The rising middle class in China has been a source of both hope and fear. The hope has been that a capitalist middle class would demand middle class rights and pull the regime towards liberalisation. The fear has been that it would make itself a competing site of power and challenge the dominance of the Party. But none of this has happened.
First, there is not much of a middle class in the socialist market economy. The working population is made up of three roughly equal size groups; the peasantry, migrant and irregular workers, and ‘modern’ sector workers. The middle class is no more than a small minority in the third group. The large sub-groups here are working class people and state and Party workers.
Second, this little middle class has edged up to and been co-opted into the Party’s system of control. There are now Party committees and branches of the official trade unions in most private enterprises, and these enterprises are themselves organised in the All-China Federation of Industry and Commerce.
Third, what has emerged as a competing site of power is a network of oligarchic fiefdoms engaged in organised crime against the state from within the state, hardly middle class behaviour. The threat to the Party does not come from the ‘ordinary’ capitalists it has created, but from a small élite of super-rich carpetbaggers who have thrived on entrenched corruption in the state dominated economy. These are not contributors to the economy but parasites on it, and now increasingly busy moving themselves out of China and taking their money with them.