Exploring the Road to Common Prosperity with Chinese Characteristics
Originally published in Chinese in the Guangming Daily on August 19, 2021. Translated by ACCEPT. Written by David Daokui Li, Director of ACCEPT, and Li Ke'aobo, Executive Deputy Director of ACCEPT. For the original Chinese article, click here.
While presiding over the 10th meeting of the Central Financial and Economic Affairs Commission, General Secretary Xi Jinping pointed out that common prosperity is an essential requirement of socialism and an important feature of Chinese-style modernization. After the comprehensive victory in the battle against poverty, the Chinese Communist Party has put forward a new goal: to solidly promote common prosperity.
So how should we explore and build the road to common prosperity with Chinese characteristics? First, common prosperity is the prosperity of all people, not just the prosperity of a few, nor is it uniform egalitarianism. Furthermore, common prosperity should be promoted in stages. In practice, it is extremely misleading to interpret common prosperity as an “income only” goal, to be achieved simply by closing the income gap. In essence, the fundamental goal of China's socialist modernization is to achieve all-around human development, and human development goes beyond the improvement of economic income, including the improvement of education, health, and subjective sense of achievement.
The path to common prosperity with Chinese characteristics should go beyond the "income only theory" and put the overall development of human beings at the core, taking into account factors such as human health, education, and development opportunities. Common prosperity should not simply stop at income equality, but should provide all members of society with relatively equal opportunities for development so that they can enjoy relatively fair conditions in education, employment, and medical care, etc. Only in this way can we motivate people to work, encourage them to participate in social activities, and give them a greater sense of achievement and satisfaction through social activities. Ultimately, through the hard work of all the people, we will strive toward a rich and abundant life, self-confidence and self-improvement, and all-around human development.
Second, common prosperity should provide equal development opportunities, and furthermore, should comfort and assist the regions and groups who have lost out in social competition. We must recognize that equal development opportunities alone will not necessarily lead to increased satisfaction. There are obvious disparities in natural resource endowments and initial development conditions among different regions, as well as in the cognitive abilities, self-restraint, and health of individuals in different societies. Thus, on top of the foundation of equal opportunity, we must add a mechanism for appropriate compensation for the results of social competition.
At the macro level, we should objectively recognize regional and urban-rural disparities and focus more attention on policy help for relatively less developed regions. At the micro level, we should provide special education and health services to disadvantaged groups living in rural areas and to those with health and cognitive challenges, compensating them for their losses to the greatest extent possible. It is also necessary to create a "new track" for them, and to vigorously promote the spirit of struggle of these less developed areas and relatively disadvantaged groups, allowing them to gain a personal sense of honor through their efforts.
Third, the institutional mechanism of common prosperity must maintain a certain degree of flexibility, plasticity, and reformability. We must avoid rigidity and resolutely prevent ourselves from falling into the "welfare trap." China's socialist modernization system of common prosperity must maintain a certain degree of adaptability and be able to adjust dynamically to the needs of different stages of economic development.
Fourth, the government and the market should work in the same direction to build institutional mechanisms for common prosperity. One of the basic lessons of socialism with Chinese characteristics is that the government and the market should work in the same direction—this should be carefully summarized and publicized. The report of the 19th Party Congress proposes to "make the market play a decisive role in resource allocation and give better play to the role of the government." This principle should also apply to the issue of common prosperity.
Specifically, the government should lead the basic direction of common prosperity, especially in the fields of market mechanisms, taxation systems, labor and employment, etc. The government can promote the realization of common prosperity through legislation and other means, while at the same time introducing a series of policies to mobilize the spontaneous vitality of the market and motivate market players to actively contribute to common prosperity. Furthermore, in response to the different economic and geographical characteristics of each region in China and the resulting uneven development of the market base, legal environment, and human resources in each area, the government can use pilot projects to break through the existing institutional constraints. The central government has given approval for Zhejiang to build a demonstration zone of common prosperity, which will be an exploration of great strategic significance. Through practice rich in common prosperity, in time we will be able to form experience and replicate best practices throughout the whole society. In this way, we can identify the proper direction, increase confidence, and set an example for the road to common prosperity in other regions.
It is especially worth emphasizing that one of the basic features of socialism with Chinese characteristics is that the government directly or indirectly holds a large amount of the means of production, which is an important advantage of the socialist system with Chinese characteristics and a crucial guarantee of our ability to achieve common prosperity in the future. At present, the total amount of non-financial state-owned assets in China is already more than twice the GDP. If the return on investment of these state-owned assets were to increase by 1%, the total amount would exceed the total amount of annual personal income tax collected nationwide. Therefore, the next reform of state-owned enterprises should focus on how to effectively promote mixed-ownership reform, revitalize state-owned assets, improve their rate of return, and make state-owned assets better serve the improvement of people's living standards and the realization of common prosperity.
In conclusion, the realization of common prosperity is both the original intention and mission of the CCP and an essential requirement of China's socialist modernization. In the process of exploring the road to common prosperity in China's socialist modernization, we should not only learn from the experiences and lessons of other countries in the world, but also base our efforts within our social system and actual national conditions, giving full play to the advantages of the socialist system. We believe that after years of effort, we will be able to explore a road to common prosperity with Chinese characteristics—a road that will promote the all-round development of human beings, protect the labor enthusiasm of all social sectors, and promote long-term economic and social development domestically, while also contributing Chinese wisdom and solutions to economic and social development on a global scale.
