China's top leadership has set in motion an agenda for the nation to attain common prosperity, a move analysts said could usher in broader reform in the nation's tax system, heavier fiscal spending on public well-being and further expansion of middle-income groups.
More tangible progress toward common prosperity is one of the nation's key long-term targets through 2035, when China is expected to achieve basic modernization. Ensuring common prosperity for everyone is also a crucial goal of the world's second-largest economy as it endeavors to build a modern socialist country by the middle of this century－one of China's two centenary goals.
On Aug 17, a meeting of the Central Committee for Financial and Economic Affairs, which was chaired by President Xi Jinping, outlined steps to promote common prosperity through high-quality growth, calling for a phased approach to reach the target.
Xi, who is also general secretary of the Communist Party of China Central Committee, underscored that common prosperity is an essential requirement for socialism and a key characteristic of the Chinese style of modernization.
Ma Guangyuan, an economist, said the meeting would go down in history, as it formally placed common prosperity on the agenda.
He noted that important gateways to common prosperity include the adjustment of overly high incomes through channels such as taxes, more help for low-income groups through the provision of stronger public benefits and the expansion of the middle-income group.
"Even though China is the world's second-largest economy, its per capita GDP has just reached the global average. So the task of making the pie bigger remains daunting. Only with the pie becoming bigger, and with proper distribution, can we attain true common prosperity," Ma said.
Han Wenxiu, executive vice-minister of the Office of the Central Committee for Financial and Economic Affairs, said at a news briefing in late August that China will continue to make the wealth pie bigger and ensure its proper distribution in working toward common prosperity.
He explained that common prosperity, which is not the equivalent of robbing the rich to pay the poor－allows for the existence of income gaps. The fundamental aim is to encourage wealth creation through hard work and innovation.
"We should avoid falling into the trap of welfarism, and we will not encourage those trying to get something for nothing or provide for lazybones," he said, adding that it is important to give full weight to the difficulty and complexity of work in this regard.
The Aug 17 meeting marked the first time that Xi had convened a special meeting to deliberate on common prosperity, an issue he has given strong emphasis to for a long time.
Since the Party's 18th National Congress in 2012, Xi has made strong appeals for common prosperity on numerous occasions, underlining the importance of sharing the benefits of growth with all people and pledging to lift the living standards of poor people.
The Third Plenary Session of the 18th CPC Central Committee in November 2013 pledged to "reform the income distribution system and promote common prosperity".
In a speech delivered at a study session attended by provincial and ministerial-level officials in January, Xi expounded on his vision to achieve common prosperity, saying that it is not only an economic issue but also an issue that matters to the foundation of the Party's governance.
"We can never allow a growing disparity between the rich and the poor, or the rich becoming richer and the poor becoming poorer. Nor shall we allow the existence of an impassable divide between the rich and the poor," he said.
He stressed that work on this front cannot afford to be delayed, and the nation must take the initiative to solve problems such as the income gap and disparities between regions and between urban and rural areas.
" (We need to) give the people a concrete feeling that common prosperity is more than a slogan, but a fact that they can see, feel and experience," he said.
As the nation completes its goal of building a moderately prosperous society in all respects and secures a complete victory in its fight against absolute poverty, enabling shared prosperity among all people has taken a more prominent position.
The nation is ready to adopt an action plan to promote common prosperity, according to a meeting of the Political Bureau of the CPC Central Committee in April.
Zhejiang, one of China's most affluent provinces, has been designated a demonstration zone to explore new paths for common prosperity, accumulate experiences and serve as an example of the way the nation can tackle the problem of unbalanced and inadequate development.
Policymakers at the Aug 17 meeting laid out measures such as more inclusive and fair conditions to improve education levels and providing wealth creation opportunities for more people.
They highlighted the need to come up with stronger and more targeted steps in taxation, social security and payment transfers to boost the proportion of middle-income people in the population. The meeting also called for tailored measures to enable low-income earners to become middle-income earners, stronger measures to adjust excessively high incomes, protection of legal incomes and encouraging high-income individuals and businesses to contribute more to society.
Louis Kuijs, head of Asia economics at the Oxford Economics think tank, said the policymakers' emphasis on common prosperity is likely to be pursued principally by scaling up the existing reform directions of public services, taxes, labor protection and regulation. "Common prosperity is about equality of opportunity, more and better access to basic public services, a fairer distribution of income, and encouragement of charity and donations," he said.
Long-discussed reforms and changes, such as the introduction of a property tax, will now get new impetus, he said. "That would be welcome, as it could generate a stable income source for local governments," Kuijs said.
Jia Kang, head of the China Academy of New Supply-Side Economics, said the nation should research and push forward income and property tax reforms to drive common prosperity.
Yao Yang, dean of the National School of Development at Peking University, said in an interview with the Paper that fairer income distribution is only part of the push for common prosperity.
To enable more people to become middle income-class, a key priority for the nation is to raise the level of education, he said, adding that the introduction of a property tax and capital gains tax will contribute to income adjustment.
"If we are to attain common prosperity, the top priority lies in education. To be more accurate, ensuring education equality is a key step," he said.
Published : September 06, 2021