A ROADMAP TO COMMON PROSPERITY

By Wang Hairong

Common prosperity， a concept that has been mentioned in official documents since the 1950s， has come under the spotlight recently.

China announced the elimination of absolute poverty last year， and the completion of the building of a moderately prosperous society in all respects in July. In this context， prosperity for all seems closer than ever before in the eyes of many Chinese.

“There is no shortcut to common prosperity，” Han Wenxiu， an official with the Central Committee for Financial and Economic Affairs pointedly remarked when speaking about how to best reach the goal. “It must be achieved through the hard work of more than 1.4 billion Chinese people.”

Han made the remarks during a press conference on the Sixth Plenary Session of the 19th Communist Party of China Central Committee， held from November 8 to 11. The resolution on Party history adopted during the session reiterated this long-range goal.

“To achieve it， development must come first，”Han said， adding that although income distribution is important， common prosperity cannot be achieved through that alone.

“Although Chinas per-capita GDP has exceeded$10，000， it has not yet reached the levels of highincome countries. Even if all incomes in China were to be evenly distributed， common prosperity would still not be achieved，” he said.

Han called for building a fair and efficient income distribution system that will not only cut the econom- ic pie into more equal slices but also help make the pie bigger.

In part to allay concerns that the growing prominence given to equality may dampen incentives for businesses to generate wealth， Han said entrepreneurial contributions to common prosperity mainly lie in running their businesses well， paying taxes in accordance with the law and fulfilling their social responsibilities. He added that charitable donations are voluntary， saying“we must not rob the rich to pay the poor.”

A crucial issue

“Development over the past seven decades has laid the economic foundation for common prosperity，” said Liu Yuanchun， Vice President of Renmin University of China （RUC）， at the China Macroeconomics Forum hosted by the RUCs Institute of Economics in September.

Chinas GDP ranks second in the world. The GDP of some regions has reached the level of developed countries. Additionally， as of the beginning of this year， the country was home to 1，058 dollar-denominated billionaires， far outnumbering those in the U.S.

“The goal of letting some people get rich first has been realized，”Liu said， referring to the goal set by late Chinese leader Deng Xiaoping four decades ago when the country embarked on reform and opening up. The country has now entered a new stage of development. The resolution adopted at the sixth plenary session states that common prosperity will be achieved by the middle of the century.

“The history of the market economy shows that when a countrys productivity develops to a certain stage， efficiency must be balanced with fairness； economic development without fairness will inevitably fall into stagnation and retrogression，” Liu said. He added that to achieve high-quality development， China must adjust development strategies and pay more attention to equity.

“Modern history shows that when the gap between the rich and the poor is too large， it will not only lead to a sluggish economic cycle， but also bring social unrest，”Liu said.

Fair distribution

“Common prosperity has two basic meanings： One is to continue to significantly improve the level of prosperity of all people， and the other is to significantly narrow peoples income and wealth gap，” said Li Shi， Dean of Zhejiang Universitys Institute for Common Prosperity and Development.

According to Li， China is a country with high income inequality. His studies show that Chinas income gap widened from the early 1980s until 2008. National Bureau of Statistics（NBS） data indicate the income gap has narrowed since 2008， with the main reason being the shrinking income gap between urban and rural areas due to the abolition of agricultural taxes and other policies aimed at boosting rural development.

According to the NBS， Chinas Gini coefficient dropped slightly from 0.491 in 2008 to 0.465 in 2019， still above the international “warning line” of 0.4. Gini coefficient， or Gini index， is used to measure income inequality， with 0 representing perfect equality and 1 representing total inequality.

Li expects COVID-19 to widen the income gap， because low-income people tend to be more vulnerable to the economic effects of the pandemic.

Li suggested reforming primary distribution by allowing the market to play a more important role in resource allocation.

Recently， the government has taken measures to create a fairer market environment. The national anti-monopoly bureau was inaugurated in Beijing on November 18. On November 20， the State Administration for Market Regulation fined several big technology firms including Alibaba， Baidu， Tencent， JD.com Inc. and Suning for violating antimonopoly rules in merger and acquisition deals.

When it comes to government measures for redistributing wealth， Li proposed increasing the weight of direct taxes， such as personal income， property and inheritance taxes， because they are more effective in reducing disparity than indirect taxes such as the value-added tax.

A decision to pilot property tax reform was adopted by the Standing Committee of the 13th National Peoples Congress， Chinas top legislature， on October 23.

When discussing tertiary distribution reform， Li suggested cultivating a social environment conducive to the development of philanthropy and offering policy incentives for making donations. The term tertiary distribution usually refers to activities carried out by social and charitable organizations.

Li said its important to improve lower-income earnerscapacity for self-development. In his opinion， some are capable of becoming middle-income through their own efforts and others are capable of doing so with assistance. It is of particular importance to ensure children in these families have equal access to educational opportunities.

Scholars have also spoken to the media about the need to be wary of incorrect interpretations. Lu Dewen， a research fellow with the China Rural Governance Research Center at Wuhan University， said achieving common prosperity is not about creating a system where welfare takes over the role of individual responsibility in meeting peoples needs， and people should not just wait for and depend on others stepping in to help.

It is not about ceasing to reward individual effort， either. Liu stressed it aims for fairness not only in the outcome of wealth distribution， but also in opportunities and processes. He called for smooth channels facilitating upward social mobility and equal opportunities for people to participate in development. BR