How The Lack of China’s Middle Class Limits U.S. Exports

An interesting question posed by Washington D.C. translation services workers in the field of economic involves the lack of a middle class despite decades of double-digit GDP growth.  According to many experts in translation and localization firms, instead of creating a new middle class in China, outsourcing has produced a new elite class.  Yet others draw a comparison between China’s amazing growth and that currently experienced in the United States where a disproportionate amount of benefits over the the last 30 years have fallen on a a relatively small percentage of elite.  Further, while there is no doubt that economic growth has benefited all Chinese citizens, wage inequality has exploded.  In recent years, the Gini coefficient, a measure of inequity,  has surpassed 45.3, approaching levels of dangerous inequality and comparable to scores exhibited in the United States of 46.8 in 2009.  In essence, instead of following the history exhibited in the United States following 1946 which established a strong middle class,  China appears to have skipped that stage altogether.

While the United States was responding to the oil crisis of the 1970s and increasing globalization, China was responding to the devastation of the Cultural Revolution. Since the late 1970s, both the United States and China have followed market-oriented economic policies, which have led to wage inequality and the deficiency of a healthy middle class.

Although the growing middle class in China is still very small as a share of their entire population, Houston Translation Services have produced research that suggest that the growth of their middle class seems encouraging.  But in order for the Chinese economy to a real middle that can dive its domestic consumption, it must greatly increase its {Gini coefficient|middle class population} in the range of 600-700% and reduce income inequality.  If this fails to happen, the country will not be able to transition to an innovation economy from a commodity oriented, export economy.  Furthermore, the lack of an emergency of a sizable Chinese middle class will reduce the potential U.S. firms to market their own exports.

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