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Solidly Promote Common Prosperity


A partial speech by Xi Jinping at the 10th Central Financial and Economic Committee meeting (August 2021), that provides highest authoritative insights into the four guiding principles and six tasks of the Common Prosperity concept.

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Since the reform and opening up, the Chinese Communist Party (CCP) has profoundly reviewed its historical experience, both positive and negative, and realized that poverty is not socialism. It has broken the shackles of the traditional system, allowed some people and some regions to get rich first, and promoted the liberation and development of social productivity. 


Since the 18th National Congress of the CCP, the Party Central Committee has grasped the new changes in the development stage, placed greater importance on the gradual realization of common prosperity for all people, and promoted coordinated regional development. It has taken strong measures to safeguard and improve people’s livelihood, won the battle against poverty, and completed the building of a moderately prosperous society in all aspects, and created favorable conditions for promoting common prosperity. And now, we have reached the solid promotion of common prosperity at the stage of history. 


As we move toward the goal of the second century, we must adapt to the changes in the main contradictions of our society and better meet the growing needs of the people for a better life. It is imperative to promote the common prosperity for all as the focus of our effort to achieve happiness for the people and constantly consolidate the foundation of the Party’s long-term ruling. High-quality development requires high-quality workers. Only by promoting common prosperity, raising incomes of urban and rural residents, and enhancing human capital can we then raise total factor productivity and lay a solid foundation for high-quality development. At present, the problem of global income inequality is prominent. In some countries, the rich and the poor are polarized and the middle-class collapses, leading to social fracture, political polarization, and populism. The lessons are very profound. China must resolutely prevent polarization, promote common prosperity, and achieve social harmony. 


At the same time, it is important to recognize that the problem of unbalanced and inadequate development in China remains prominent, and there is a large disparity in development and income distribution between urban and rural areas. The new wave of scientific and technological revolution and industrial transformation has given a strong boost to economic growth and has a profound impact on employment and income distribution, including some negative impacts that need to be addressed effectively. 


Common prosperity is the essential requirement of socialism and an important feature of Chinese-style modernization. The common prosperity that we spoke of is the wealth of all people, both in material and spiritual life, rather than the prosperity of a few nor uniform egalitarianism. 


We should study the objectives of different stages and promote common prosperity in phase: By the end of the 14th Five-Year Plan, solid steps should have been taken to achieve common prosperity for all people, and the gap between incomes and actual consumption levels of residents should have gradually narrowed. By 2035, substantial progress toward common prosperity for all will be more evident, and basic public services will be equalized. By the middle of this century, the common prosperity of all people will be achieved, and the gap between incomes and actual consumption levels of residents will be narrowed to a reasonable range. We should promptly formulate a plan of action for promoting common prosperity and put forward scientifically feasible assessment and evaluation methods that suit China’s national indicators. 


 To promote common prosperity, we must grasp the following principles: 


Encourage making wealth from hard work and innovation. A happy life is achieved through hard work, and common prosperity is created through hard work and wisdom. We must adhere to safeguard and improve the livelihood of the people during the development, give priority to promoting high-quality development, create more inclusive and equitable conditions for people to improve their educational attainment and development capabilities, upgrade the human capital and professional skills of the whole society, and enhance employability and entrepreneurship, which in turn enhances their ability to become rich. We need to prevent social class solidification, open channels for upward mobility, create opportunities for more people to get wealthy that form a development environment in which everyone participates, and avoid getting “bogged down” (vicious competition or making meaningless efforts)and “lying flat” (young Chinese reject rat race and embrace being a couch potato). 


Adhere to the basic economic system. To be based on the primary stage of socialism, adhere to the “two unwaverings.” We need to ensure that the public sector plays a dominant role and that economic entities under different forms of ownership develop side by side with the public sector and play an important role in promoting common prosperity. While we need to promote the sound development of the non-public sector and the healthy growth of non-public-sector employees, we need to allow some people to get rich first while emphasizing that those who get rich first should bring along others and help others get rich. We should emphasize to encourage entrepreneurial leaders who get rich by hard-working, legitimate operations with the courage to start new businesses. Growing rich with illegitimate means should not be advocated; illegal violations should be handled per the laws and regulations. 


Try our utmost to do our best. It is necessary to establish a scientific public policy system and form a rational distribution pattern for all. We need to take stronger and more concrete measures to give the people a greater sense of gain. Meanwhile, we should also note that our country’s level of development is still far from the developed countries. We need to balance needs and possibilities, and safeguard and improve people’s livelihood based on economic development and financial sustainability. We should not bite off more than we can chew and make promises that we cannot keep. The government cannot cover everything, and the focus is on strengthening fundamental, inclusive, and basic living protection and efforts. Even if the level of development is higher and the financial resources are stronger in the future, we still cannot set too high goals and provide overprotection; we should resolutely prevent falling into a “welfare” trap and raising idlers. 


Adhere to gradual progress. Common prosperity is a long-term goal that requires going through a process that cannot be achieved overnight. It must be fully estimated for its long-term nature, difficulties, and complexities; there is no time to waste but also cannot be rushed. Some developed countries have been industrializing for centuries, but due to their social systems, the problem of common prosperity remains unresolved, and the disparity between the rich and the poor is becoming increasingly serious. We must be patient, take solid measures to handle matters one by one, and increase efficiency. We should make attention to the construction of Zhejiang Common Prosperity Demonstration Zone and encourage locals to explore effective paths in light of local conditions and experience, and push forward gradually. 


The general idea is to promote common prosperity in high-quality development; properly handle the relations between efficiency and fairness; establish basic institutional arrangements for initial distribution, redistribution, and coordination of the third distributions; and that the adjustment of taxation, social security, transfer payments, and other adjustments should be increased and accuracy improved, the proportion of middle-income groups expanded, and the income of low-income groups increased. Also, high income should be rationally regulated, and illegal income should be abolished, to form an olive-shaped distribution structure with a large middle section and two small ends that promote social equity and justice, comprehensive human development, as well as enables all people to make solid progress toward the goal of common prosperity. 


First, improve the balance, coherence, and inclusiveness of development. It is necessary to accelerate the improvement of the socialist market economy system and promote more balanced, coordinated, and inclusive development. It is essential to enhance the balance of regional development, implement major regional strategies as well as regional coordination and development strategies, improve the transfer and payment system, reduce the regional gap in per capita financial expenditure, and increase support to the less developed regions. It is necessary to strengthen the coordination of industry development; accelerate the reform of the monopoly industries; and promote the coordinated development of finance, real estate, and the real economy. We should support the development of small and medium-sized enterprises and build up an enterprise development ecology in which large and medium-sized enterprises are interdependent and mutually improving. 


Second, focus on increasing the size of the middle-income group. It is important to grasp the focus and make precise strategies to promote more low-income people to enter the middle-income groups. College students are an important part of the middle-income group. It is important to improve the quality of tertiary education to enable them to use the expertise they learn and support them to adapt to the social development needs soonest possible. Skilled workers are also an important part of the middle-income group. It is necessary to strengthen the training of skilled talents, raise the wages of skilled workers, and attract more qualified talents to the skilled workforce. Small and medium-sized business owners and self-employed businesses are an important group of entrepreneurs to become wealthy. We should improve the business environment, reduce the burden of taxes and fees, and provide more market-oriented financial services to help them to have stabilized operations and continuous increase of income. Migrant workers that come to the cities are an important source of middle-income groups. We should deepen the reform of the household registration system and solve problems such as children’s education for the workers migrating from rural for their peace of mind in finding jobs in the cities. Wages of civil servants, especially grassroots frontline civil servants and grassroots workers in state-owned enterprises and public enterprises, should be properly raised. It is necessary to increase the income of urban and rural residents from housing, rural lands, and financial assets. 


Third, promote the equalization of basic public services. Low-income groups are the key support groups on promoting common prosperity. It is necessary to increase investment in inclusive human capital, effectively alleviate the burden of education for families with difficulties, and raise the education level of low-income children. It is necessary to improve the pension and medical security system, gradually reduce the gap between workers and residents and urban and rural areas in terms of financing and security, and gradually raise the level of basic pensions for urban and rural residents. We should improve the basic comprehensive support system, accelerate the narrowing of the gap of urban and rural areas social assistance standards, and gradually raise the minimum living security level of urban and rural areas, and support basic living standards. We need to improve the housing supply and protection system, insist on the position that housing is for living and not for speculation, for rent and purchase. We need to improve the long-term rental housing policy based on urban policies, expand the supply of affordable rental housing, and focus on solving the housing problem of new citizens. 


Fourth, strengthen regulation and adjustment on high incomes. While protecting legitimate income per the law, it is necessary to prevent polarization and eliminate unjust distribution. It is necessary to regulate excessive income rationally, improve the personal income tax system, and standardize the management of capital income. We need to push forward real estate tax legislation and reform actively and steadily and conduct good pilot work. We need to intensify consumption-related tax regulation and study the scope of consumption tax collection. We should strengthen the regulation and management of philanthropy, improve tax incentives, and encourage high-income groups and enterprises to give back more to society. We must clean up and standardize unreasonable income, increase the management of income distribution in monopoly industries and state-owned enterprises, rectify income distribution order, and clean up distribution chaos, such as those that increase the income of executives in the name of reform. It is necessary to resolutely curb trade power, firmly crackdown on insider trading, stock market manipulation, financial counterfeiting, tax evasion, etc. 


After years of exploration, we have a complete approach to the poverty problem; however, we still need to explore and accumulate experience on how to get wealthy. We need to protect property rights and intellectual property rights and protect from getting wealthy illegitimately. We must resolutely oppose the disorderly expansion of capital, draw up negative lists for access to sensitive areas, and strengthen anti-monopoly supervision. At the same time, it is also necessary to mobilize entrepreneurial motivation to promote the healthy development of all kinds of capital norms. 


Fifth, promote the common prosperity of the people’s spiritual life. There is a high degree of unity between the promotion of common prosperity and the promotion of the all-rounded development of people. It is necessary to strengthen the leadership of socialist core values; strengthen the education of patriotism, collectivism, and socialism; develop public cultural programs; improve the system of public cultural services; and continuously meet the diverse, multi-level, and multifaceted spiritual and cultural needs of the masses of the people. We should strengthen the guidance of public opinion on promoting common prosperity, clarify ambiguities, avoid over-eagerness of success and fear of difficulties, and provide a good environment for public opinion to promote common prosperity. 


Sixth, promote common prosperity for rural areas and peasants. The most difficult and onerous task of promoting common prosperity remains in the rural areas. We should speed up the work on common prosperity in rural areas, but it is not appropriate to propose uniform quantitative targets like poverty alleviation. We need to reinforce and develop the achievements of poverty alleviation, strength monitoring, and early intervention on the populations that are prone to return to poverty and cause poverty to ensure there is no sizeable return to poverty and new poverty. It is necessary to comprehensively promote rural revitalization, accelerate agricultural industrialization, revitalize rural assets, and increase farmers’ asset revenues for more rural residents to become prosperous through hard work. We should strengthen the construction of rural infrastructure and public service systems and improve the rural habitat environment. 


I generally believe that the common prosperity of all is an overall concept, just like the construction of a moderately prosperous society. It is for the society as a whole and should not be divided into cities and rural areas or eastern, central, and western regions, where they have their indicators. This needs to be viewed from an overall perspective. If we want to achieve common prosperity for 1.4 billion people, we must be down to earth and make a long-term effort. Not everyone is going to get affluent at the same time, and it is not for all regions to reach a single level of affluence at the same time. Different people not only have various levels of affluence, but also different levels of affluence within different regions. It is impossible to go hand in hand at the same time. This is a dynamic process of moving forward; it is necessary to continue moving forward to constantly achieve results. 


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习近平 (Xi Jinping). "Solidly Promote Common Prosperity [扎实推动共同富裕]". CSIS Interpret: China, original work published in Qiushi [求是], October 15, 2021

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