China’s Middle Class Now World’s Largest says Credit Suisse Report

At business schools in the West, teaching on the subject of business in China often emphasizes the opportunities that stem from the country’s emerging middle class and the potential markets for products and services that have sprung up as a result.

However, it might now be time to stop referring to China’s middle class as ‘emerging’. There are now more adults defined as middle class in China than they are in the US, according to a new Credit Suisse report into global wealth.

The middle class in China now amounts to 109 million people, putting it ahead of the US – where they number 92 million - for the very first time, according to the Credit Suisse report, which equates middle-class wealth to holding assets (mostly financial and real estate) in the region of US$50,000 to US$500,000.

India, by dint of its large population and recent economic growth, is another country with a burgeoning middle class. However, its count of 24 million middle-class adults in 2015 is still some way short of China and the US. It is enough, however, to put India level with France and not far off the UK and Germany (both 28 million) and Italy (29 million). Japan, with 62 million adults, provides the global wealth study with 2015’s third-biggest middle class. 

GMAC survey testifies to China’s growing influence in MBA applicant pool

A growing middle class isn’t just about greater opportunities for companies to conduct business in China; it also helps explain why its citizens are displaying a greater appetite for higher education taken at prestigious institutions overseas. Business schools have been seeking out China’s most-talented prospective MBA students – through university partnerships and initiatives – for a while now, yet it’s interesting to note the influence that MBA applicants in China now exert on the overall admissions landscape.

Schools reporting to GMAC’s 2015 Application Trends Survey said that the number of applications received from China, along with those from India, caused the greatest fluctuations to their yearly applicant pool this year, with some saying that the greatest increase in international applicants this year came from the East Asian nation and others, conversely, that their number represented the greatest decrease among international applicants.  

The GMAC survey found that applicants from the regions of East and Southeast Asia combined represented 20% of all applications to full-time MBA programs in both the US and Canada this year, while they also accounted for 13% of applications to those in Europe. To put these figures in context, for the US this proportion is second only to the 22% of applications received from GMAC’s Central and South Asia grouping (which includes India) for sources of international applications. Canada and Western Europe only supplied 1% and 3% of GMAC’s total count, respectively, with 42% of applications coming from within the US itself.

Oxford scholarship aimed at attracting talent and developing business in China 

Europe’s proportion of applicants from the region is noticeably lower; however this is a region which attracted greater proportions of applications from, for example, Africa and Latin America according to GMAC’s latest analysis. Even so, just this week came news that the University of Oxford’s Saïd Business School has launched a new MBA scholarship initiative (in partnership with a large cosmetics business in China) that specifically targets female students from China, with the school’s dean saying that its aim was to “attract the brightest and best women from China.”

Of course, this is about increasing access to an MBA education for female professionals. But, in the announcement, Saïd’s dean Peter Tufano, also spoke of the value that these professionals could offer by returning home post graduation and using their business expertise “for the benefit of Chinese society.”

Scale of global wealth inequality

Narrowing wealth inequality between China’s richest and poorest citizens would be a good point to address, although this is an issue for almost every country in the modern world. Indeed, perhaps the headline finding of the Credit Suisse report is its confirmation of the growing scale of global wealth inequality, with the world’s richest 1% in possession of half its wealth.

Nevertheless, at the top end of the societal spectrum, Credit Suisse - who appointed INSEAD MBA graduate, Tidjane Thiam as CEO earlier this year – believes that China is likely to see the fastest growth to its number of US dollar millionaires between now and 2020. In addition, 22% of the world’s ultra-high net worth (UHNW) individuals (those worth more than US$50 million in the Credit Suisse Report) now reside in Asia-Pacific. This is only marginally behind the 24% living in Europe, although the biggest chunk, of 50%, reside in North America, where the US’s UHNW count of 58,855 far exceeds the 9,600 currently found in China.