China's Communist Party wants billionaires to give back in new vision for society

Communist China has tirelessly pursued economic growth for decades, produced more billionaires than the United States, lifted 800 million people out of poverty but abandoned them another 600 million to live on $ 150 a month.

Now President Xi Jinping is planning what some experts say it would be a dramatic U-turn in trying to restructure Chinese society by cracking down on the country’s newly formed super-rich and distributing the wealth more evenly among its 1.4 billion population.

The initiative includes plans to “regulate excessively high incomes” and “encourage high-income people and businesses to return more to society”. according to a reading of Xi’s comments at a meeting of the Chinese Communist Party by the state-run Xinhua News Agency.

While his slogan “shared prosperity” was hardly new among Chinese leaders, Xi’s speech last month was the sharpest example of his obvious plan for a transformed society.

Some experts believe that the goal of better income equality for the party is a principle of self-preservation. For years the Communist Party has placed its legitimacy on growth that has surpassed that of any other major economy; Now that that is slowing down, it may feel like it has to offer a new promise: equality.

Women look at bags in the Louis Vuitton Shanghai flagship store.China Photos / Getty Images file

“The Chinese government recognizes that both local and international audiences are watching,” said Austin Strange, assistant professor of politics at the University of Hong Kong. “This is an opportunity to present yourself as a forward-thinking government that cares about its citizens, including those at the bottom of the wealth distribution.”

As part of the Communist Party’s broader vision for the future, the government has enforced regulatory action against Chinese tech giants that have rocked Western financial markets.

But efforts go beyond economics and include everything from limiting video game hours for minors to trying to eradicate a fan culture where teenagers “blindness idolize celebrities.” as the restrictive, party-controlled Global Times put it last week.

This message resonates with Cao Xinyin, 19, a college student in Beijing whose demographic – university-educated urbanites – the Communist Party is keen to stay on their side.

“Shared prosperity means everyone can lead a quality life,” she said. “People will live healthier lives, behave better, have a happier mood, and be more likely to pursue and achieve their dreams.”

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However, others are not convinced.

Shaun Jiang, 28, former owner of an education company in southwestern Chengdu that recently closed, said shared prosperity was little more than a political slogan lacking “a clear roadmap and feasibility.”

However, Xi’s attempts to control the market are unprecedented, according to Bill Bikales, a New York-based economist who spent years working in China on economic policy for various United Nations agencies.

“This is a very unusual situation,” he said. “It is surprising to what extent Xi believes that the role of the market can be restricted and restricted again and again.”

Political legitimacy at stake

Xi’s recent state intervention efforts may not seem surprising to a one-party communist state. But since the 1970s, China has turned away from former Chairman Mao Zedong’s Marxist zeal and embraced reforms that opened up its economy and helped make it today’s global center of power.

An apartment building in Chongqing, the largest community in southwest China.Zhou Zhiyong / AP file

More than 800 million people have been lifted from extreme poverty since 1978. according to the World Bank, and more than half of the population is now included Middle class. Last year there were 1,058 billionaires in China, compared to 696 in the US Hurun report, a Shanghai-based organization persecuting China’s wealthy people.

But although forecasts predict that China’s economy could outstrip the US in size as early as 2028, the country also has one of the highest income inequalities of any major world economy.

Around 600 million people – almost double the US population – still live on the equivalent of around US $ 150 a month, said Chinese Prime Minister Li Keqiang last year.

“The prosperity gap is pretty big in China,” said Jiangnan Zhu, associate professor of politics at Hong Kong University.

China was the only major economy to expand last year after the coronavirus was largely eliminated after its first discovery in late 2019. In recent years, however, the country’s stratospheric economic growth, which had been a “crucial pillar,” has slowed the overall political legitimacy of the Chinese Communist Party, “said Strange of Hong Kong University.

Now that “the era of breakneck economic development is over,” said Ryan Hass, senior fellow at the Washington think tank, Brookings Institution, “Chinese leadership is shifting its focus to improving the quality of life as a new source of benefit.” Legitimacy.”

Meanwhile, Beijing has come under increasing criticism from abroad on a variety of issues, including its increasing military activity around Taiwan, tightening control over Hong Kong, and the treatment of Uighur Muslims labeled genocide by the US and others.

A child eats a snack in their temporary 290 square meter Hong Kong studio apartment. Squeezed into the tiny temporary apartment, her family struggles to make ends meet in the notoriously unequal city.Anthony Wallace / AFP via Getty Images

Some tech giants have responded to government crackdowns by pledging money for philanthropic welfare programs. One of China’s largest companies, Tencent Holdings Ltd., has pledged around $ 15 billion for a range of initiatives that cover everything from the environment to education and rural reform to technology support for the elderly.

Tencent said the move was a direct response to “China’s Wealth Redistribution Campaign”.

Alibaba Group Holding Ltd., another Chinese tech giant, pledged a similar amount on Thursday.

Along with a revamped tax and welfare system, Xi may plan to use these kinds of large donations as a central engine for its reforms, said Vivian Zhan, an associate professor of politics at Hong Kong University of China.

The Communist Party has “many policy tools to regulate large corporations and to mobilize resources from them for redistribution and other political ends,” she said.

But the common thirst for prosperity faces other challenges such as corruption, the eradication of which was the focus of a year-long campaign by Xi. More than 60 percent of Chinese still believe that corruption is a big problem. according to Transparency International, a non-profit organization based in Berlin.

“Shared prosperity is a good idea, nice to hear, but difficult to achieve,” says Qin Guiying, 52, who used to work as a farmer in Sichuan Province but now works in a car wash in Beijing.

“The main problem is corruption among local officials,” she added. “I think the rich will stay rich while the poor stay poor because of corruption.”

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