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ABSTRACT
In China the idea of common prosperity dates back to 1953. After 1979 China chose to let some people and places get rich first to accelerate economic development, with Deng Xiaoping arguing that public property could prevent social polarization. The result was extraordinary sustained economic growth but at the expense of large increases in urban-rural, regional and social inequalities in income and wealth themselves associated with the growth of private capital. In 1999 China started to address urban-rural and regional disparities in the name of common prosperity, while under the leadership of Xi Jinping the emphasis on common prosperity has increased markedly alongside domestic goals relating to innovation, improved governance and ecological and spiritual civilization. Starting in 2020, this course has seen strong government action against the disorderly expansion of private capital, monopolies, speculation and the costs of privately provided education, housing and potentially health, as well as the establishment of a demonstration zone in Zhejiang province to explore ways to address uneven development and reshape the primary, secondary and tertiary distributions of income.
Acknowledgements
The author would like to thank Bing Qi for providing some of the Chinese language material. He also wishes to thank the editors of the journal for their helpful advice and Zixu Liu for his very careful editing of the manuscript. The usual disclaimers apply.
Disclosure Statement
No potential conflict of interest was reported by the author(s).
Notes
1 In some cases, it is claimed that China is an example of state capitalism. Without entering this controversy, it is important to note as Lenin emphasized that state capitalism under capitalism and socialism differ and that the former is a “step towards socialism” (Lenin [Citation1921] Citation1983), while Mao (and indeed Stalin) spoke of a need to “develop socialist commodity production and commodity exchange.” The implication is that commodity production under socialism and capitalism differ. Some of the words of Mao are particularly significant. In 1975, he said: “At the moment, our country employs a commodity system, and the wage system is unequal as well, what with the eight-grade wage system, etc. Such things can only be restricted under the dictatorship of the proletariat” (Mao, cited in Coderre Citation2019, 34). In this light one should understand the Deng era “Constitution of 1982” and its adherence to four cardinal principles, namely, adherence to socialist road, to the people’s democratic dictatorship, to the leadership by the Communist Party of China and to Marxism, Leninism and Mao Zedong thought.
2 Marx and Engels ([Citation1845] Citation1968) pointed out,
In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.
3 Jiang (Citation2002) said,
We should give priority to efficiency with due consideration to fairness, earnestly implementing the distribution policy while advocating the spirit of devotion and guarding against an excessive disparity in income while opposing equalitarianism. In primary distribution, we should pay more attention to efficiency, bringing the market forces into play and encouraging part of the people to become rich first through honest labor and lawful operations. In redistribution, we should pay more attention to fairness and strengthen the function of the government in regulating income distribution to narrow the gap if it is too wide. We should standardize the order of income distribution, properly regulate the excessively high income of some monopoly industries and outlaw illegal gains. Bearing in mind the objective of common prosperity, we should try to raise the proportion of the middle-income group and increase the income of the low-income group.
4 In official documents reference is made to “the income distribution system with distribution according to labor as the main body and multiple coexisting distribution modes, focusing on protecting labor income and perfecting the mechanism of factor participation in distribution” (in Chinese; see http://www.gov.cn/zhengce/2021-06/10/content_5616833.htm). Alongside wages, the rents, interest, profits and capital gains of landowners/possessors, capital owners and owners of financial wealth co-exist.
5 See the Database of CPC National Congresses (in Chinese). http://cpc.people.com.cn/GB/64162/64168/64568/65402/4429278.html.
6 See “CPC Central Committee’s Work Meeting in 1999” (in Chinese). http://www.gov.cn/test/2008-12/05/content_1168875.htm.
7 See “1999: The Great Western Development” (in Chinese). http://www.prcfe.com/web/meyw/2009-10/12/content_564747.htm.
8 See “The Fifth Plenary Session of the 18th CPC Central Committee Convened in Beijing” (in Chinese). http://cpc.people.com.cn/n/2015/1030/c64094-27756155.html.
9 See the World Development Indicators. https://databank.worldbank.org/reports.aspx?source=2&series=NY.GNP.MKTP.PP.CD&country=.
10 Data available at: http://tongji.oversea.cnki.net/oversea/engnavi/navidefault.aspx.
11 This data comes from the China Family Panel Studies (CFPS) of the Institute of Social Science Survey of Peking University in 2021, which is funded by Peking University and the National Natural Science Foundation of China, and maintained by the Institute of Social Science Survey of Peking University. http://www.isss.pku.edu.cn/cfps/sjzx/gksj/index.htm?CSRFT=XMK9-S7AK-ZNYV-4YIF-5YSC-W1U0-MPJ8-RJDG.
12 See “China’s Total Assets Exceed 1300 Trillion Yuan” (in Chinese).” https://baijiahao.baidu.com/s?id=1667568756159490784&wfr=spider&for=pc.
13 See “Macao Reissued a Red Packet for All People: 9,000 Yuan for Residents and 5,400 Yuan for Non-permanent Residents” (in Chinese). https://news.qq.com/a/20140523/018162.htm?tu_biz=v1_region.
14 In the “Report to the 18th National Congress of the Communist Party of China,” Hu Jintao stated,
The underlying issue we face in economic structural reform is how to strike a balance between the role of the government and that of the market, and we should follow more closely the rules of the market and better play the role of the government. We should unwaveringly consolidate and develop the public sector of the economy; allow public ownership to take diverse forms; deepen reform of state-owned enterprises; improve the mechanisms for managing all types of state assets; and invest more of state capital in major industries and key fields that comprise the lifeline of the economy and are vital to national security. We should thus steadily enhance the vitality of the state-owned sector of the economy and its capacity to leverage and influence the economy. (see http://language.chinadaily.com.cn/19thcpcnationalcongress/2017-10/16/content_32684880_5.htm)
16 A pilot affecting twelve large property developers subjects their debt to three red lines: a liability-to-presale-asset ratio of no more than 70%; a net debt-to-equity ratio of under 100%; and cash holdings at least equal to short-term debt.
17 These measures came on top of a significant tightening and centralization of control over outward foreign direct investment in late 2016 and 2017 to stem capital outflows and the rapid depletion of China’s foreign currency reserves (Wang and Gao Citation2019).
18 See Xinhua Net, http://www.xinhuanet.com/english/2020-08/16/c_139294561.htm.
19 In sectors where China restricts or prohibits foreign participation, Chinese companies set up shell companies in a tax haven such as the Cayman Islands with a similar name. The original company sets up agreements that give the shell company a claim on the profits and control over the assets of the original company. The shell company then registers on the New York Stock Exchange and sells shares to investors under the name of the Chinese company. Although these shares do not entail any company ownership claims, the Chinese company can raise international capital, and international investors secure a share of the Chinese company’s profits. The Chinese government would prefer that capital is raised on domestic capital markets where it can also ensure that it goes to industries it wants to see develop and avoids areas it deems a threat to the common good.
20 See “More Regulatory Clarity after China Bans For-Profit Tutoring in Core Education.” https://www.china-briefing.com/news/china-bans-for-profit-tutoring-in-core-education-releases-guidelines-online-businesses/.
21 See “Wipeout: China Stocks in US Suffer Biggest 2-Day Loss since 2008.” Al Jazeera, https://www.aljazeera.com/economy/2021/7/26/wipeout-china-stocks-in-us-suffer-biggest-2-day-loss-since-2008.
22 See “Regulations for the Implementation of the Law of the People’s Republic of China on the Promotion of Private Education” (State Council Decree No. 741). http://www.gov.cn/zhengce/content/2021-05/14/content_5606463.htm.
24 See “China Orders Showbiz to Ban Unpatriotic and Unethical Stars.” Nikkei Asia, https://asia.nikkei.com/Spotlight/Caixin/China-orders-showbiz-to-ban-unpatriotic-and-unethical-stars.
25 In August 2021, tech giant Tencent Holdings donated US$7.7 billion towards “common prosperity” to support low-income groups, rural revitalization, healthcare and education after having in April 2021 committed US$7.7 billion towards “sustainable innovations for social value.” Nasdaq-listed e-commerce website Pinduoduo announced that it would donate its second-quarter profit and all future earnings until the sum reached 10 billion yuan ($1.5 billion) for China’s agricultural development.
26 In G7 countries, the rate of growth of productivity in real sectors has almost progressively declined. In liberal market economics, it is argued that capital is allocated efficiently to activities according to the marginal efficiency of capital (Keynes) or marginal productivity (neoclassics). Yet the marginal efficiency of capital in which capitalists are interested has declined, and with it the rates of real productivity growth and investment also declined (see also Wei Citation2021).
27 For national statistical yearbooks, see http://www.stats.gov.cn/enGliSH/Statisticaldata/AnnualData/. National data are also available at https://data.stats.gov.cn/english/. For provincial statistical yearbooks, see http://tongji.oversea.cnki.net/oversea/engnavi/navidefault.aspx http://tongji.oversea.cnki.net/oversea/engnavi/navidefault.aspx.
28 The China Statistical Yearbooks Database is available at: http://tongji.oversea.cnki.net/oversea/engnavi/navidefault.aspx.
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Notes on contributors
Michael Dunford
Michael Dunford is Emeritus Professor at the School of Global Studies, University of Sussex, Visiting Professor at the Institute of Geographical Sciences and Natural Resources Research (IGSNRR), Chinese Academy of Sciences, and Managing Editor of Area Development and Policy. He graduated with BS in Geography and MS in Quantitative Economics from the University of Bristol. His interests are in global development (at multiple geographical scales and with special reference to Europe and the western world, China and Eurasia and the wider world system) drawing on materialist conceptions of history and geography and on theories of uneven and combined development, regulation and geopolitical economy.