[Epoch Times, August 22, 2021]Three days ago, the Chinese Communist Party 2.0 version of the policy of “distributing local tyrants and dividing fields” was introduced. Xi Jinping proposed “common prosperity” and “reasonably regulate excessive income”. However, This has been interpreted by some analysis as the CCP is trying to solve the problem of inequality between the rich and the poor through “kidnapping” charity. We have seen that the CCP’s series of major actions in various industries this year have already made the wealthy private enterprises the targets of purge, while teachers and civil servants have not been spared. Then, which industry and who will it affect next? How will this so-called “common prosperity” policy be implemented? What impact will it have on the Chinese people? Let’s talk about these topics today.
Policy analysis
On August 17, Xi Jinping presided over the tenth meeting of the Central Finance and Economics Committee. The theme was “Promoting Common Prosperity.” The meeting emphasized the need to expand the proportion of middle-income groups, increase the incomes of low-income groups, reasonably adjust high-income groups, and encourage high-income groups and Enterprises give back to society more. It was also mentioned that illegal income should be banned and the order of income distribution should be rectified.
So, what counts as high income in China? What is illegal income? We know that the off-campus education and training that had been raging before is now illegal. Therefore, the specific standards depend on the definition given by the Chinese Communist government, and this definition is subject to frequent changes.
Last year, a survey conducted by Jinan University in China mentioned that if China’s high-income group is set at a disposable monthly income of more than 10,000 yuan, then there will be about 8 million high-income groups in China, accounting for about the total. 0.61% of the population. Perhaps these more than 8 million people are about to beat their hearts now, because it is very likely that under the slogan of “common prosperity”, some of their income does not know where they will be adjusted.
So, how does the CCP explain “common prosperity”? According to official media reports, it is necessary to “construct basic institutional arrangements for the coordination of primary distribution, redistribution, and tertiary distribution,” and “increase the adjustment of taxation, social security, and transfer payments.”
What are the first, second and third distributions of wealth?
The primary distribution refers to the wealth obtained through labor; the redistribution refers to the adjustment of income through taxation, that is, the overpayment of taxes on high incomes, then a series of taxes may be introduced for the wealthy, such as consumption tax, real estate tax, inheritance tax Etc.
The third distribution is for the rich to give back to the society through donations and charity. From the “14th Five-Year Plan” to this meeting, the CCP has repeatedly mentioned the role of charity in the third distribution. Therefore, a major trend in the future is to ask the rich to donate more.
However, this also makes the original voluntary charity may become a forced fundraising. In fact, the CCP has not done so much for this kind of forced fundraising. There have been some government agencies directly deducting part of their wages before forcibly collecting donations. If giving back to society by the rich becomes a guiding policy, I don’t know what kind of chaos will happen, and will it allow institutions or individuals with greater power to breed corruption?
We can see that under the suppression of the CCP, some wealthy people have been forced to use donations to save their lives. For example, Tencent announced in April this year that it would invest 50 billion yuan to solve social problems and help Chinese villages get rid of poverty. Xi Jinping is shouting that all people will be lifted out of poverty this year.
After Xi Jinping just finished talking about “common prosperity”, on August 18, Tencent announced that it would invest an additional 50 billion yuan to launch the “special plan for common prosperity.” Tencent said in its statement that this is a positive response to the national strategy, and mentioned that Tencent has planned to continuously invest RMB 100 billion to give full play to the company’s subjective initiative in the “three distributions” and continue to explore ways to help “common prosperity”. I have to say that Ma Huateng tried his best to show his loyalty.
In addition to Tencent, this year, Chinese tech giants such as Xiaomi, Meituan, and Bytedance have also launched philanthropy. In July this year, Xiaomi founder Lei Jun donated US$2.2 billion worth of stocks for public welfare purposes. ; Wang Xing, the founder of Meituan, also donated US$2.3 billion of company shares for charity to the charity foundation he founded.
On one side is the strict review of Internet companies, on the other side is the government’s “common prosperity” policy. It is estimated that in the future, there will be more and more corporate leaders who love public welfare.
In some Western countries, such as the United States, the government encourages the rich to donate through tax exemptions. For example, if you make 500,000 a year and you like traditional art, you donate 200,000 to the art troupe. Then the 200,000 is Tax exemption is possible, and donations are usually completed through non-profit organizations, and the government has very strict supervision over non-profit organizations, and the finances need to be open and transparent.
But in China, donations are opaque, such as the Red Cross. If it weren’t for Guo Meimei, we probably don’t know how much trickery is hidden in it.
In addition, some foundations in China collect money in the name of charity. For example, the Shanghai Charity Foundation is known as the “Guantai Club.” Yu Huiwen, the wife of the former Shanghai Mayor Huang Ju, used to serve as the vice president. At that time, many giants who were active in the Shanghai business community tried their best to get close to her. It is said that the richest man in Shanghai Zhou Zhengyi once donated 20 million RMB to this foundation.
Who is the “high-income group”?
Speaking of this “common prosperity”, we have to talk about the current divide between the rich and the poor in China. In the past 40 years, despite the rapid economic development in China, the gap between the rich and the poor is still serious. The epidemic that began last year has widened the gap. Data shows that the epidemic has hardly affected the incomes of China’s upper-class elites, but ordinary people However, wages have stagnated or even declined.
According to data from Credit Suisse, China’s Gini coefficient was 0.599 in 2000 and expanded to 0.704 in 2020, making it one of the world‘s most unequal major economies.
The Gini coefficient is an indicator for judging the fairness of income distribution. According to the United Nations regulations on the Gini coefficient: 0.6 or more indicates a wide disparity in income. According to OECD data, the Gini coefficient of the United States in 2017 was 0.39.
In Japan, Australia and other countries, generally 5% of households control 50-60% of the country’s wealth, while the concentration of wealth in China to the rich is increasing at an average annual rate of 12.3%, which is twice the global average growth rate.
In 2006, a report released by the Chinese Academy of Social Sciences and other departments (for editing reference “National Local Party and Government Departments, Public Officials’ Salaries and Family Property Survey Reports”), among the richest Chinese with assets of more than US$100 million There are more than 9,700 family members of CCP officials, accounting for 86% of the total number of rich people. The annual income of CCP officials at all levels is 8 to 25 times the average income of local cities and 25 to 85 times the average annual income of local farmers!
In addition, neither the World Bank nor China’s universities or private institutions can count Chinese people’s “black income”, “gray income”, and “dark income” data. Then, if you consider the “invisible income” that the Chinese Communist Party’s huge power group obtains through corruption, bribery, money laundering, etc., China’s true Gini coefficient will be even more astonishing.
In 2013, the information disclosed in WikiLeaks’ “China Secrets” showed that senior CCP officials had approximately 5,000 accounts with Swiss Bank, and two-thirds of them were officials of the CCP Central Committee. There are still 150 names yet to be confirmed, estimated to be family members. Almost everyone at the ministerial level and above and most of the Central Committee members have a share.
In 1985, Deng Xiaoping said that some people and some regions should get rich first, and then they should lead and help other regions and other people to gradually achieve “common prosperity.” As a result, CCP officials have become part of the people who got rich first. However, “common prosperity” has not been realized. Instead, the gap between the rich and the poor is getting wider and wider.
China’s wealth has been controlled by 500 powerful families. Today, the top CCP and princeling families continue to collect money, enclose land, and launder money. The assets of each family are in the hundreds of billions, even trillions of dollars. For example, according to the news last year by Guo Wengui, a wealthy mainlander in the United States, Jiang Zemin’s grandson, Jiang Zhicheng, holds at least US$500 billion in assets, and the wealth controlled by the Jiang Zemin family abroad is at least US$1 trillion.
In May last year, Chinese Premier Li Keqiang mentioned that there are 600 million people in China with a monthly income of less than 1,000 yuan. According to a survey report released by Beijing Normal University in June last year, among these 600 million people, 220 million people have monthly income. With an income of less than 500 yuan, 5.46 million people have no income.
After the ordinary people have experienced the severe damage from the Sino-US trade war and the epidemic, the unemployment rate has skyrocketed, their lives are difficult, and the people have no livelihood.
Is “common prosperity” feasible?
The “common prosperity” that Deng Xiaoping did not have time to do is now Xi Jinping has come to complete. Regarding the “common prosperity” declared by Xi Jinping, Beijing economist Peng Dingding said in an interview with foreign media, “As long as you use legally and legitimately acquired wealth, no matter how huge it is, it should be protected. It cannot be changed for policy purposes. I’ll hit you with the money.”
Everyone knows that Sun Dawu, who was sentenced to 18 years ago, has a good reputation among the people and he is called an entrepreneur of conscience, but now he has ended up like this. Some people analyzed that this was because Sun Dawu did not donate the money to the government. People were grateful to Sun Dawu, not the CCP.
So how is the gap between the rich and the poor in Chinese society caused? We have seen inequality caused by the privileges of the powerful and powerful in terms of resources, opportunities, competition, etc. everywhere.
Such as the inequality of educational resources. Compared with rural areas, cities have more educational resources. Compared with second- and third-tier cities, first-tier cities have more educational resources. For Beijing, Xicheng District and Haidian District have more educational resources.
For example, in 2020, the number of students admitted to Peking University and Tsinghua University in various districts of Beijing is 862, Haidian District accounts for 479 students, and Xicheng District has 213 students. Students from the two districts account for 80% of the total number. No wonder the parents desperately wanted to buy houses in these two districts.
Let’s take a look at medical care. Quan Hongchan, the Chinese diving champion in the Tokyo Olympics recently, mentioned in an interview that her purpose in winning the championship is to make money for her mother to see a doctor. But what is the medical situation of CCP officials? The Chinese Communist Party’s official media has disclosed that a retired provincial cadre spends as much as 3 million yuan in a hospital, while a city bureau-level senior ward costs more than 200,000 yuan a day, and more than 70 million yuan a year.
There is also the inequality of competition. For example, some businessmen acquire the right to operate state-owned assets or the right to exploit natural resources at a low price by bribing local officials, which brings high profits, but this wealth is not obtained through fair competition.
The CCP has been engaged in reform and opening up for 40 years, making China the second largest economy in the world, but where did these dividends go? A considerable part of them are in the pockets of CCP officials.
The current situation is that with the international community’s encirclement and suppression, the CCP’s fiscal revenue is getting less and less. Then, how can the huge gaps such as medical care and pensions be filled? At this time, the CCP once again started the idea of high-income groups, using some people’s hatred of the rich to “rob the rich and help the poor.” This is actually the CCP’s usual routine, which can not only buy people’s hearts, but also divert attention and let the CCP spend it again. Catastrophe.
Some people may think that the CCP’s equalization of the rich and the poor is a good thing. We have seen that the CCP has cut a circle of leeks in the entertainment and technology circles, including teachers, civil servants and other fields. If the gap in medical care and elderly care cannot be closed, The CCP may also come up with more ways to cut leeks for the whole people.
Back then, the CCP used to defraud farmers to participate in the civil war in order to defend their land when the CCP seized the local tyrants to divide the land. However, their land only harvested a few crops of wheat. In 1953, the CCP’s co-operative movement of land disappeared. Someone once summarized the party history of the CCP: killing people in the name of revolution, robbing in the name of the people, and dividing the spoils in the name of reform… The next “common prosperity” may again write a history of “legal” robbery by the CCP.
Planning: Institute of Finance, Business and Economics
Written by: Institute of Finance, Business and Economics
Editing: Songs
Producer: Wen Jing
Financial and Business World: http://bit.ly/3hvUfr7
Editor in charge: Lian Shuhua
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