The Chinese President Xi Jinping has masterminded a major policy shift for the world’s second largest economy by underscoring the imperative of “common prosperity” (共同富裕, Gongtong fuyu). At a recent meeting of the Central Finance and Economic Affairs Commission (CFEC), which he leads, Xi said that a relatively equal income distribution across disparate sectors of the populace and geographical areas was “an essential requirement of socialism and a key feature of Chinese-style modernization” (Xinhua, August 17). Xi has apparently made seminal revisions to reform-era chief architect Deng Xiaoping’s philosophy that “to get rich is glorious.” Deng’s quasi-capitalist strategy helped to produce 1,058 billionaires in the Greater China Region last year, compared to 696 in the U.S. and 171 in India (Hurun List 2021, March 2). Common prosperity has also been cited by Xi and his fellow ideologues as the “original quintessence” (初心, chuxin) of socialism.
As the Central Party School professor Zhang Zhanbin (张占斌) recently noted, “pushing forward common prosperity for all citizens is a bright banner of Marxism.” Zhang added that, “It reflects the chuxin mission of the CCP and the fundamental demand of socialism” (People’s Daily, August 20). This is despite the fact that immediately after the Chinese Communist Party (CCP) took power in 1949, Mao Zedong pursued a kind of rough egalitarianism with Chinese characteristics that included experiments such as the liquidation of capitalists and their properties as well as the establishment of people’s communes, resulting in common poverty for all and mass starvation.
Concerns about Inequality and Stability
Xi, who is also CCP General Secretary and chairman of the Central Military Commission (CMC), has revived a quasi-Maoist road map by calling for “common prosperity.” According to a communique of the August 17 CFEC meeting, “We can allow some people to get rich first and then guide and help others to get rich together.” China’s highest decision-making body on economic issues also said that, “We can support wealthy entrepreneurs who work hard, operate legally, and have taken risks to start businesses … but we must also do our best to establish a ‘scientific’ public policy system that allows for fairer income distribution,” (Xinhua, August 18; SCMP, August 18).
Part of the rationale behind the CCP leadership’s new orientation is to further consolidate Xi’s position as the party’s “second Mao” in the run-up to the 20th Party Congress scheduled for next year. Preparations for the five-year congress will also play up Xi’s qualifications for being the “leadership core” of the CCP for life due to in part to his status as a preeminent “Marxist theoretician” (BBC Chinese, June 28; Radio Free Asia, October 16, 2020). Domestically, Xi realizes that because the Chinese economic miracle ended several years ago, more must be done to pacify the have-nots – the unemployment rate among urbanites is estimated at 15 percent – who could pose a threat to stability (RFI, December 19, 2020). Despite Beijing’s claims that it had wiped out absolute poverty by the end of 2020, Premier Li Keqianq also noted in June 2020 that 600 million Chinese subsist on a monthly income of barely 1,000 RMB (about $150) a month (Xinhua, June 22, 2020; Finance.sina.com.cn, May 29, 2020). As the conservative theorist Wang Ruolei (王若磊) pointed out, “realizing common prosperity is related to the important political issue of [bolstering] the party’s ruling basis (执政基础, zhizheng jichu)” (Cn.reuters.com, July 28; Qstheory.cn, June 21).
Top-Down Philanthropy and Pilot Programs Unlikely to Offset Systemic Inequality
Xi also seems to be using the pretext of “common prosperity” to impose tighter party-state control over the nation’s super-rich private enterprises, which range from information technology (IT) and logistics behemoths to huge firms offering education tutoring services. Details of what could be the largest redistribution of wealth since the Mao era have yet to be articulated. Chinese officials, however, have disclosed that there will be a “threefold redistribution” of national income. This involves measures such as increasing taxation for the well-off, boosting social security for the poor, and executing certain types of “transfer payments,” with the goal of firming up the middle class and increasing income for the disadvantaged. Long-delayed property taxes and even inheritance taxes could also be introduced in the foreseeable future (BBC Chinese, August 20; New.qq.com, August 18).
The heaviest burden will likely be borne by the rich, including the bosses of private conglomerates, who will have to underwrite so-called “fiscal transfers” and help to fund a comprehensive social service system. Xi has a tough message for the superrich, whose wealth will be subject to the party-state’s “regulation and adjustment (规范和调节, guifan he tiaojie).” “We must reasonably adjust excessive high-income [sectors] and encourage high-income individuals and companies to make more contributions to society,” Xi said at the CFEC meeting.
Powerful business leaders of several major companies that have recently been targeted by state regulators have signaled their willingness to serve the country. According to recent media reports, Alibaba’s Jack Ma (马云) has donated at least 3.22 billion RMB ($496.8 million) in the past year to politically expedient causes, including anti-pandemic, poverty alleviation and disaster relief efforts, followed by Evergrande Group’s Xu Jiayin (许家印) (RMB 3.04 billion or $469 million) and Tencent CEO Pony Ma (马化腾) (RMB 2.6 billion or $401.1 million) (Citizen News [Hong Kong], July 27; VOA Chinese, July 27). Pressuring the rich to increase their philanthropy may be easier than boosting the paychecks of ordinary workers and farmers; the disposable income for urban residents only grew 1 percent in 2020 (Deutsche Welle Chinese, August 18).
The Xi leadership has designated specific provinces and cities to be models of “common prosperity,” including coastal Zhejiang Province, where Xi served as party secretary from 2004 to 2007. Zhejiang is also the home base of a host of IT conglomerates including Alibaba. The central authorities in July issued a document titled “CCP and State Council Opinion on Supporting Zhejiang’s Development as a High-Quality Common Prosperity Demonstration Zone.” ( [中共中央国务院关于支持浙江高质量发展建设共同富裕示范区的意见], Zhonggong Zhongyang guowuyuan guanyu zhichi Zhejiang gao zhiliang fazhan jianshe gongtong fuyu shifan qu de yijian). The opinion indicates a goal to create an “olive-shaped society” with a fairer distribution of income that will result in greater earnings and social-welfare entitlements for the middle and underprivileged classes. For example, residents’ per capita disposable income is set to be raised to 75,000 RMB ($11,581) by 2025. Compensation for workers should account for more than 50 percent of provincial GDP by 2025, with this ration expected to continue increasing. The document also states that while IT and other successful industries in Zhejiang should continue to develop and mature, fair competition should be ensured even as their social responsibility to less well-off sectors should be enhanced (Zj.gov.cn, July 19; Global Times, July 17).
Official media have stated that Xi seeks to innovate the ruling CCP’s ideology and governance systems in the long term. But the recently elevated ideal of common prosperity may be more accurately thought of as a retrogression to the Mao era. Given the fact that “getting rich” has become a commonplace aspiration under the runaway capitalism of modern China, can the better educated and more business-savvy part of the populace be forced to sacrifice their self-interests in order to reinstate Mao-style egalitarianism? The example of the Xiong’an New District (XAND, 雄安新区, Xiongan xin qu) in Hebei Province, another common prosperity pilot zone, demonstrates the party-state’s inability to realize successful socio-economic models for common prosperity. Established in 2017, the 1,576 square mile district boasts features including standardized income and social welfare perks such as subsidized housing and generous retirement benefits. After four years, however, the XAND has attracted few domestic or foreign investors. Its population is only slightly more than 1 million and it is full of uninhabited apartment buildings where managers and workers alike enjoy subsidized rentals (Liberty Times (Taipei), August 5; Radio Free Asia, August 3).
There is also the question of supervision over the vast sums that top tycoons have donated. Absent a robust civil society, charitable contributions are often routed through government-controlled organizations, many of which have had previous issues with transparency and efficient resource allocation (China Development Brief, July 8, 2015; signal.supchina.com, August 29, 2019). While the State Council document on Zhejiang said that the central government welcomed a host of non-governmental organizations to aid poverty relief and social welfare, Beijing has simultaneously cracked down on the nation’s charity-related civil society units. This has led to concerns that contributions from the super-rich may not necessarily be translated into benefits for the poor (Xiao Ruoyuan via Youtube, August 22).
According to the historian and Tiananmen Square dissident Wang Dan (王丹), “the idea of common prosperity is purely utopian…it may lead to another Great Leap Forward,” referring to the 1958-1962 Maoist campaign that resulted in widespread economic collapse and widespread famine. In addition, Wang said that Xi might want to squeeze and humble the rich to boost his own power—as well as to punish the members of rival political factions who are silent backers of myriad private conglomerates (Radio Free Asia, August 23; China Brief, July 23). Zhou Qiming (周其明), a professor at the Zhongnan Economics and Law University, told Hong Kong reporters that “depending on the rich to donate to the poor is not sustainable” and argued that a better approach would be for Beijing “to expand the economic pie” so that workers can not only find employment but also have the ability to bargain for higher wages (Citizen News, August 18).
Xi’s resuscitation of the Maoist ideal of “common prosperity” also has foreign policy implications. If China can ameliorate its inequality issues, more credibility will be accorded to the “China model” or “socialism with Chinese characteristics in the new era.” This is closely tied with Xi’s global projection of soft power in the face of the apparent weakening of the Western-led alliance system following the recent crisis in Afghanistan. Following the fall of Kabul on August 15, Chinese Foreign Minister Wang Yi remarked that Afghanistan and other instances of “neo-imperialism” represented the Western tactic of imposing “alien models on countries which have distinctively different history, culture and national conditions will inevitably lead to failure of acclimatization (水土不服, shuitubufu)” (People’s Daily, August 17). According to the popular Chinese Internet commentator Bu Yidao (补壹刀), the combination of China’s economic power and its long-standing official state policy of non-interference would make it a strong partner for “constructive intervention” to help with the future rebuilding of the Afghan state (3g.China.com, August 19). The retired People’s Liberation Army (PLA) colonel and international security expert Zhou Bo (周波) made a similar argument in a recent opinion piece for the New York Times (New York Times, August 23), indicating popular optimism in the China state’s ambitions to develop Afghanistan. China’s success in addressing domestic stability concerns including high wealth inequality and diminishing economic growth will go a long way to bolstering its foreign policy.
In the short run, China’s image as an egalitarian society could also help to burnish the country’s human rights record. In response to foreign criticisms of state policies in Xinjiang and Tibet, CCP propagandists have always emphasized the dramatic increase in living standards in the two autonomous regions (Gov.cn, May 21; Xinhua, July 14). However, given that Xi seems bent on returning to a party-run economy where the authorities are given Maoist powers to regulate the distribution of wealth, frictions will inevitably grow with foreign investors and trading partners as the costs associated with doing business in China increase. Part of the reason why trade talks between China and the United States have stalled is that U.S. presidents Donald Trump and Joe Biden have both insisted that the Chinese party-state beat a retreat from the economy so as to allow market forces to flourish (RFI, August 7; VOA Chinese, July 26) While the elevation of the rhetoric on “common prosperity” seems aimed at substantiating Mao’s dictum “serve the people,” it has also buttressed the party-state’s increasing control over all walks of life in the Chinese polity.
Dr. Willy Wo-Lap Lam is a Senior Fellow at The Jamestown Foundation and a regular contributor to China Brief. He is an Adjunct Professor at the Center for China Studies, the History Department, and the Master’s Program in Global Political Economy at the Chinese University of Hong Kong. He is the author of five books on China, including Chinese Politics in the Era of Xi Jinping (2015). His latest book, The Fight for China’s Future, was released by Routledge Publishing in July 2019.