'Rise of middle classes in India, China key to growth in Asia'

The rise of middle class in Asian countries, including India and China, will help restructure the region's economic growth, government and business leaders gathered at an economic forum have said.

Former Japanese Prime Minister Fukuda Yasuo said at the three-day Boao Forum for Asia ( BFA) that Asia's middle class is expected to reach two billion by 2020, more than double the figure at present.

With more disposable income to hand, middle class's spending habits have already shifted from essentials to more sophisticated products and sometimes luxury goods, indicating an improved quality of life, he told Chinese state-run Xinhua news agency.

Rick Kash, vice chair of Dutch media conglomerate Nielsen, said Asia, excluding Japan, made up only three per cent of the world's middle class in 1975 and their purchasing power accounted for a mere two per cent of the middle class worldwide, but these figures surged to 24 per cent and 16 per cent in 2010 respectively.

So the rise of middle class in Asian countries, led by China and India, will help restructure the region's economic growth, they said.

Xiang Bing, founder and dean of the Cheung Kong Graduate School of Business said China should focus more on expanding middle classes than creating billionaires, who owned over 40 per cent wealth.

The rise of middle class has become sluggish in China, which could affect the social stability of the country, he warned.

According to economists, China's Gini coefficient is estimated to be as high as 0.52 in 2011, from 0.37 in 2007.

The top one per cent of affluent Chinese families hold 41.4 per cent of the nation's wealth, he said, citing a World Bank 2010 report.

A report by Asian Development Bank (ADB) published in 2010 states that the middle class is not easily defined as it is not necessarily a distinct or unique group in a society that has very different attributes or values than other social classes.

However, it describes Asia's rapid expansion of its middle class as a "fundamentally important" driver not only of the Asian economy but also the global economy.

By 2030, middle class Asians are expected to become the next global consumers and assume the traditional role of the U S and European middle classes.

Fan Bi, an official with the policy research institute of China's State Council, said the middle class -- with their appetite for sophisticated goods and large spending power -- has become the main population group to spur consumption in China.