class "have-nots."

However, I have to point out vis-a-vis @Keel 's speculation about money flows, that foreign investment in the US does not belong to the US, it belongs to the foreigners who invested. So while I am happy to have foreigners invest and grow wealthy from the US financial recovery, foreign inflows do not factor into the spike in US wealth market share.

Thanks a lot for the very detailed analysis indeed. I got the answer now.

 

[Speeder 2]

China's middle class 10 times larger than that in India
Kounteya Sinha, TNN | Oct 14, 2014, 09.20PM IST


LONDON: The swelling middle class has long been India's strength, driving the country's economy.

But it now seems that China has emerged as home to the world's largest number of people belonging to the "middle class".

Credit Suisse's Global Wealth Report 2014 released on Tuesday says that there are one billion adults at present who belong to the middle class - with wealth anywhere between $10,000-$100,000 range.

With a net worth of $31 trillion, this group holds considerable economic clout

However according to the report, India has just 3% of the global middle class, and that share has changed very little during the past decade.

In contrast, China's share of the middle class has doubled since 2000 and now covers one-third of the global membership, 10 times the share of India.

By 2016, India's middle class was expected to swell up to 267 million people according to the National Council for Applied Economic Research's (NCAER) Centre for Macro Consumer Research. It predicts that by 2015-16, India will be a country of 53.3 million middle class households, translating into 267 million people falling in the category according to 'household income'. As per the criteria, a family with an annual income between Rs 3.4 lakh to Rs 17 lakh (at 2009-10 price levels) falls in the middle class category.

Currently India has 31.4 million middle class households (160 million individuals).

The Credit Suisse report says that the total global household wealth increased in current dollar terms to $263 trillion, or $56,000 per adult in the world, an all-time high for average net worth.

Aggregate household wealth has more than doubled since the start of the millennium from $117 trillion in 2000 to $263 trillion in mid-2014.

Over the same period, personal wealth in India and China has risen by a factor of 3.1 and 4.6 respectively. Allowing for the rise in the adult population, global net worth per adult has increased by 77% from 2000, an average growth rate of 4.3% per annum. Despite recording a 15% decline during the financial crisis, wealth per adult has increased each year since 2008 and is now 7% above its pre-crisis peak.

India has seen rapid growth in wealth measured in domestic terms since the year 2000. In rupees, wealth per adult has grown quite steadily, averaging an 8% annual increase over

2000-2014. Until the global financial crisis, wealth also rose strongly in US dollar terms, from $2,040 in 2000 to $5,100 in 2007. After falling 25% in 2008, it rebounded, reaching $ 5,400 in 2010, but then fell 13% in 2011 due to adverse exchange rate movements.

"As is common in the developing world, household wealth in India is heavily skewed towards property and other real assets, which make up 86% of estimated household assets".

While wealth has been rising strongly in India, and the ranks of the middle class and wealthy have been swelling, not everyone has shared in this growth and there is still a great deal of poverty. This is reflected in the fact that 95% of the adult population has wealth below $10,000.

At the other end of the scale, a very small proportion of the population (just 0.3%) has a net worth over $100,000.

However, due to India's large population, this translates into 2.4 million people. India has 238,000 members of the top 1% of global wealth holders, which equates to a 0.5% share.

The report says "We estimate that 1,000 adults have wealth over $50 million and 650 people own more than $100 million".

India will also see a 61% increase in the number of millionaires between 2014 and 2019 - 182 now to 294 millionaires in 2019.

For the first time this year, more than 400 million adults globally have wealth above $100,000, against 217 million at the start of the century.

China's middle class 10 times larger than that in India - The Times of India

This article must be wrong, because it's been widely known in blogosphere for at least a decade from those Indians that India's middle class is the largest in the world...

Total foreign assets of US is 4.8 trillion dollars.

You can't explain a 25 trillion wealth increase in 5 years with just buying assets abroad. No country can buy 5 trillion dollars of foreign assets a year.

Between 2009-2014 US increased it's wealth equal to the amount of total wealth in Japan. Meaning US made a "Japan" in 5 years. There must be something to explain this.

you might want to look up a modern invention called "printing machine".

It is an amazing piece of wealth-creating iron tool, particularly when combined with another invention called 'Fed".

 

[Infra_Man99]

The OP's article seems lousy. It does not talk about the definition of the middle class such as quality of life measurements across the world, practical purchase power in each nation, social problems in each nation, social opportunities in each nation, etc.

According to some measurements, India's GDP is similar to Canada's. Idiots would think India and Canada have the same quality of life. In reality, Canada is a modern nation, but India looks like a gigantic toilet overflowing with feces and with a few strawberries on top.

 

[cirr]

The report tells us nothing but 2 simple facts：

（1）The Chinese economy is 5 times the Indian economy
（2）India's income inequality problem is far more serious than China's