China’s top leaders have vowed to strengthen regulation of the country’s wealthy people, including “reasonably adjusting excessive” income and encouraging high-earning groups and enterprises to give back to society, according to state media.
The commitment was made Tuesday during an economic policy meeting chaired by Chinese President Xi Jinping as part of efforts to build a society of “common prosperity” and improve its income distribution structure to tackle social inequality, according to the state-run Xinhua News Agency.
The meeting also highlighted “preventing and resolving major financial risks” and enhancing “steady development of finance.”
Common prosperity refers to wealth being shared among everyone, rather than just a few people, according to the meeting resolution.
The country will also expand the proportion of middle-income groups in the population, increase earnings for people on low incomes and strictly ban income from illicit dealings, which will achieve an “olive-shaped wealth distribution structure,” Xinhua said.
These adjustments will be achieved by establishing a more reasonable income distribution system that allows social forces such as charity organizations to participate, and further regulating taxation, social security and transfer payments, Xinhua said.
The meeting, which provides new insights into the government’s vision of how to build a common prosperous society, followed Xi’s declaration that China had eradicated absolute poverty in February.
“Common prosperity” is an essential requirement of socialism and a key feature of Chinese-style modernization, Xi was quoted by Xinhua as saying at the meeting. He called for more efforts to promote common prosperity while pursuing high-quality development.
Xi said in a Communist Party Central Committee meeting in November 2015 that achieving common prosperity is the “fundamental position” (link in Chinese) for the country’s economic policy planning and development, according to the party’s official Qiushi Journal.
The income gap between urban and rural areas remains significant, while the country faces other problems such as unbalanced regional economic development between the south and north, said Yin Zhongqing, vice chairman of the Financial and Economic Affairs Committee of the National People’s Congress at an event last month in Beijing.
In June, the State Council, China’s cabinet, issued a guideline on building the eastern province of Zhejiang into a pilot zone for common prosperity (link in Chinese). The province of more than 64 million people has selected 15 regions as the first batch of the pilot program to narrow the regional, urban-rural and income gap by 2025 (link in Chinese), according to a July statement.
The Tuesday meeting also discussed building a three-tier income distribution system. Currently, China’s income distribution system is divided into three sections: primary, secondary and tertiary distribution. Primary and secondary distributions highlight the efforts of the market and government in promoting overall income equality, while the tertiary distribution, which officially became part of the system in 2019, indicates having citizens help increase the income of the poor by activities such as donations, charity and voluntary work, the official Study Times newspaper reported.
The Communist Party pledged in a 2019 plenary meeting to make more substantial progress in achieving common prosperity by 2035 (link in Chinese) through significant expansion of middle-income groups and reducing the gap between urban and rural regional development.
Author: Wang Xintong, Caixin Global