China’s middle class: more than 400 million people who still spend, but more carefully

Updated on 2 July 2026

China’s middle-income group keeps growing, but after the property slowdown and slower income growth it looks for value, trusts Chinese brands and spends more on experiences than on status.

By Daxue Consulting

China’s middle-income group (中等收入群体) has passed 400 million people, according to Nankai University economist Chen Zongsheng, and the long-term government goal is to grow it to more than 800 million (People’s Daily (人民日报), November 2025). Expanding it is one of the aims of the 15th Five-Year Plan (2026-2030), which describes an “olive-shaped” society with a large middle.

Income growth continues at a slower pace. In 2025, average disposable income per person reached RMB 43,377, up 5.0% in real terms, and RMB 56,502 for urban residents; spending per person grew 4.4% to RMB 29,476, of which services made up 46.1% (National Bureau of Statistics (国家统计局), January 2026). In the early 2010s, forecasts expected some 700 million middle-class Chinese within a decade; growth has been slower, and the group’s mood has changed. This analysis of the Chinese middle class examines who the middle class is today and what this implies for international brands.

Chinese middle class: key figures

Exhibit 1: Income and spending grow, with services taking a larger share

Source: compiled by Daxue Consulting.

There is no single definition of China’s middle class

The government uses the term “middle-income group”, which economists define around the middle of the income distribution rather than by a fixed threshold. By this measure, the group has passed 400 million people. Average figures give a reference: an urban resident had RMB 56,502 of disposable income in 2025, a rural resident RMB 24,456 (NBS).

Five shifts in middle-class consumption

From confidence to caution. For many families, the apartment is the main source of wealth. Since the property market turned down after 2021, many feel less wealthy even when incomes rise. They save more and buy more carefully.

From logos to value. “Value for money” (性价比) and “quality for price” (质价比) have become key words. Membership stores such as Sam’s Club and Costco, discount platforms and private labels have gained middle-class shoppers.

From foreign to Chinese brands. Chinese brands in beauty, sportswear, cars, electronics and tea drinks are now seen as modern and of good quality. Chinese brands held 57.37% of the cosmetics market in 2025 (Yicai (第一财经), May 2026). Guochao, the “national trend”, has become a normal choice rather than a fashion.

From things to experiences. Families spend on travel, sport, concerts, children’s education and health, which explains the 46.1% share of services. New sports such as Hyrox in China illustrate the shift.

From status to self. Younger middle-class consumers spend on “emotional consumption” (情绪消费): small treats, collectibles, pets and wellness. In luxury, the same logic favours discreet products over visible logos, as analysed in China’s ultra-luxury market.

The middle class has spread beyond tier-1 cities

Tier-2 cities such as Chengdu, Hangzhou, Wuhan and Xi’an have large, young middle classes with lower housing costs and more spending power after rent or mortgage. Urban residents made up 67.89% of the population at the end of 2025 (NBS). Middle-class shoppers use Douyin to discover, Xiaohongshu to check reviews, Tmall and JD for official stores, membership stores for weekly shopping and second-hand platforms for luxury and electronics.

Online, “middle-class anxiety” (中产焦虑) about housing, children’s education and keeping one’s status is a frequent theme. Products that save time, protect health or support children’s development are perceived as good investments.

Exhibit 2: What the middle class buys now

Source: Daxue Consulting.

How China’s middle class has changed over the past decade

Exhibit 3: From optimism and trading up to caution and value

Daxue Take: implications for international brands

China’s middle class is no longer a promise of new buyers for Western products; it is a large, demanding market with its own brands, platforms and idea of a good life. A group of more than 400 million people with rising incomes and an appetite for services remains one of the largest consumer markets in the world, but it rewards listening, local product development and honest pricing.

1. For premium brands built on status, middle-class consumers pay for quality they understand and products that match their values. A clear explanation of value is likely to matter more than a logo.
2. For international brands in categories where Chinese brands lead, Chinese competitors are the benchmark for quality and price. Positioning against “local copies” no longer reflects consumer perception.
3. For brands concentrated in tier-1 cities, the fastest-growing middle class is in tier-2 and tier-3 cities, where costs of entry are often lower.
4. For product brands, nearly half of spending goes to services. Adding a service, a community or an experience tends to build loyalty.
5. For brands in health, education and family categories, middle-class worries about health, children and time are strong motivators. Messages that help without amplifying fear are more likely to build trust.

Questions for leadership teams: How does the brand justify its price to a value-seeking consumer? Which Chinese brand is the real benchmark? Which tier-2 cities have the right middle-class profile?

What to watch next

• Household income and consumption data for the first three quarters of 2026.
• Measures in the 15th Five-Year Plan to expand the middle-income group.
• The property market and its effect on household confidence.
• Spending on services during the National Day Golden Week.

FAQ about the Chinese middle class

How big is the Chinese middle class? China’s middle-income group has passed 400 million people, and the government aims to grow it to more than 800 million in the long term.

What income makes someone middle class in China? There is no single official definition. As a reference, average disposable income per person was RMB 43,377 in 2025, and RMB 56,502 for urban residents.

What does the Chinese middle class spend on? Housing, children’s education, health, travel, dining and entertainment. Services made up 46.1% of household spending in 2025.

Is the Chinese middle class still growing? Yes, but more slowly than forecast in the 2010s. Expanding it is a goal of the 15th Five-Year Plan (2026-2030).

Do middle-class Chinese consumers prefer foreign brands? Less than before. Chinese brands now lead several categories, such as cosmetics. Foreign brands still win when they offer clear quality, innovation or a distinctive story.

About Daxue Consulting

Daxue Consulting is a market research and strategy consulting firm focused on China. For international brands, Daxue Consulting segments middle-class consumers by income, life stage and values, runs surveys and in-home interviews, follows conversations on Xiaohongshu and Douyin, and tests prices and positioning against Chinese competitors. Related analysis: retirement in China. Learn more about our consumer research and China market research services, or contact our team.

Author: Daxue Consulting