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“A powerful China should also be a fair and just China,” says Yao Yang, a professor of economics at Peking University, quoted in a 7 September New York Times article.
In an effort to ensure equality, President Xi Jinping has declared that China has reached the next phase in its growth, and has informed China’s entrepreneurs that the time has come for them to help “narrow the stubborn wealth gap” that threatens to not only hold back development but to “erode public confidence in the leadership.”
This will be known as the “common prosperity” campaign, and its stated aims are to make schooling, housing and health care more affordable and available outside the large cities, along with cracking down on the dominance of the high tech sector and increasing the size of the middle class. Despite the announcement last year that rural poverty had been eliminated (see “GLOBAL ECONOMIC TRENDS,” 1 December 2020), China’s wealth is still concentrated in its cities.
The Chinese Way
It was part of China’s long-term plan, going back to the days of Deng Xiaoping, to partially embrace elements of capitalism in order to allow some people to attain great wealth in the process of building the economy and power of the country at large. Even then, however, “common prosperity” was a long-term goal.
And in the U.S. where we have been continually reporting in our economic section of the rich getting richer, the middle class shrinking and the poor getting poorer, the top one percent own about 35 percent of America’s wealth.
But unlike in the U.S. where Washington supports and assists the “Bigs Getting Bigger” in China, with its top one percent controlling some 31 percent of the nation’s wealth (up from 20 percent two decades ago, Beijing wants to re-distribute the wealth.)
Capitalism 2.0
Indeed, China doesn’t want to be like the U.S. (see “CHINA 2021: THE CHINESE CENTURY,” 9 March 2021), which it sees as mired in inequality and declining in power and influence.
It also wants to be less reliant on Western capital and expertise (see “TOP TRENDS OF 2021: THE RISE OF CHINA,” 19 January 2021). And Xi Jinping still needs to secure his own future as a leader by demonstrating that he’s faithful to the long-term goals of Communism.
So, having attained a sufficient degree of affluence, it’s now time for the government to step in, on the theory that more evenly-distributed consumer spending power, i.e., a growing middle class, will drive up the economy.
And it may be just in time, because China’s growth is moderating, and, the NYT article tells us, many young Chinese feel that upward mobility isn’t what it once was, with well-paying white collar jobs harder to find, tech workers compelled to work longer hours, and even families questioning whether they can afford to have children.
Some party officials favor more gradual changes, but the trend may be toward “a broad shake-up,” a “political transformation” which would “wipe away” the ability of capitalists to “make a fortune overnight.” This could include inheritance and property taxes, a move that could rile up the many who have invested heavily in housing.
But Xi has tried to calm fears of a rapid transformation by setting 2035 as the date by which “substantive progress” must be made toward “common prosperity.”
Meanwhile, Zhejiang province, home to some of China’s wealthiest private companies (and where Xi was party chairman for four years) has been chosen as the site of “common prosperity” demonstration zones, wherein a 52-point plan will be implemented, to include profit-sharing, reduced housing and educational costs, regulation of “excessive income” and expanded charity.
And some of China’s highest-profile billionaires, Jack Ma among them as reported by The Times, are already scrambling to show their support for the new plans, committing billions of dollars to various “common prosperity” projects and charity.
TREND FORECAST: As we have long reported, there are going to be “Off With Their Heads, 2.0” movements sweeping the globe as the BIGS get bigger, the Rich get richer and the peasants of Slavelandia get poorer.
Income inequality is a global trend. As we have been reporting in the Trends Journal, Oxfam research shows the world’s 2,000 billionaires have more combined wealth than the 4.6 billion people who comprise 60 percent of the world’s population.
And according to Bill and Melinda Gates Foundation’s report published yesterday, the ongoing COVID WAR pushed an additional 31 million people worldwide into dire poverty, reversing global progress on eliminating poverty by four years.