Chinese President Xi Jinping made a bold new pledge this week to redistribute the country’s wealth, putting more pressure on the country’s richest citizens and businesses.
Xi told the top leaders of the ruling Chinese Communist Party on Tuesday that in the interests of “social justice,” the government must put in place a system of wealth redistribution, according to a summary of the speech released by the official state news agency, Xinhua. He said it was “necessary” to “adequately regulate excessively high incomes and encourage high-income people and businesses to return more to society”.
The Xinhua article did not contain however, many details on how Xi had hoped to achieve this goal suggested that the government might consider taxation or other options Redistribute income and wealth.
Xi even invoked the need for “common prosperity” among the Chinese people as crucial to maintaining the party’s power and transforming the country into a “fully developed, rich and powerful” nation by 2049, the 100th Republic of China.
“Common prosperity is the prosperity of all people,” Xi said during the leadership’s economic meeting, held every few months to determine policy. “Not the wealth of a few.”
This phrase has great historical significance in China, and the use of Xi in connection with wealth redistribution is reminiscent of its use by Chairman Mao Zedong In the middle of Century when the former communist leader advocated dramatic economic reforms to take power from the rich landowners and peasants, the rural elite.
Mao ruled the country through great economic and social changes and upheavals. His death in 1976 marked the end of the Cultural Revolution.
After that, under the leadership of Deng Xiaoping, China began decade-long economic liberalization.
Deng adopted his own use of the term “shared prosperity” when the country adopted the principles of free market in China’s socialist economy and opened the world’s largest communist country to the west.
The former Chinese head of state told a delegation of American business leaders visiting in 1985 that “some areas and some people get rich first and then lead and help other regions and people.” [get rich], and little by little [we] achieve common prosperity. ”
Over the years, China has grown from a poor country to the second largest economy in the world and one of the greatest forces in business and technology. Its rapid growth could help it overtake the United States as the world’s largest economy in a decade.
But as the country’s private sector and wealth have exploded – in 2019, the number of rich Chinese outstripped the number of rich Americans for the first time – the gaps between rich and poor, and rural and urban citizens, have widened in China.
This problem seems to have annoyed Xi. On Tuesday he admitted that following its economic reforms of the 1970s, the party “allowed some people and some areas to get rich first”.
But since 2012 – when Xi took office – he said the central government had “put the realization of the common prosperity of all people in a more important position.”
Xi’s focus on wealth redistribution ties in with his government’s broader goals for the economy. In recent months, the country has taken unprecedented crackdown on technology, finance, education and other sectors to contain financial risk, protect the economy and eradicate corruption.
His government has also raised the need to protect national security and protect the interests of the people. Regulators have widely blamed the private sector for creating socio-economic problems that could potentially destabilize society and undermine the party’s rise to power.
The crackdown on private companies has rocked global investors and fueled fears about the prospects for innovation and growth in China’s economy.
The country’s economy has been showing signs of weakness lately. Data released on Monday showed the country’s recovery is slowing and the unemployment rate among young people has risen to its worst level in a year.
Economists have attributed the slowdown to a number of factors, including the rapid spread of the delta variant, natural disasters, growing debt risks, and deteriorating investor sentiment following the regulatory crackdown.