China's middle class emerges, to spend more

Yuval Atsmon, principal in McKinsey & Co's Shanghai office and a core member of the leadership of the Greater China Consumer Retail Practice as well as co-author of the 2012 Annual Chinese Consumer Report, said the big trend over the next decade is that there is going to be a huge increase in the number of people in China of Western-style middle class incomes.

The proportion of people in China earning between $17,000 and $35,000 a year is set to increase from just 6 percent in 2010 to 51 percent in 2020.

"When we talk about people entering the middle class, we normally define this as around $10,000 a year, when people start having the opportunity to make discretionary spending choices instead of worrying about the basics such as food, clothing and housing," he said.

"The higher income bracket more accurately reflects what we really mean about being middle class."

Helen H. Wang has made a name for herself writing about the Chinese middle class and, in particular, with her book The Chinese Dream: The Rise of the World's Largest Middle Class and What It Means to You.

Originally from Hangzhou in Zhejiang province, the California-based consultant defines the middle class in her home country as anyone who earns between $10,000 and $60,000.

"While the average income of the Chinese middle class may be lower than those in the Western countries, the cost of living in China is also lower," she said.

She said it is also misleading to regard car ownership as a badge of achieving Western-style middle class status.