400 million strong and growing: China’s massive middle class is its secret weapon

YANTAI, China — They shop in malls and high-end supermarkets, buy condos by the seaside, attend wine tastings, vacation abroad and push their kids to apply to Harvard. But they aren’t American suburbanites; they are China’s huge and growing urban middle class, which Beijing hopes will eventually consume enough to lower the country’s dependence on exports.

Whatever the outcome of the U.S.-China trade war — and any tête-à-tête between Presidents Donald Trump and Xi Jinping at the upcoming G-20 meeting in Argentina — China’s urban middle class is set to become a major driver of the global economy. And a major force in the wider world.

If you trust Chinese government figures, the middle class already tops 400 million, larger than the entire U.S. population. Even if you cut that figure in half, it outstrips the U.S. middle class of roughly 120 million. Moreover, despite far lower earnings than their Western counterparts, lower costs in China give them living standards approximating southern Europe.

On a trip to Beijing, to Chengdu in western China, and to Yantai and Qingdao on the east coast, I saw a booming consumption culture that outstripped anything I’d seen in previous visits.

High-end, indoor malls everywhere sporting luxury western brands are already old news. Add to that a new chain of high-tech supermarkets called 7Fresh — the Chinese version of Whole Foods. I visited one in Beijing replete with glitzy packaging and lighting, and mobile shopping carts that follow you around. I watched sales people inform Chinese shoppers of every detail of where and how live lobsters, stone crabs, and other sea creatures were caught and delivered still breathing.

7Fresh is an offshoot of JD.com, an Amazon wannabe and part of China’s e-commerce explosion, that has a China-wide delivery network replete with drones and bikes that can reach 90 percent of the country with same- and next-day delivery.

By the way — and this made me feel really archaic — almost no one pays with cash or credit cards these days in China: I watched everyone from kids to old ladies pull out cellphones and flash their Alipay mobile app (from Alibaba, the e-commerce giant). Payments are deducted from their bank accounts.

Old ladies with phones? As of early 2017, mainland Chinese consumers accounted for an estimated 243 million iPhone users, a third of all iPhones in use globally, according to research firm Newzoo.

On the weekend, Beijing’s 798 art district, in a decommissioned military factory, is jammed with Chinese spenders browsing its galleries, cafes, and restaurants. So is the area around Beijing’s Beihai Lake, where old Chinese houses have been converted into shops.

And how does the middle class spend its vacations? In Yantai, a lovely port city 350 miles from Beijing, seaside hotels and restaurants line the oceanfront. Row after row of luxury apartment towers overlook white sandy beaches and the Yellow Sea across from South Korea; they are snapped up by well-heeled urban Chinese seeking to escape awful urban pollution — and find cheaper real estate.

None of this is meant to disguise China’s problems, including rural poverty and frayed social safety nets. Middle-class Chinese worry about an economic slowdown and about getting their kids into good schools or getting them visas to U.S. colleges (Some enroll their kids as young as 1 year old in weekday boarding schools with names such as Harvard Cradle, to expose them to intensive language and music training and boost their chances of winning admission to the best U.S. universities.)

In my conversations, worries about freedom of speech or political liberalization appear subordinated these days to economic concerns. No one can be certain what will happen in the future. But what impact this ambitious middle class will have on its own government and the world is the most fascinating question in China today.