Which of the following would NOT be generally considered as one of the main reasons for the rapid expansion of middle class in China?

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Question restatement: Which of the following would NOT be generally considered as one of the main reasons for the rapid expansion of the middle class in China?

Option A: Broad-based economic growth due to fast development in 2nd/3rd industry. This is typically seen as a core driver of rising incomes across many sectors, as manufacturing and services expand, more workers move into higher-value jobs, and overall GDP per capita increases. The middle class often grows when growth is broad rather than concentrated in a few sectors, making this a plausible reason for expansion.

Option B: Infrastructure development caused by rapid urbanisation. Infrastructure investment (roads, housing, utilities, transit) supports productivity gains, reduces living costs, and enables urban residents to participate more effectively in the economy. As urbanisation accelerates, access to jobs and services improves, contributing to the growth of the middle class. This is commonly cited as a partial driver.

Option C: A steady increase in labour force participation and improvement in labour market conditions. Higher participation, better employment opportunities, rising wage levels, and more stable jobs all contribute to more households achieving middle-class status. This aligns with typical mechanisms behind middle-class expansion.

Option D: People’s Bank of China, as the central bank, abandoned fixed exchange rate regimes, and adopted floating or managed exchange rate regimes. While exchange rate policy can influence trade and macro stability, this shift is primarily a macroeconomic policy choice with indirect effects on the broader distribution of income and the size of the middle class. It is not commonly cited as a main driver of rapid middle-class expansion within the domestic economy, and its link to household income growth is more indirect and contingent on other structural factors. Therefore, this option is generally considered less central to explaining the rapid growth of the middle class compared to the other options.

In sum, options A, B, and C describe mechanisms that directly affect incomes, employment, and living standards in ways that typically support middle-class growth. Option D describes a monetary policy change whose primary aim is price stability and external balance, with less direct, consistent impact on the domestic expansion of the middle class, making it the least fitting explanation among the choices.

ECX2630 - ECX5630 - S2 2025 Quiz #2 - Topics 3 and 4 (Not Assessed)

Which of the following would NOT be generally considered as one of the main reasons for the rapid expansion of middle class in China?

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