Why securing middle-class prosperity is vital for leaders in China, and the US
- For the Communist Party, achieving ‘common prosperity’ means repairing the fallout from its economic success: endemic corruption and extreme inequality
- For Biden’s Democrats, ensuring prosperity for all could secure election success in 2022
In most countries, the principle of “common prosperity for all” would be as close to a political cliché as you could get. What more could a modern democratic leader possibly promise?
It harks back to the party’s egalitarian origins and the vision championed by Mao Zedong after the party captured power in 1949. It alludes to the social and political contract engineered by Deng Xiaoping’s leadership as it encouraged people to get rich.
It reflects the party’s abiding anxiety to bolster its legitimacy – and legacy – in the absence of a fully-fledged democratic mandate.
At the end of last year, Xinhua said the Central Commission for Discipline Inspection had “solved” 375,000 cases of “hedonism and extravagance” and punished over 320,000 people.
The richest top 10 per cent in China account for 41.7 per cent of national income, according to the World Inequality Database. The top 1 per cent accounts for 14 per cent – almost the same as the bottom 50 per cent at 14.4 per cent.
This wealth explosion is largely due to private enterprises, which by 2000, accounted for an estimated 66 per cent of China’s economy and 80 per cent of its growth, said Dr Lee Jones at the Queen Mary University of London in a January 2020 Transnational Institute report.
Why a prosperous society, or xiaokang, is worth celebrating in China
China has 135 companies in the latest Global Fortune 500 list – more than America’s 122 – and its corporate elite has significant clout outside China as well as inside it.
But Dr Jones raises an important concern: “It is also unlikely that any private enterprise could have become a giant like Huawei, Alibaba or Xiaomi without party-state patronage.”
These tough-to-trace links between the astonishing private-sector growth and the Communist Party are a rising concern for the party, both as a source of potentially corrupt power in the party, and a potential threat to public support.
The government’s objectives became even clearer with the crackdown on China’s US$100 billion private education sector, which has ruthlessly exploited parental anxieties about the ferociously competitive annual gaokao, the university entrance exams.
China’s crackdown on tech and tutoring is really directed at inequality
“The top leaders do not believe private schools serve the greater good, said a Beijing-based education adviser. “Public education does.”
So they have to be cut down to size. In Xi’s words, the government will “regulate excessively high incomes and encourage high-income groups and enterprises to return more to society”.
There seems to be a striking similarity with the Biden administration’s plans. What are the American Families, American Jobs, and American Rescue Plans – costing about US$6 trillion – if not a bid to provide “common prosperity” to secure Democratic election success in 2022?
Perhaps Xi’s Communist Party and Biden’s Democrats have more in common than we think – or perhaps “common prosperity” is a “pumpkin pie” mantra to politics wherever you are in the world.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view