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Last Updated: Tuesday, 30 March, 2004, 11:35 GMT 12:35 UK
China's middle class growing fast
A shopping mall in Beijing
China's middle class is growing at 1% a year
China's middle class has mushroomed to nearly one fifth of the population, according to the country's leading thinktank.

A Chinese Academy of Social Sciences (CASS) study found 19% of Chinese were middle class in 2003, up from 15% at the end of 1999.

It includes any household with assets worth $18,000 (10,000) to $36,000.

Economists say that cheap property and food prices have helped to push more people into this wealth band.

The vogue among urban Chinese for buying apartments and cars has increased the value of assets held by Chinese families.

City spenders

Many families have also had to purchase their homes as a result of the restructuring of state owned enterprises, which have abandoned the Communist Party's past promise of cradle-to-grave provision for their workers.

The report estimated that nearly half of city dwellers - 49% - are now middle class.

With a population of 1.3 billion people, China's middle class is now 247 million using the CASS benchmark.

When the National People's Congress met in March, it changed China's constitution to enshrine legal protection for private property for the first time since the Communist revolution in 1949.

Tackling poverty

But the speeches were also dominated by the need to tackle the yawning wealth gap that has opened up between rich and poor, a theme President Hu Jintao and Premier Wen Jiabao have kept centre-stage since.

The party has promised to cut taxes for farmers, crack down on corrupt local officials in rural areas, and adopt more efficient farming methods to boost grain production.

It has also eased rules on urban residence permits, making it easier for farmers to move to cities to find jobs.

"We believe it will take the migration of at least another 200 million farmers to the cities before China has genuinely become a middle class society," said Li Peilin, a CASS researcher.

More than 100 million farmers are estimated to have moved to urban areas since economic reforms began in the late 1970s.

Assuming the economy remains healthy and the middle class continues to grow by one percentage point a year, China's middle class would be 40% of the population by 2020, CASS said.

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