President Xi Jinping offered an outline for “common prosperity” in China. (File)
President Xi Jinping briefed China’s wealthiest citizens on Tuesday, offering an outline for “common prosperity” that includes income regulation and redistribution, according to state media reports.
Since Xi took office in 2012, the ruling party has made it a priority to end poverty and build a moderately prosperous society, goals the party sees as central to promoting well-being and strengthening its management. Income inequality in the country is high — the richest 20% earn more than 10 times the poorest 20% — and has not declined since 2015.
Beijing has made huge efforts to reduce poverty, especially in rural areas. More recently, it has focused on the higher end of the spectrum, cracking down on the tech industry that has beaten several billionaires, and criticizing the excesses of celebrity culture.
At Tuesday’s meeting of the Communist Party’s Central Committee for Financial and Economic Affairs, the government devised new strategies to attack the upper echelons. Officials pledged to “strengthen the regulation and adjustment of high-income earners, protect legal income, reasonably adjust excessive earnings and encourage high-income groups and businesses to give more back to society,” according to a summary of the meeting published by state media Xinhua.
At the same time, officials also pledged to expand the size of the middle-income group, grow income for the low-income groups and ban illegal income to promote social justice and equity. It also confirmed Deng Xiaoping’s famous words, “let some people get rich first”, adding that it will create an environment where more people have the opportunity to get rich.
Officials promised to create conditions for people to improve their education and move up the income ladder. They also called for promoting equal access to public services by improving the housing supply, elderly care and medical system.
The meeting also highlighted the need to curb financial risks. A balance must be struck between ensuring stable economic growth and avoiding financial risks, Xinhua said.
Zhejiang experiment
The government has given the eastern province of Zhejiang, home of Alibaba Group Holding Ltd. and known for its robust private sector, designated as a pilot area for the new initiatives.
Last month, Zhejiang announced detailed plans to increase per capita disposable income to 75,000 yuan ($11,563) by 2025, which would be a 45% increase in five years. It also wants wages to make up more than half of its gross domestic product and increase its urbanization rate to 75%.
To achieve those goals, the provincial government will encourage workers to collectively negotiate wages; publicly traded companies to increase cash dividends to shareholders; and farmers to pursue entrepreneurship strategies. It will also promote the development of financial products for the benefit of residents.
The roadmap also said the government will better protect the rights of people with new forms of employment, including delivery drivers and drivers working for taxi companies, and introduce tax breaks for philanthropic donations.
