Thriving in the Middle Kingdom

Charley Qian is not a wealthy man. As food-and-beverage manager of 88 Xintiandi, Shanghai's most exclusive serviced apartment building, his job is to satisfy the whims of the rich, anticipating and fulfilling their every culinary desire. He commutes an hour to work each morning, arriving at 7 a.m. to change into his uniform—a black jacket, charcoal striped pants, a gray vest and a gray silk tie. After attending to the day's budgeting and purchasing decisions, overseeing business lunches and catered events, handling room service deliveries from nearby restaurants and other special requests from his guests, Qian often catches the subway back to his modest apartment at 9 or 10 p.m.

But Charley Qian is far from poor. By any Chinese yardstick, he receives an outstanding salary. Including overtime, Qian stands to earn between $7,500 and $9,000 this year. That's way above average. In China's countryside (where more than 60% of the population lives), incomes average less than $300 a year, but even in the wealthier cities, the typical annual salary amounts to little more than $850.

Charley Qian belongs to China's newly minted middle class. The 36-year-old can't afford to clothe himself in Armani, Prada or Gucci, but he likes to look his best, filling his wardrobe with snappy pleated khakis and golf shirts. He carries a Nokia mobile phone, though not the latest model. He hasn't yet achieved his ambition to travel abroad, but he vacations in relative style with his girlfriend—an aerobics instructor at the nearby Radisson Hotel—and his 10-year-old son at places like Hainan Island in the South China Sea. He eschews the stock market, which he likens to gambling, and tries to avoid debt, stashing all of his extra money in the bank. Qian, who divorced four years ago, has his son's education to worry about after all, and he hopes to buy a car or even a house some day. Overall, Qian is optimistic about what's ahead for himself, for his son, for China. "It's been hard to get where I am," he says, drawing deeply on his Double Happiness cigarette. "I started as a bellboy 18 years ago. Many 16-hour days." But he is astounded now at the China springing up around him. "China is very different from what it was 20 years ago," he says. "China is catching up to Hong Kong and Japan." Does he think his country will be better off in 20 years than it is now? "I do," he says, nodding. "Definitely better."

Twenty-four years after Deng Xiaoping's first wave of financial reforms attempted to shake off the pall of the Cultural Revolution, the key to China's future is in the hands of people like Qian—members of the hardworking, skilled industrial and services sectors. The country's next cultural revolution may be sparked by the establishment of a middle class, a capitalist class, populated—in a cruel irony—by the children of those whose lives were ruined by the first precisely because they were capitalists. Sandwiched between China's nouveaux riches and the hundreds of millions of peasants, factory workers and jobless whose standard of living is plummeting in the face of wrenching economic change, a small but rapidly growing and influential middle class has sprouted in the cities of Shanghai, Beijing, Shenzhen and Guangzhou. And as China lunges toward modernity, it is this middle class that hundreds of millions of Chinese citizens must join if the country is to transform itself into one of the world's leading economies.

Around the globe, the existence of a broad and stable middle class is one of the hallmarks of an advanced economy, one of the anchors of a prosperous and fair society. But creating a sustainable middle class in a country that was founded on the principle of abolishing class differences isn't going to be easy. Corruption, a widening wealth gap, political freedoms that lag far behind economic ones and the social confusion that arises from turning generations of anticapitalist, antimaterialist dogma on its head are gargantuan obstacles. Will the middle class live up to its promise, becoming the root of sweeping social change, the touchstone from which a civil society—or even democracy—springs? Or will it become a politically docile government factotum, a willing participant in the state capitalism that the Communist Party seems intent on establishing where everything is up for grabs—except the power to rule?

Thanks to its loaded political connotations, few in China use the term middle class. Everybody, it seems, talks about it, but they use different words such as white-collar, entrepreneurs, businessmen or middle income. It has become fashionable among commentators to celebrate—even hype—the emergence of the middle class. But how many middle-class consumers are there, really? In January the Chinese Academy of Social Sciences (CASS) released the results of a three-year study on economic stratification, making it the most authoritative look at class in China so far. A sociologist at CASS who spoke to TIME under the condition of anonymity estimates that the group most people think of when asked about the middle class—managers, professionals, skilled technicians and service workers earning $2,500 to $10,000 a year each—constitutes considerably less than 5% of the national population. In other words, fewer than 65 million people.

By Chinese standards, then, members of the middle class are still a tiny minority. And yet their rapid expansion in number over the past 20 years, the degree to which they have benefited from economic reforms, their optimism about the future, and the extent to which they influence Chinese culture and society make them far more important than such statistics might suggest. Already, they are inexorably restructuring their country. "China's social stratum structure is gradually changing," observes the report. "The middle stratum will keep expanding and finally become the most important part and the most stable force in China's modern social structure."

To see how far the new middle class has come so quickly, and why many of its members might find their rise strangely disorienting, you need only visit their parents—a generation still coping with the excesses of the first cultural revolution. Take Charley Qian's father, Zhu Ansheng, who lives in a dark, cramped one-room apartment with his wife, Xiangmei, in the heart of Shanghai. "Welcome to a typical low-class home," he jokes as he serves tea and puffs on one of his ever-present cigarettes. He, a former factory worker, and she, a schoolteacher, are both retired and live on a comparatively hefty combined pension of about $3,600 a year. But despite this level of material comfort, Zhu lives with a nagging sense of missed chances and unfulfilled potential. He isn't bitter, he says, but it's clear that his life has amounted to much less than he once dreamed. The son of a printer, he was quite well off in his youth. But when the communists came to power, says Zhu, the whole family was branded as capitalists. Zhu, now 66, was never exiled to the countryside but he spent 35 years bouncing from factory to factory, trying to work hard and, above all, avoid the Red Guards' attention. So concerned was he about the capitalist stigma his name carried that he gave Qian and Qian's 31-year-old younger brother Yong (a freelance photographer in Shanghai) their mother's maiden name. "It's just fate," Zhu says. "I was just not born at the right time."

"They are a lost generation," says Jonathan Chu, a partner in an investment firm in Shanghai, about the men and women of Zhu's age. Chu's own father was banished to a remote area in Guangxi province for harboring Rightist thoughts, and Chu's grandfather, once a powerful rice merchant in Shanghai and an unrepentant capitalist, spent 24 years in prison after a photo of him with Chiang Kai-shek surfaced. "They worked hard all their lives for the betterment of the socialist state, whether they liked it or not," observes Chu. "And then Deng comes in and says, 'Thank you. Thank you very much for all your help, but you are going to have to find something else to do.' Imagine how disorienting that is." Today, getting rich is honorable again and Chu himself is based in Shanghai, living the lush life of an unashamed capitalist. The melancholic irony of his family coming full circle is not lost on him. "We live in extraordinary times. We live at a time when, with the right push, a person can be somebody," he says, pointing at himself with his thumb. "But the very same person in the same position at a different time," he continues, "would have spent his life in prison, and would have been a nobody."

For Qian's father, Zhu, it's impossible to forget the suffering he witnessed and endured during the Cultural Revolution. While he was growing up, Qian recalls, his father "never wanted to talk about what happened." The acute awareness that everything can fall apart, that fate—or grand political shifts like the Cultural Revolution—can strip you of all that you own, has left Zhu with a kind of watchful pessimism that his son's generation lacks. Zhu is delighted that Qian is doing well, but he remains cautiously guarded in his opinion of what the world tells him is an economically invigorated China. Asked what he hopes for in the future for himself and his family, he smiles broadly, delighted at the question, then pulls his visitor to view a poem he composed and hung on his front door. Entitled "Smooth Sailing," it reads, "Breakfast, lunch, dinner—the same. Last year, this year, next year—like that." "See," he says, pleased to elaborate on his poem's fatalistic message, "I don't hope for much. If you can live your life peacefully and day to day and there is not too much trouble, then you are doing O.K."

Qian's and Zhu's different mind-sets should come as no surprise, says Stanley Rosen, a political science professor and China specialist at the University of Southern California who specializes on China. After all, Rosen explains, the Communist Party has turned its entire message virtually upside down over the past generation. "It used to be bad to be rich," he says. "Now it is bad to be poor. As it searches for sources of its own legitimacy, the government's strategy is to create a middle class that is grateful to the Party for allowing it to exist." Ever since Deng's first market reforms in 1978, the government has been more accommodating to the group that had always been its sworn enemy: capitalists. As the economy has taken off, Deng's successor President Jiang Zemin has become aware of the dangers of a politically empowered middle class, and has sought vigorously to neutralize that threat. First in 1988, the government recognized private property as an important part of the economy. Then in 2000, Jiang debuted the "Three Represents," a theory that states the government must now represent the interests of the "most advanced productive forces in China"—universally understood code words for the rich and middle class. And in a July 1, 2001 speech, Jiang indicated that capitalists and entrepreneurs should be allowed to join the Party.

The Party's strategy of appeasing the middle class carries considerable risks, however. Many observers think that an ascendant middle class will lead, inevitably, to political liberalization. This, of course, is one of the government's worst fears, with many conservatives believing that capitalists are ultimately unappeasable and will gather power outside the system rather than work from within it.

Others are not so sure. They argue that the government and the middle class ultimately crave one thing in common above all else: stability. "These people have vivid memories of the uprising in Tiananmen Square, and have come to see it as a dead end, a revolution that went nowhere," says Cheng Li, a fellow at the Woodrow Wilson Center in Washington, D.C. and a professor of government at Hamilton College in New York. "The middle class has sided with the government." It is the unemployed factory workers and abandoned peasants who are striking and rioting in ever greater numbers while most of the middle class in Beijing and Shanghai revel in their newfound comfort. Notes the CASS sociologist about the incipient middle class: "They're content and thus tend to profess a total disinterest in politics. They won't be the ones issuing calls for democracy or human rights. Their politics range from moderate to just plain apathetic."

That's not the case with Zhu Ansheng's less affluent generation. Visit Zhu's house and it's clear he has spent much time pondering the theory of the Three Represents; he quotes liberally from various strains of Deng's political and economic thinking, and is keenly interested in what will happen during the coming Party Congress. His son Qian, on the other hand, claims to be disinterested in such issues. "I read the paper, I watch television, I try to know what is going on," says Qian, "but I don't really follow politics." Middle-class Chinese like Qian seem, for now, to have come to an understanding with their Party leaders. Since communism nearly bankrupted the country, the government is attempting to retain its Mandate of Heaven the only way it now knows how—by improving the nation's standard of living, even if it means throwing out its founding belief system. And the middle class, seduced by the pleasures of comfortable living and 20 years of growing fortune, is willing to condone and endorse the Party's legitimacy, even if that means suppressing any desire for political participation or reform.

There are considerable challenges, however, to the successful establishment of a sizable middle class. Some claim that it is an eastern, urban phenomenon that will not transfer to the slower-growing, neglected center and west of the country. And there is evidence that this class is part of society's increasing polarization of wealth rather than a true middle bracket. The CASS study notes that market reforms are widening the disparity, not closing it. In 1978, according to the report, the richest 20% of Chinese households were four times better off than the poorest. Today the richest have incomes 13 times greater than the poorest.

But start probing middle-class Chinese and you discover that they, too, harbor resentments and skepticism behind their professed political indifference. Corruption and its euphemistic handmaiden guanxi (connections) have convinced many in the middle class that the playing field is not level, and that merit will only get them so far. Over coffee at the Soho bar in Xintiandi, Qian frets that his dislike of guanxi has impeded his rise: "Because of my personality, I don't like to build guanxi. If I liked guanxi," he says, gesturing at his uniform, "I would not be working here. I would be higher." In darker moments, he doubts whether he will ever manage to start his own business. It is "difficult, very difficult" if you don't come from the right background, he says. Likewise, Qian's father fears that his son—though still young—has already hit the apex of his career. "To start your own business you either need money or the right connections," says Zhu. "You can use either to solve your problems. But if you don't have either, then it is impossible to succeed."

For all the hype about China's unleashing of free-market forces, the government still wields tremendous influence over which companies succeed and which fail. Private entrepreneurs profit richly from their carefully nurtured relationships with government officials, and a disproportionate number of China's newly wealthy are themselves former government or military officials, or their sons or daughters. Richard Pu is a young, middle-class resident of Shanghai who manages the real estate business Eachnet.com, an Internet auction site. He thinks that China is closer to a meritocracy than it was a generation ago, but it still has a long way to go. "City people have a better chance at success," he says. "Kids of government officials have a better chance at success."

Likewise, people frequently complain about the legal system, decrying its inequality. "In China," says another Shanghai resident, "there is a problem when the law meets authority. If a case arises between two normal people, then the law is powerful. But if one person is a company official or from the government, then forget it—there is no power in the law." Andy Xie, an economist at Morgan Stanley in Hong Kong, predicts that the middle class will gradually push for a stronger rule of law, frustrated by the way the judicial deck has been stacked against them: "To be middle-class means you own property, a house or a car. At some point, these property owners will demand that their possessions be better protected, equally protected."

These quiet middle-class grumblings about corruption, unfairness, and inequality may, in fact, be the first stirrings of a political consciousness—one that might yet take root to bring about lasting political change. Still, anyone looking for political parties or democratic elections to erupt overnight is expecting too much too soon. Elizabeth Economy, director of Asian studies and senior fellow at the U.S. Council on Foreign Relations, thinks China's middle class is already redefining the political landscape. She points to the real if subtle ways in which environmental organizations, neighborhood societies and other nongovernmental groups are now agitating for change. Indeed, urban dwellers are increasingly taking to the streets to protest seemingly mundane but very personal matters such as housing quality, garbage collection, school curricula and the destruction of neighborhood parks. A sociologist who worked on the CASS study argues that many middle-class Chinese "are not afraid to publicly state their opinions on matters like transportation, urban infrastructure and legal practices relating to the industries they are involved in. Though they stay quiet about larger social issues, they become vocal about anything that directly affects their lives."

But will China's middle class ever feel sufficiently large and powerful to move from demonstrating for buses that will run on time to such issues as free speech, corruption and the right to rule? It is impossible to say with certainty, though the answer to that question will play a crucial role in determining the kind of country China becomes. For now, many people like Charley Qian are too busy earning a living and getting ahead to ponder such matters. In fact, he says after looking at his watch after dinner, he really should be going. He has to be up early for work tomorrow.

—With reporting by Susan Jakes/Beijing and Yin Zi/Shanghai

1. Randy Pausch — Life Teacher
2. Israel's Debate Over an Iran Strike
3. 10 Questions for Randy Pausch
4. Obama's Private Prayer 'Leaked'
5. Hasbro's Legal War On Scrabulous
6. LeBron's Gold Guarantee
7. McCain's Foreign Policy Frustration
8. "Last Lecture" Professor Dies at 47
9. Goodbye to France's 35-Hour Week
10. Banksy: An Artist Unmasked