The Economist Intelligence Unit (EIU) recently published an article on China's largest cities. In the article, they state that Chinese households with income over 30,000 yuan/year (less than $5,000) are 'middle class'. I beg to differ. I believe the authors greatly underestimate the cost of living in urban China. Rent in most large cities is 1,500 yuan or more for a modest 2-bedroom apartment. In Shanghai or Beijing, it's over 2,000 yuan. Utilities are another 400 yuan or more/month. So rent and utilities, plus food and daily expenses, will be at least 3,000 yuan/month, or 36,000 yuan/year. Yet the EIU calls Chinese earning only 2,500/month 'middle class'.
The chart below shows, in my opinion, a more realistic view of the economic classes in urban China.
A family which is 'poor' cannot afford their own apartment, and are sharing with others- relatives or co-workers, usually. In some cities, this is probably half the population.
A 'working class' family rents an apartment, and has some savings, but has no car and is unlikely to ever save enough to buy an apartment (especially in Shanghai). At least one third of the urban population is in this income group.
The 'lower middle class' or 'middle class' family will probably, eventually, buy an apartment. They may have a car, although probably not.
The 'upper middle class' family has both a car and an apartment. Actually, probably two or three apartments, as Chinese often buy them as investments. This economic class is wealthy enough to travel internationally, and even send their child to study abroad.
'Wealthy' Chinese range from those who would be considered middle class in North America to the truly rich. Chinese millionaires like to flash their money, with over-sized apartments and a Lexus or Audi in the garage (just having a garage in China is a sign of great wealth).