At the 20th National Congress of the Communist Party of China, “common prosperity”, as a part of “Chinese-style modernization”, once again became the focus of attention from the outside world.
The party constitution adopted by the 20th National Congress of the Communist Party of China revised the proposition that “socialism … eventually achieves common prosperity” since the party constitution of the 14th National Congress of the Communist Party of China in 1992, and proposed that “the common prosperity of all people will be gradually realized”.
Xi Jinping, General Secretary of the Communist Party of China, said in the report of the 20th National Congress: “Chinese-style modernization is a modernization with a huge population size, a modernization in which all the people are prosperous, a modernization in which material civilization and spiritual civilization are coordinated, and a modernization in which man and nature coexist in harmony. , is a modernization that takes the path of peaceful development.”
China’s official Xinhua News Agency explained after Xi Jinping chaired a meeting of the Central Finance and Economics Committee centered on common prosperity in August 2021 that the so-called common prosperity “is not the prosperity of some people and some regions, but the prosperity of the whole people”, which is obvious. It is different from Deng Xiaoping’s proposal written into the party constitution in 1992 to “encourage some regions and some people to get rich first, gradually eliminate poverty and achieve common prosperity”.
Although it has only been 30 years since “common prosperity” was written into the CCP constitution, it was a political goal that first began in the 1950s when the CCP first took power.
Mao Zedong enriched the rural people
According to research by researchers in the history of the CCP, the leader of the CCP who first proposed the concept of “common prosperity” was Mao Zedong. In 1953, Mao proposed the concept of “common prosperity” in the “Resolution of the Central Committee of the Communist Party of China on the Development of Agricultural Production Cooperatives” drafted under the auspices of Mao; At the same time as socialist industrialization and the gradual realization of the socialist transformation of handicrafts and capitalist industry and commerce, the socialist transformation of agriculture as a whole will be gradually realized, that is, the implementation of cooperatives, the elimination of the rich peasant economic system and the individual economic system in the countryside, and the All rural people will become prosperous together.
From the historical background, when Mao Zedong proposed “common prosperity” for the rural people, it was at the peak of the “socialist transformation” of agriculture, handicrafts, and capitalist industry and commerce by the CCP, which had just established its regime.
After the CCP’s three major transformations in agriculture, industry and commerce from 1951 to 1956, 96.3% of farmers in China joined cooperatives, more than 90% of handicraftsmen joined cooperatives, and capitalist industrialists and businessmen adopted the CCP’s “peaceful redemption” policy , so that “the exploiters become self-reliant laborers”.
“The Second Volume of the History of the Communist Party of China” published by the Party History Publishing House of the Central Committee of the Communist Party of China in 2011 wrote: “The choice of socialism is unavoidable and completely correct” for the transformation that has swept across China, but admits that “the latter will appear.” In order to solve the shortcomings of too urgent requirements, too rough work, too fast changes, and simple and uniform forms, some problems are left.”
These problems include: unified management in politics, disregarding the scientific nature of planting, forestry, fishery, etc. in agriculture; the control of handicraftsmen has led to the shrinking of traditional handicrafts and inconvenience to life; “Some capitalists beat gongs and drums during the day, cry at night.”
In 1958, the CCP launched more extreme economic policies such as the Great Leap Forward and the People’s Commune, resulting in a three-year famine that began in 1959, the so-called “three-year difficult period” by the CCP.
In 2008, Yang Jisheng, a former senior reporter of Xinhua News Agency, after more than ten years of investigation and research, wrote a book “Tombstone” based on various statistics and concluded that the death toll caused by the three-year famine was as high as 36 million.
Deng Xiaoping’s reform and opening up and getting rich first
In October 1985, when Deng Xiaoping met with a delegation of senior American entrepreneurs, he said: Let some people get rich first, drive most areas, and then achieve common prosperity.
At the beginning of 1992, Chinese leader Deng Xiaoping delivered a speech when he visited the south, saying that “to take the socialist road is to gradually realize common prosperity. The concept of common prosperity is put forward as follows: some areas have the conditions to develop first, and some areas develop slowly. The regions that develop first drive the regions that develop later, and finally achieve common prosperity.”
Against this background, “common prosperity” was written into the party constitution at the 14th National Congress of the Communist Party of China held in October 1992.
In the CCP’s propaganda, the pursuit of “common prosperity” has been an issue that has been highly valued by successive leaders since Deng Xiaoping, including Jiang Zemin, Hu Jintao, and the current leader Xi Jinping, but international statistics show that the gap between the rich and the poor in China is encouraging some people It has rapidly increased under the policy of getting rich first. According to the statistics of the World Bank, China’s Gini coefficient has been rising since 1990, and it has exceeded the warning line of the gap between the rich and the poor in just ten years.
The Gini coefficient, which is an important analytical indicator used internationally to comprehensively examine the differences in the income distribution among residents of a country, has remained high in China for many years.
The Gini coefficient is a value between 0 and 1, with a higher value indicating a more uneven distribution of income. Internationally, 0.4 is usually used as a warning line for the gap between the rich and the poor.
In September 2021, the director of the National Bureau of Statistics of China admitted at a press conference on the release of the white paper “China’s Comprehensive Well-off Society” that the Gini coefficient of Chinese residents’ per capita disposable income “has peaked at 0.491 in 2008, and has shown a downward trend since 2009. , down to 0.468” in 2020.
Reuters’ summary of Xi Jinping’s past ten years said: Xi Jinping regards eliminating absolute poverty as a major achievement of the CCP in the past decade, “but eliminating the gap between the rich and the poor has proved to be a more difficult problem, especially the income gap between urban and rural areas.” , “Like the United States, China remains one of the countries with the widest gap between the rich and the poor among the major economic powers.”
Influence of “Common Prosperity” Policy
In the eyes of overseas observers, the Chinese government has recently issued a number of regulatory policies to rectify and crack down on many private enterprises in the name of promoting “common prosperity”.
These include the education and training industry, video game industry, entertainment industry, technology industry, internet giants, e-commerce, and more.
On the other hand, a number of private entrepreneurs in China responded to the call of the Common Prosperity Policy and made active charitable donations. According to Chinese media reports, Alibaba and Tencent have successively announced a “common wealth” fund of 100 billion yuan, and Internet companies such as ByteDance, Pinduoduo, and JD.com have also announced corresponding goals and plans.
The Australian Financial Review reports that China’s “get rich first” era is officially over, “the day Xi Jinping remains in power for his third five-year term, confirming the unknown of China’s new economic path, which is to start from capital ism to a more ideologically driven model.”
Former Australian Prime Minister Kevin Rudd, a China expert, recently wrote in The Economist: On the economic front, Xi Jinping has upended Deng Xiaoping’s 35-year growth model on ideological grounds.
Why is “common prosperity” important to the CCP?
Since Xi Jinping came to power in 2013, he has made many speeches on the issue of “common prosperity”.
Xi Jinping once said that there must be no phenomenon in China where “the rich get tens of thousands while the poor eat the crumbs”, and he acknowledged the importance of addressing the gap between the rich and the poor to the legitimacy of the CCP’s ruling status: “Achieving common prosperity is not only an economic issue, but also a It is a major political issue related to the party’s ruling foundation.”
“Common prosperity” as a major policy has repeatedly appeared in Xi Jinping’s report to the 20th National Congress of the Communist Party of China. In the report, he stated that the basis for promoting common prosperity is the distribution system, and proposed to “build a coordinated and supporting institutional system for primary distribution, redistribution, and third distribution.”
The establishment of a distribution system for common prosperity has been called by some comments as the CCP’s path of “robbing the rich to help the poor”, for which CCP officials have publicly denied it many times.
This year, the Asia Society Policy Institute (ASPI) published an analysis report by Wu Guoguang, a senior researcher in Chinese politics, arguing that Xi Jinping’s push for the “common prosperity” policy has three purposes:
- Eliminate the gap between the rich and the poor and the gap between urban and rural areas, because these are the big problems for China to achieve the goal of becoming a middle-income country and get out of the middle-income trap;
- Common prosperity has great political significance and is actually a populist strategy to revitalize the foundations of Chinese communist ideology, strengthen the legitimacy of the Chinese Communist Party and the personal authority of Xi Jinping;
- Promote the discourse, moral, material and institutional advantages of China’s socialist autocracy over the liberal capitalist system of the West, and spread the “China Model” worldwide.
Ryan Hass, a senior researcher at the Brookings Institution in the United States, analyzed the purpose of Xi Jinping’s push for the “common prosperity” policy: As the initial shock caused by Xi Jinping’s anti-corruption work gradually faded, he advocated by imposing heavy taxes on the rich and so on. Society’s move to become more egalitarian provides itself with a new opportunity to form alliances with the people against the powerful. There is also a corollary to this effort, which is to limit China’s new oligarchs from challenging him or the Chinese Communist Party’s authority over China.
The US “New York Times” report also believes that Xi Jinping’s “common prosperity” movement has a political purpose, that is, to strengthen public support for Xi Jinping’s leadership, while advocating that China’s top-down political system is superior to the Western system.
Former Australian Prime Minister Kevin Rudd published an article in The Economist, arguing that Xi Jinping promoted a “new development concept” with the revitalization of state-owned enterprises and large-scale industrial policies as the main content; The real estate and education sectors have launched political attacks and made “common prosperity” a priority. These match China’s international economic policies in business activities. This is based on Xi Jinping’s theory of a “dual circular economy” that China needs to be self-sufficient and reassure China’s own global supply lines in response to what Xi believes is the United States‘ strategy of systematically decoupling from China.
The Feasibility of “Common Prosperity”
Michael Pettis, a senior researcher at the Carnegie Endowment for International Peace, once wrote an article on whether China’s common prosperity can stimulate a dual economic cycle, arguing that the Chinese government’s proposed common prosperity “is not by raising wages, but by raising wages. Transfer what it considers to be the excess profits of corporations and the wealthy to China’s middle-class and working families in the form of fiscal transfers and donations from corporations and the wealthy. In this way, the Chinese government can keep domestic wages competitive while effectively to provide more business profits to workers and the middle class and raise overall household income levels.”
Pettis believes that there are three points of special caution in doing so:
First of all, the amount donated by Chinese companies and wealthy people only accounts for a very small share of GDP, which was only 0.2% of GDP in 2017. Therefore, China wants to get rich together through the third distribution method, “not only needs to be A substantial increase in private donations and, more importantly, a major change in the form of donations is required.”
Second, advocating for common prosperity has the potential to undermine the dynamism of China’s economy by forcing the private sector to bear the major adjustment costs of rebalancing China’s income distribution.
The third, and most important reason Pettis believes, is that China’s economic structure is different from that of the West.
“In the West, where household income typically accounts for 70-80% of GDP, the main income distortion is reflected in the unequal distribution of growth benefits between the rich and the non-rich. In China, however, households retain a much smaller share, About 55% of GDP. While income inequality is certainly a problem in China, the low consumption rate in China is not primarily caused by the unequal distribution of income among households. It is mainly caused by the low level of household income in GDP share”.
Therefore, Pettis believes that only through direct or indirect means such as social welfare, the Chinese government transfers income from local governments to households, so that it is possible to promote Chinese households’ consumption to play a more normal role in China’s next stage of economic growth. effect.
However, before the 20th National Congress of the Communist Party of China, Xi Jinping had already stated that “to promote common prosperity, we must not engage in welfarism.” Xi Jinping also said that common prosperity is to make the cake bigger and better, and then divide the cake well through a rational distribution system.
William H Overholt, a senior fellow at the Harvard Kennedy School of Administration, published an article in the journal International Economy, arguing that in order to achieve the income equity promised by the common prosperity policy, Xi Jinping needs to Imposing substantial property taxes, highly progressive income taxes, ending controls on rural-urban migration, substantially relaxing rural land rights, and changing the balance of tax power between central and local governments.
But Xi’s measures so far, such as requiring donations from big companies and the wealthy, have been ineffective, and discussions on tax policies that really work, such as the wealth tax, have so far gone unresolved.
He believes that Xi Jinping is ultimately as incapable of changing the country’s serious wealth gap as Biden.
In his view, what Xi Jinping’s Common Prosperity depicts is “an inspiring wish list that is as inspiring as the promise of socialism a century ago. Moreover, China’s actual policies are completing many Western democracies currently. Things that seem impossible to implement, such as unusually rapid progress in green energy.”
But he added that Xi’s common prosperity “is also an impossible desire to eat and keep the cake.”
In Ouweiholt’s view, foreign companies and countries will reject such a system, China attracts foreign companies to enter because they have the technology, but in the end, China does not let them share the big pie of the domestic market, just like China I want the West to do what I want.