Explainer: What is China's "common prosperity"?

Whether it’s reporting on video games in China, the online tutoring industry, or luxury consumer trends, one phrase keeps coming up. “Common prosperity”. The term isn’t widely understood, so AMC has put together a round-up of views from English-language media who are trying to decipher it.

Common prosperity, as a concept, is nothing new in China. It’s a fundamental communist ethos – spreading wealth to the many, not the few. It re-entered the lexicon in October after an expanded transcript of an earlier President Xi Jinping speech was released.

Reuters notes, “’Common prosperity’ was first mentioned in the 1950s by Mao Zedong, founding leader of what was then an impoverished country, and repeated in the 1980s by Deng Xiaoping, who modernised an economy devastated by the Cultural Revolution. Deng said that allowing some people and regions to get rich first would speed up economic growth and help achieve the ultimate goal of common prosperity.”

Under Deng, the plan was to build up the economy and eliminate absolute poverty a “moderately prosperous society”, which had an achievement goal of the year 2020. The Chinese Communist Party claims this was successful.

This strategy is what allowed China to become an economic powerhouse under a hybrid market policy of "socialism with Chinese characteristics". But it also deepened inequality, Reuters explains, especially between urban and rural areas, a divide that threatens social stability. Hence the shift towards common prosperity, which could be seen as a continuation of Deng’s legacy.

However, policies are being rapidly implemented to curb what President Xi and the CCP feel has gotten out of hand. “Moderately prosperous” has led to extreme wealth for some Chinese – the CCP is certainly no fan of Alibaba co-founder Jack Ma, for example, who had his “wings clipped” according to The Spectator.

Following the “billionaire crackdown”, Reuters points out, is “the push for common prosperity, encompassing policies ranging from curbing tax evasion and limits on the hours that tech sector employees can work to bans on for-profit tutoring in core school subjects and strict limits on the time minors can spend playing video games.”

South China Morning Post (SCMP) explains common prosperity, from Xi’s point of view, is an integral part of his long-term vision. He has set two “reasonable and achievable goals”. The first, by 2035, is for all essential public services to be made equal for everyone. By 2050 income gaps will be narrowed to a “reasonable range”.

Xi’s vision is touted as an antidote to the West’s (i.e. 20th Century capitalist) mode of prosperity, which has focussed on the individual rather than the collective. Common prosperity is “pitched as a lesson learned from the West’s failures in order to prove the value and even superiority of China’s political economy system. Without naming the United States, Xi said inequality has led to the ‘collapse of the middle class, social divisions, political polarisation and widespread populism’. As such, China’s modernisation must be different.”

What this looks like confuses journalists at SCMP. “For China, one big obstacle in creating an equal society is that a centralised bureaucratic system has grabbed and consumed too many resources. Many small businesses are, for example, struggling to deal with power rationing while local governments waste electricity on decorations so that their cities can look nice.”

Wall Street Journal believes the overall message appears that the policy pendulum “will move more toward equality: higher taxes and more pressure to donate for high-income individuals, moderately higher spending on social programs and education and tougher antimonopoly enforcement in some areas.”

Bloomberg believes there are several interpretations of Xi’s goal, and what has been said (and done) so far. It could mean, “China is moving pragmatically to address the deficiencies of an economic model that has run its course, undertaking necessary reforms that will lay the foundation for its next phase of growth and development.

“Or: China is turning away from the formula that underpinned its spectacular economic ascent and condemning itself to a future of subpar growth. Or: The common prosperity campaign is mostly populist grandstanding and will fail to attack the vested interests that are the biggest obstacle to reducing inequality. Or: more.”  

Both WSJ and Bloomberg’s resulting theory is that Xi’s vision of “common prosperity” is full of contradictions.

As Newsroom agrees, the goal is either very simple or very complicated. “This transformation could simply be an adjustment to rein in dangerous inequality by strengthening the underfunded social welfare system and cracking down on illicit income and tax evasion… or it could be a sign of an even bigger shakeup of the economic model.”

Writing for People’s Daily, columnist Li Guangman argues a “profound transformation” was underway, with a “return to the original intentions of the Communist party” and “a return to the essence of socialism”.

As such, many journalists are convinced industries such as technology and online tutoring are just the beginning, and more industries will be identified for “reclassification” as time progresses.

 - Asia Media Centre