The role of the middle class in the economic development of Chinese cities : a case study of Shanghai and Wuhan

Abstract

The Chinese middle class will be central to the continued sustainable development of China. This paper investigates the role of the middle class in the development of individual cities utilizing the Solow growth model. The paper breaks down the Solow growth model into the individual factors of production and calculates values for them over the period 2000 to 2010. Then using the data and the Cobb-Douglas production function shows that, for both Shanghai and Wuhan, total factor productivity is decreasing over the period. The size of the middle class in both cities is also calculated using a relative definition in order to compare its growth to the change in total factor productivity. The study shows that the middle class have yet to play a significant part in the economic development of Shanghai or Wuhan.