‘Common prosperity’ push is not a war on wealth, Chinese economists and officials say

Business & Technology

Did Xi Jinping launch a war on wealth earlier this month when he complained of some people’s “excessively high incomes” and demanded measures to reduce inequality? “No,” say various experts with official ties, who say the government is not planning to rob the rich.

Statues of Karl Marx and Friedrich Engels in the Museum of the Communist Party of China
Statues of Karl Marx and Friedrich Engels in the Museum of the Communist Party of China, opened in Beijing on June 18, 2021 to mark the centenary of the Party. Photo from Artyom Ivanov/TASS via Reuters Connect

When Chinese leader Xí Jìnpíng 习近平 emerged last week from a seaside retreat to make his first public remarks in nearly three weeks, he demanded that China “adjust excessively high income” and promote “common prosperity.” Many observers wondered, does this mark the end of capitalism in the country?

  • It wasn’t reassuring, to capitalists, that Xi’s call to “rectify income distribution” came on the heels of a monthslong regulatory crackdown on Big Tech, and specifically the internet industry, in which many of China’s richest people made their fortunes.
  • Sensing the shifting political winds, many tech industry figureheads and their companies have made huge philanthropic pledges in recent months.

Reassuring the rich they won’t be “robbed”

Officials and Chinese economists are now making great efforts to clarify the meaning of “common prosperity,” assuring the country’s wealthy — and investors — that the phrase isn’t meant to be quite as communist as it sounds.

  • “Hán Wénxiù 韩文秀, deputy director of the Office of the Central Financial and Economic Affairs Commission, said the country’s push for common prosperity allows for ‘the existence of a certain gap’ (link in Chinese) and the country encourages people to work hard and bring innovation…It also allows some to ‘get rich first’ and then guide and help others to become rich, he said,” Caixin reports.
  • China won’t “rob the rich to help the poor” (杀富济贫 shā fù jì pín), Han reassured, but “common prosperity” is an “essential requirement of socialism” and an “important feature of Chinese-style modernization,” he said.
  • At the same time, China should “avoid falling into the trap of welfarism,” he said, and the state “can’t support sluggards.”
  • Chinese economists also promoted moderate interpretations of Xi’s new buzzword. “‘Robbing the rich to give to the poor’ would only result in ‘common poverty,’ said Zhāng Jūn 张军, dean of the School of Economics at Fudan University in Shanghai, in an interview [in Chinese],” Bloomberg reports, also citing comments by a former adviser to China’s central bank and a professor at Shanghai Jiaotong University.
  • “Common prosperity is not redistributing the existing accumulated wealth involuntarily,” wrote Hong Hao, head of research at Hong Kong-based Bocom International Holdings. Instead, “It is more about devising a fairer process in which the fruits of economic development can be shared by more Chinese people…there are many ways to achieve this goal, such as a capital gains tax and some other forms of redistribution and transfer payment in the future.”