Under the slogan “common prosperity,” the administration of Chinese President Xi Jinping has come out with a series of measures aimed at narrowing the gap between the rich and the poor. It is necessary to pay close attention to how China’s economy and society will change.
China has achieved growth through a socialist market economy in which a market economy has been introduced while maintaining a socialist political system.
Deng Xiaoping’s “reform and opening-up” policy laid the groundwork for this. It was based on a theory that allows some people and regions to become wealthy ahead of others.
On the other hand, in August, Xi announced a policy to make efforts to promote the happiness of the people with a focus on common wealth, which will enrich the people as a whole. It can be said that Xi made clear a shift from the “get rich first” theory.
Xi said that he would aim to narrow the gap by regulating high incomes, supporting low-income people, reforming the tax system and using donations.
In response, large companies and billionaires have made their intention to offer cooperation and donations as if vying with each other, with information technology giant Alibaba Group Holding Ltd. announcing it will spend a total of ¥1.7 trillion, mainly to support small and midsize companies.
At the same time, the Xi administration is tightening controls to weaken the monopolistic position of IT giants and cracking down on tax evasion by celebrities who symbolize the wealthy. Behind the massive donations may be their intentions to avoid the tightening of controls from the authorities.
Surveys show that while there are more than 100 million Chinese people among the world’s top 10% of richest people in terms of asset holdings, 600 million have an average monthly income of around ¥17,000.
Western nations also share the same problem of narrowing the gap between the rich and the poor and the equitable distribution of wealth.
It is necessary for China to make efforts to correct the situation. However, if China is trying to solve the problem through an authoritarian approach, there can be said to be many problems. There are also concerns that excessive government intervention in the economy could hamper growth.
In the first place, it is widely believed that Xi’s promotion of his common prosperity initiative is aimed at strengthening the foundations of his long-term administration by enhancing his leadership through policies that are easy for the public to like.
By rewriting Deng’s policies and promoting his own policy line, Xi apparently aims to establish himself as a historical leader comparable to Mao Zedong.
Starting this month, elementary, junior high and high schools in China have made it compulsory for students to learn about “Xi Jinping Thought,” or his political ideas. Xi’s cult of personality is expected to grow further.
The history of the Mao era must not be forgotten, with its excessive concentration of power in and deification of Mao leading to the catastrophe of the Cultural Revolution. During the Cultural Revolution, people who were considered to be out of step with Mao’s policy line were attacked at random, which brought society into chaos.
Unlike back then, China is now the world’s second largest economy. China should be aware that if it goes in the wrong direction, it would affect the whole world.
— The original Japanese article appeared in The Yomiuri Shimbun on Sept. 21, 2021.