Editorial | ‘Common prosperity’ push to share China wealth more fairly
- Latest call by President Xi Jinping aims to create a robust mass consumer market to drive sustainable growth, and is certainly no return to planned economy mode
In opening up, China under former leader Deng Xiaoping allowed some people to get rich first to speed economic growth. It has certainly done that.
But, proportionate to the size of the economy now, it has been more effective in creating billionaires – over 250 new ones last year alone – than in evenly distributing newly created wealth, or in creating a robust mass consumer market to drive sustainable growth.
President Xi Jinping says China must now focus more on caring for those not yet rich. The aim is to enable more people to share in the opportunity to be wealthy in the next stage of national development. It is an ambitious goal of economic management. This was the main message to come out of a high-level meeting of the country’s leaders to discuss the economy.
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Xi defined the goal of “common prosperity”, catchwords with which he will become identified, and which are bound to be a major theme for years to come. The definition is important.
The words have already been misunderstood by some abroad as a move to make China more socialist and redistribute wealth in communist fashion. The official account issued by the Communist Party’s Central Committee for Financial and Economic Affairs seeks to make it clear this is not so.
China needs to have a bigger domestic consumer market. One reason Chinese are not spending as much is a wealth gap. If wealth is spread more evenly, consumption by society as a whole will be much higher.
The idea of the call for common prosperity is that rich people and major companies need to do more to help people catch up. The government will change incentive mechanisms to encourage them to give back more to society.