But given China’s history of economic egalitarianism, the push for common-prosperity from the top level has rattled business circles, with many concerned that China may return to its old days of orthodox communist doctrine.
The highlighting of “third distribution” of wealth at the meeting, referring to high-income groups and businesses giving back to society, adds to existing anxiety that authorities may resort to seizing assets from the rich to achieve the goal of common prosperity.
In a news briefing held on August 26, Han Wenxiu, an official from the CPC Central Financial and Economic Affairs Commission, said the concept does not mean “robbing the rich to help the poor” and China will not return to economic egalitarianism.
Noting that common prosperity is a “fundamental characteristic” of a socialist society and “a common aspiration” of the Chinese people, Han said that common prosperity can only be achieved through “working hard together” and that the government will not “fall into the trap of welfarism.”
Han also said that the government will endeavor to increase the size of the pie and divide it more fairly and seek to promote high-quality development to reduce income disparity and prevent economic polarization.
Regarding the emphasis on “third distribution,” building upon the first distribution of salaries and the second distribution through taxation, Han said that it will be completely voluntary, though the government will encourage it through relevant reforms.
Many experts believe that China could in the immediate future introduce inheritance tax, property tax and capital gains tax. The absence of these in China’s tax regime has long been criticized for disproportionately favoring the rich.
In an article published on people.cn, Li Daokui, chief economist at the New Development Bank and former adviser to China’s central bank, stressed that the common prosperity concept should go beyond income to center on the comprehensive development of the Chinese people.
“It should not be just about income,” Li said, “What is more important is education, health, employment and a sense of gain.” Authorities have already taken action. In July, authorities issued a guideline ordering online platforms to ensure food delivery drivers earn above the country’s minimum wage and are freed from “unreasonable demands” placed upon them by algorithms.
On August 26, China’s top court, the Supreme People’s Court, and the country’s Ministry of Human Resources and Social Security issued a memo that outlined 10 legal cases in which Chinese courts ruled against employers for labor rights violation.
The move is a sign that China is becoming more serious about protecting labor rights, and a warning against the “996” work culture found in many China’s tech giants, which refers to working from 9am-9pm for six days a week, although employees in this sector are generally well-paid.
In the months leading to the launch of the common prosperity doctrine, China’s leadership warned repetitively about “reckless capital expansion” and moved to strengthen regulations on a range of industries, including crypto miners, internet companies and more lately tutoring firms.
Although none of these actions have official links to the common-prosperity agenda, many believe that a new era that prioritizes fairness over efficiency has come.