The World in 2030

Cultural, Economics, Premium POM

China, Vietnam and India Middle Classes Explode – US Middle Class Shrinks Further?

By JC Collins

With the ongoing international monetary reforms and new governance policies which are building towards the United Nations 2030 Agenda, it is worth taking a closer look at how the world in the year 2030 may look from a socioeconomic perspective.  The rise and fall in the percentage of the middle class per total population measured against the increase and decrease in percentage of global GDP can paint an interesting picture from which some geopolitical predictions can be made.

The information which I have complied for this post comes directly from the OECD study on Shifting Wealth.  Some of the predictions for the year 2030 don’t align with the predictions made here on POM, but let’s review and make some informed clarifications.

The first batch of data considers the rise in percentage of global GDP attributed to nations.  Some of the fundamental considerations taken in this data set include the re-balancing of reserve accumulation and the opening of China’s financial market to accommodate the rise of the renminbi in the international monetary system.

With this we see that China will experience the largest increase in percentage of global GDP with India coming in second.  Most developed nations will experience a decrease.

Country 2016 2030 Change +/-
United States 18.4% 17.5% -0.9%
China 19.5% 23.6% +4.1%
India 7.8% 10.3% +2.5%
Germany 3.1% 2.7% -0.4%
United Kingdom 2.6% 2.2% -0.4%
Canada 1.6% 1.5% -0.1%
Russia 2.4% 2.1% -0.3%

The second set of data provides information on percentage of the total population which will shift into a middle class status.  India shows the largest increase in middle class with Vietnam and China coming in second and third.  The developed nations also experience a decrease here.

Country 2016 2030 Change +/-
United States 64.9% 50.9% -14.0%
China 29.10% 72.4% +43.3%
India 21.20% 92.7% +71.5%
Germany 89.6% 80.4% -9.2%
Vietnam 24.1% 86.2% +62.1%
Japan 95.2% 86.5% -8.7%
Russia 82.2% 91.3% +9.1%

The data from the OECD does not consider that the USD will experience depreciation and the associated benefits from such depreciation will provide the US with an expansion in exports and overall increase in GDP.  This expansion in exports will cause massive job creation at home as factories fire up and jobs return.  This will see a substantial increase in the American middle class numbers.

How this shift in American exports will affect the numbers of the emerging nations is hard to determine.  I would suspect that with the large amount of infrastructure development which needs to take place, along with the exploding middle class populations in the emerging markets, there will be enough to go around for all.

The one I find interesting is India.  The increase in middle class population far outweighs the increase in percentage of global GDP.  This is a massive change in middle class of 71.5% in just 14 years.  Consider that China has spent over a decade building ghost cities which will be able to accommodate the influx of middle class population.  India has not completed anywhere near the same level of infrastructure development.

Middle class populations tend to demand financial services and methods of consumption.  The two most populated nations on Earth are about to experience massive increases in middle class populations.  The opportunities for products and services in these regions, including Vietnam and other emerging markets, provide a need for new and balanced trade agreements.

Commodities will also see an upward valuation on demand.

From the geopolitical perspective we can expect that both the South China Sea and Indian Ocean will be regions of tension and potential hostility as the major player’s position for leverage and dominance.  The ability of the United States to project influence across such a large area against growing powers is problematic.

It would be my estimate and prediction that America will take on a new military doctrine of defense rather than the offensive posture which they have taken for over a century.  Trade routes will be protected and each regional power will ensure the protection of their own optimized economic zone.

The other factor which needs to be considered is the rise of AI and robotics.  This will lead to the loss of human jobs on a large scale across all regions.  The definition of middle class and the requirements to be included in such a class will change in the coming years.  This has been discussed in previous POM articles and will be discussed again in the near future.  – JC