Where Is China's Middle Class?

The paper, authored by geographer and University of Washington professor Kam Wing Chan, and published in the journal Eurasian Geography and Economics, points to a Mao-era rule, "that draws a harsh line between those from urban areas and those from rural ones," as the culprit.

Berg describes the conundrum created by the rule, called hukou, this way: "Urban citizens are given access to social services and welfare programs, including public education and affordable housing. Rural residents are not. Status is hereditary, meaning that once a family is in one tier it will always remain in that tier. This has been a problem for many rural residents who want to leave their agricultural lifestyles to earn the higher wages in cities working in factories or construction, but who are faced with slum-like living conditions and an effective low ceiling over their social and economic mobility.

The larger global effect is that the rising Chinese middle class that was supposed to purchase the goods manufactured in the developed and developing world with their new-found disposable income may never appear.