Common prosperity

The term was first used by the People's Daily on 25 September 1953, as part of the 65 approved slogans for the National Day of the People's Republic of China (PRC). The article read:[2]

United together, [we must] bring into play the spirit of collectivism, improving productivity, increasing production of grain and other crops, increasing income, striving for lives of common prosperity, according to the principles of willingness and mutual benefit...

Common prosperity was mentioned again in a People's Daily headline in December 1953, in which it said there were two paths to take forward; either capitalism, "a road of a few getting rich, while the vast majority are poor and destitute", and socialism, which was "the path of common prosperity".[2] The article defined common prosperity as collective ownership of the means of production.[2]

Paramount leader Deng Xiaoping later redefined how common prosperity could be achieved, saying that "[o]ur policy is to let some people and some regions get rich first, in order to drive and help the backward regions, and it is an obligation for the advanced regions to help the backward regions".[2][3] A People's Daily article on 19 February 1979 called A Portion of Peasants Getting Rich First Should Be Encouraged (一部分农民先富起来应受到鼓励) attacked Lin Biao, historically Mao's chosen successor, and the Gang of Four, a powerful faction during the Cultural Revolution, and decried what it said was the practice of egalitarianism in the people's communes, saying that that "[w]hat was originally intended to guide commune members down a road to ‘common prosperity,’ in the end made a rich team poor, and then poorer and poorer".[2] Another People's Daily article on 15 April 1979 titled A Few Getting Rich First and Common Prosperity (一部分先富裕和共同富裕) stated:[2]

我们党领导农民走社会主义道路，就是‘要使全体农村人民共同富裕起来’。允许一部分农民先富起来，正是为了达到共同富裕的一项切合实际的政策。

Our Party's leading of the peasants along the path of socialism is about ‘making all rural people achieve common prosperity.’ Allowing some peasants to get rich first is a practical policy to achieve common prosperity.

Another People's Daily article in December 1979 titled Common Prosperity Does Not Mean Equal Wealth (共同富裕不是平均富裕) went further, saying that "[s]ocialism is not egalitarianism, and common prosperity does not mean equal wealth". These redefinitions allowed China to justify its wide-ranging economic reforms, moving away from planned economy to a market-oriented economy.[2] While this allowed Chinese economy to grow rapidly, it also led to China becoming one of the most unequal countries on earth, with a Gini coefficient of 0.47 as of 2020.[4]

In 2011, Bo Xilai, the CCP committee secretary of Chongqing, undertook a campaign to promote common prosperity in the municipality as part of his broader "Chongqing model". During a speech to the Chongqing Municipal CCP Committee on 25 July 2011, he said:[5]

We regard the improvement of people's livelihood as both the purpose of development and the driving force for development. Taking the road of "people's livelihood" and chanting the “common prosperity” mantra, we have taken the initial steps to promote "common prosperity." Today some people regard common prosperity only as the starting point and destination of development, which I think is not enough. "Common prosperity" is not only an ideal, but also a driving force; it is not only the "starting point" and the "destination," but also runs through the whole process of development.

In what is called the "cake theory" which metaphorized China's economy as baking a cake, Bo and his supporters clashed with the more economically liberal Guangdong CCP committee secretary Wang Yang, with Wang advocating for "making the cake bigger" while Bo advocated for "dividing the cake more equitably".[5] Bo stated that a more equitable growth was more favorable to China, saying "[s]ome people worry that seeking common prosperity will delay development and maintain that we should first make a big cake and then divide it. Actually, you not only can make a big cake and divide the cake well at the same time , but the more you divide the cake well, the bigger and faster you can make it."[5]

Bo's campaign for common prosperity included decreasing inequality between urban and rural residents, increasing role of the state sector and the government in the economy, and a fairer distribution of income. For this, he enacted policies such as expansion of low-income housing, land transfer policies for the rural residents of Chongqing in exchange for employment and urban hukou, and increasing state funding for social programs.[5] Common prosperity was mentioned over 200 times in major newspapers in China from late 2010 to March 2012, with 85% of them being from Chongqing Daily. The campaign ended with the Wang Lijun incident which led to the end of Bo's political career and removal from power in March 2012.[5] Mary Gallagher, a sinologist and professor at the University of Michigan, wrote that Bo's campaign "seems to be the unspoken inspiration" for the campaign launched under Xi.[5] However, she also argued that unlike Bo, Xi focused less on redistribution and more on expanding of state control in his own common prosperity campaign.[5]

The term saw a large revival in 2021 under CCP general secretary Xi Jinping. In a speech to the Central Financial and Economic Affairs Commission (CFEAC), later published in the CCP theoretical journal Qiushi, Xi said that in some countries "the wealth gap and middle-class collapse have aggravated social divisions, political polarization and populism, giving a profound lesson to the world",[6] saying that China should promote common prosperity to guard against this fate. He said that common prosperity "is an essential requirement of socialism and a key feature of Chinese-style modernization",[7] and defined it as affluence and prosperity for all, rather than the few, but also said that it is not "uniform egalitarianism" and that "not everyone will be wealthy at the same time".[3][8] He additionally said that by 2035, China will make "substantial progress" to the realization of common prosperity, in which there will be "equitable access to basic public services" and that by the middle of the 21st century, common prosperity will be "basically achieved", in which the urban-rural income gap will be shrunk "to a reasonable range".[6] He also warned against the "disorderly expansion of capital". He spoke out against the tendency of "lying flat", warning against shrinking social mobility.[9] Xi vowed to "adjust excessive incomes",[10] but also spoken out against "welfarism", saying that too much welfare "encourages laziness".[6]

Han Wenxiu, another official from the CFEAC, echoed Xi's claims, saying that people "who get rich first" should help those left behind but that common prosperity would still involve economic disparities and that it does not mean "killing the rich to help the poor".[11][12] Zhao Feng, a professor at the Renmin University of China said that common prosperity needs a "society of public ownership".[13] According to The New York Times, Chinese officials and advisers have said that they want to create an "olive-shaped" society with a large middle-class and little in extreme wealth or poverty.[14] During a speech in 2023, Xi identified common prosperity as a component of "Chinese-style modernization", which he said "breaks the myth of 'modernization equals Westernization'".[15]

Especially in 2021, common prosperity was used as justification for large-scale regulations and crackdowns against perceived excesses of private industries, most prominently the tech, property and the tutoring sectors.[16][17] As part of common prosperity, China passed new anti-monopoly rules including a one that stopped companies from using algorithms to have users spend more or "disrupt social order", fined companies like Alibaba Group, Tencent,[18] Baidu and DiDi[19] for breaking various laws, and banned tutoring companies from making profits, effectively decimating the industry.[20] The large amount of regulations have caused the tech companies to lose around $1 trillion in stock market value in 2021.[21]

Several tech companies and billionaires have pledged investments and donations in the name of common prosperity. In 2021, Alibaba Group was reported to have pledged $15 billion towards common prosperity.[22][23] In August 2021, Tencent created a $7.7 billion fund towards common prosperity.[24] On 3 February 2022, Liu Qiangdong, founder of JD.com, announced he was donating $2.2 billion worth of stocks to charity as part of common prosperity.[25] By 2022, Hurun's China Rich List reported that top ten philanthropists in China pledged 6.3 percent of their wealth to donation totaling around $8.7 billion, while 49 benefactors in total gave away $10 billion from April 2021 to August 2022.[26] In response to the common prosperity policies, Goldman Sachs created a portfolio of 50 stocks which includes companies related to manufacturing, green energy, consumption and state-owned enterprise (SOE) reform.[27] In November 2021, Xi additionally opened a new stock exchange in Beijing targeted for small and medium enterprises (SMEs), which was a part of this campaign.[28]

The common prosperity campaign also targeted China's large property sector. As part of the campaign, China pledged to build 6.5 million low-cost rental houses, from 2021 to 2025, accounting for 26% of the new housing supply.[29] Xi was also considering a property tax to control the high property prices in 2021, initially through trial efforts in several cities. However, The Wall Street Journal reported the plan was met with high resistance and thus was limited to an even smaller number of cities.[30]

Starting in 2022, the term was downplayed due to increasing economic difficulties.[31] However, some policies associated with the term continued; for example, there were large amounts of pay cuts for investment bankers, sometimes up to 60 percent.[20] It was also speculated that China may resume the common prosperity campaign after the 20th CCP National Congress in the second half of 2022.[31][32] During the 20th Congress, the CCP amended its constitution to include a goal of "gradually achieving common prosperity".[33] Consistent with this principle, the 20th Party Congress emphasized that the Party's economic agenda should focus on quality of growth, rather than raw quantity.[34]^: 135On 22 November 2022, JD.com announced that more than 2,000 of its top managers will face salary cuts of around 10 percent to 20 percent which was said to be aligned with common prosperity.[35] On 4 January 2023, Bloomberg News reported that China International Capital Corporation (CICC) was cutting travel perks for its senior bankers as part of the policy.[36]

Tom Hancock and Tom Orlik of Bloomberg News collectively referred the common prosperity policies as "progressive authoritarianism",[37] while the turn towards common prosperity was called a shift towards left-wing politics and socialism by Katsuji Nakazawa of Nikkei Asia.[38] The Wall Street Journal reported that the ultimate aim of common prosperity was to return the CCP closer to its socialist roots by increasing state control over the economy, while still allowing market mechanisms to exist.[39] Mary Gallagher, a sinologist, argued that while Xi's campaign officially targeted inequality, there was little change to redistribution policies, saying that the campaign was instead used to further advance CCP control over the Chinese economy.[5] American economist Steven Roach writes that China's focus on common prosperity is an attempt to use state intervention to improve the quality of China's economic growth which had been neglected in prior decades as China focused on raw growth.[40]^: 268

One concern of the common prosperity policies is that they will stifle innovation and dynamism of the private sector.[39] Others, including Willy Wo-Lap Lam, a political analyst writing for the Jamestown Foundation, have argued the campaign is designed to enhance CCP control over private enterprises[41] while James Palmer of Foreign Policy stated that "in theory, common prosperity is an attempt to make the Chinese economy more equal, but in practice, it has become another excuse for putting the CCP in charge of everything, especially private businesses."[42] A Bloomberg Economics report said that, if successful, common prosperity policies will lift fertility rates and lead to an average of 3.2% growth in the 2040s, compared to the base case scenario of 2.6%, even if it initially costs some short term growth. However, if the policies are not successful, it said that it would cost China short-term growth with no long-term benefits.[43]

Zhang Weiying, a pro-market economist in China, warned that China risks "common poverty" rather than common prosperity if it pushed too far with state control over the economy.[44] Ren Yi, an online internet commentator who writes under the name "Chairman Rabbit", said that common prosperity will allow China to better adapt to the future of technology, especially artificial intelligence (AI).[45] Ray Dalio, an American billionaire and long time supporter of the Chinese government, praised the common prosperity campaign and said that the US "needs more common prosperity" along with many other countries.[46] Despite his company being targeted by the campaign, Alibaba Group CEO Daniel Zhang announced his support for common prosperity.[47]

Li Guangman, a retired newspaper editor affiliated with China's New Left, published an article that claims a "profound revolution" was close that would mark a return "to the original intent of the CCP", continuing that:[48]

This transformation will wash away all the dust: capital markets will no longer be a paradise for get-rich-quick capitalists, cultural markets will no longer be heaven for sissy-boy stars, and news and public opinion will no longer be in the position of worshipping western culture. It is a return to the revolutionary spirit, a return to heroism, a return to courage and righteousness.

Major Chinese state news agencies published the article, including People's Daily and Xinhua News Agency, setting off widespread worries about parallels to the Cultural Revolution. In response, the news agencies tried to downplay the incident by not carrying the article in their print versions, some of them removing the article from their sites and, in the case of People's Daily, publishing a front-page editorial in support of market forces.[49]

In July 2021, the Zhejiang local government declared that it will become a "pilot zone" for common prosperity.[50] The stated goals by 2025 of the government were:[51]

Bloomberg News said the goals were "modest" and that Zhejiang was already on track to achieve these goals.[51] On 1 November 2022, Jiashan County of Zhejiang was named by a guideline of the National Development and Reform Commission (NDRC) as a "leading trial area" for common prosperity. The guideline included goals such as expanding the middle class of the local population to 82%, increasing research and development spending to 4% of the local economic output, and decreasing the per capita disposable income ratio between urban and rural areas to 1.55 (the figure was at 1.35 at the end of June). It also said that the county would be turned into "a model of high-quality, county-level development" by 2035.[52]