Deciphering the Chinese economic miracle: lessons for the developing world

We are pleased to publish this important article by Associate Professor Efe Can Gürcan, which sets out what he describes as the ‘Chinese miracle’, “that China has enjoyed unprecedented economic success in world history despite enormous historical, demographic, geographical and geopolitical adversities.” Despite this, he notes, “China has developed an exemplary model of economic development that inspires much of the developing world.” Therefore, “to decipher the formula behind China’s historic economic success” is to “offer fundamental hints to guide developing countries in their endeavours to reach an advanced stage of economic development.”

Professor Gürcan surveys the various stages of China’s socialist development under Mao Zedong, Deng Xiaoping, Jiang Zemin, Hu Jintao and Xi Jinping, noting that “the roots of the Chinese economic miracle can be traced back to the early phase of the Chinese revolution under the leadership of Mao,” who he sees as the real originator of the concept of socialism with Chinese characteristics. Deng Xiaoping developed this, including by digging deeper into Mao’s work, for example his, ‘A Critique of Soviet Economics’, and he highlights Deng’s view of the essence of socialism lying in the “liberation and development of the productive forces, elimination of exploitation and polarisation, and the ultimate achievement of prosperity for all.”

Professor Gürcan concludes by stating that: “In contrast to Western capitalism, the Chinese economic miracle does not originate from forced accumulation, wars, and colonialism. On the contrary, it springs from peaceful development and international cooperation. Understood as such, China’s model also constitutes the living example of the rising relevance and superiority of socialism over the capitalist system.”

This is an extremely important article that is worthy of careful study. It was originally published in Volume 3 Issue 2 of the Turkish journal Belt and Road Initiative Quarterly (BRIQ) and is reproduced with thanks. The article can be also be read/downloaded in PDF form.

Abstract

Despite enormous historical, demographic, geographical, and geopolitical adversities, China has enjoyed unprecedented economic success in world history. This article aims to decipher the formula behind China’s historic economic success and distill policy lessons for developing countries in their endeavors to reach an advanced stage of economic development. Based on descriptive case study and statistics, the article suggests that the Chinese economic miracle can be explained by a four-fold formula: a) devising an autocentric economic model aspiring to improve national autonomy and cushion the impact of foreign interference, b) insisting on socialism and the leadership of the Communist Party of China (CPC), which allows for strategic coherence and long-term planning to overcome free-market anarchy, c) creating a state-driven industrial base fueled by national science and technology policies, and d) adopting a balanced approach to development centered on attaining a higher sociocultural and ecological quality of life. The findings also help to debunk the myths surrounding the Chinese miracle, particularly the “cheap labor thesis”, the “technology theft thesis”, the “foreign investment and capitalist integration theses”, the “imperialism thesis”, and the “Mao-the-monster thesis”.  

Keywords: Chinese miracle,economic development, Mao Zedong Thought, socialism with Chinese characteristics, Xi Jinping Thought

Deciphering the Chinese Economic Miracle: Lessons for the Developing World

The “Chinese miracle” has become a widely used term in development studies, inspiring developing countries to achieve high levels of prosperity, living standards, and stability over the last decade. The popularity of this term can be explained in large part by the fact that China has enjoyed unprecedented economic success in world history (Zakaria, 2011; Gürcan 2021a), despite enormous historical, demographic, geographical, and geopolitical adversities. China was one of the world’s poorest countries before the socialist revolution in 1949. In the early revolutionary era, China struggled much to overcome its crippling semi-colonial legacy characterized by the medieval conditions of an agricultural economy and the weakness of its industrial base. History aside, China is the largest country by population size, which currently accounts for 22% of the world’s population. This goes hand in hand with China’s resource scarcity problem as a structural adversity constraining its development potential. China possesses only 7% of the world’s arable land and freshwater resources and 8% of the world’s natural resources. Furthermore, only 19% of its surface area is suitable for human habitation, and 65% of its surface area is rugged. This severely cripples China’s farming capabilities and facilitates ethnic heterogeneity as a potential impediment to political cohesion (Morton, 2006; Naughton, 2018). Another adversity threatening China’s economic development concerns geopolitical circumstances. Cases in point are how China’s membership in the United Nations was stalled until 1971, and the US resorted to military interventions in China’s neighboring regions to suffocate the revolution. The current geopolitical circumstances find their sharpest expression in the current US containment strategy and the US-led trade and technology war against China (Gürcan, 2019; Gürcan, Kahraman & Yanmaz, 2021).     

Despite such adversities, China has developed an exemplary model of economic development that inspires much of the developing world. Since 1979, China is the only country that has remained untouched by any economic crisis. The 1979-2018 period testified to an average economic growth rate of 9.4% in the lead of the CPC, making China the world’s second-largest economy, top producer, and the leading exporter of technological goods (Hu, 2020). By 2015, China came to assume the global production of 40% of washing machines, 50% of textiles, 60% of buttons, 70% of shoes, 80% of televisions, and 90% of toys. Recently, China has made significant progress in producing higher-value added products in the computer, aviation, and medical technology sectors, among others. One should also note that China has risen to the world’s largest lender to the developing world, second-largest investor in foreign direct investment (FDI), and top leader in green bonds and credits. China’s contributions to green finance also bring to mind China’s global leadership in sustainable development. China has recently emerged as the world’s top leader in green transportation as the largest producer of electric buses and the largest market for electric vehicles and bikes. Similarly, China’s status as the world’s top producer of solar, wind, and hydroelectric power is closely related to its reputation as the world’s top investor in sustainable energy technology (Gürcan, 2021a). Besides China’s historic success in economic and environmental development, one should also note that the Chinese economic miracle is credited for 70% of global poverty eradication between 1990 and 2015 (Gardner, 2018).

Continue reading Deciphering the Chinese economic miracle: lessons for the developing world

Cheng Enfu: Economic development in socialist countries – great achievements and future prospects

We reproduce below the text of a speech given by Cheng Enfu – former president of the Academy of Marxism at the Chinese Academy of Social Sciences (CASS), currently Academician of CASS, principal professor of the University of the Chinese Academy of Social Sciences, and president of the World Association for Political Economy (WAPE) – at the recent book launch we co-hosted for Elias Jabbour and Alberto Gabriele’s ‘Socialist Economic Development in the 21st Century’. In his brief but comprehensive speech, Professor Cheng describes the trajectory of socialist economic development, starting with the extraordinary achievements of the Soviet Union, and continuing with China’s “three miracles”: the period of early socialist construction, which broke China out of underdevelopment and “fundamentally reversed the trend of China’s marginalization in the world system”; the Reform and Opening Up period from 1978, within which China became a major economic power; and the construction of socialism with Chinese characteristics in the new era since 2013, in which China’s “scientific, technological, economic and ecological construction has jumped to a new level.” Cheng discusses the escalating New Cold War, which is the imperialist camp’s response to China’s rise and humanity’s multipolar trajectory, concluding that “bad things can also become good things” and that the socialist countries – China, Vietnam, Laos, Cuba and the DPRK – will continue to achieve greater economic and social development in the face of the US-led onslaught.

Alberto Gabriele and Elias Jabbour’s monograph on the economic development of several socialist countries in the 21st century deserves careful reading and great attention. In the following, I will address a few potentially controversial points on the subject of economic development in China and the Soviet Union, as two representative examples of socialist countries, in response to the misconceptions prevailing in the world.

The first point: the Soviet Union has made great achievements in economic and social development. This year is the 100th anniversary of the establishment of the Soviet Union, which is worth commemorating, but because of the betrayal and subversion of the Soviet Union by the Gorbachev and Yeltsin leadership groups, the Western world generally denies the achievements in economic and social development of the Soviet Union. In my opinion, after the October Revolution, the Soviet Union, under the leadership of Lenin, established the dictatorship of the proletariat and the centralized democratic system, carried out large-scale economic, social, educational and cultural construction, repelled the armed aggression of 14 capitalist countries, and developed a series of theories and successful practices for building socialism in one country under the siege of capitalist countries.

Continue reading Cheng Enfu: Economic development in socialist countries – great achievements and future prospects

On the sinicization of Marxism

We are very pleased to publish (for the first time in English) this detailed and insightful article by Carlos Miguel Pereira Hernández, Cuba’s ambassador to China. Comrade Pereira delves into the meaning of Socialism with Chinese Characteristics, carefully noting that it should be understood on its own terms, rather than being compared against a one-size-fits-all model: “There is no unique definition of socialism, and any analysis on the issue must start by accepting that visions of it are diverse.”

Pereira analyses the trajectory of sinicized Marxism-Leninism, noting that this begins not with the Reform and Opening Up period from 1978 but with the early development of the Chinese Revolution. The author cites Mao Zedong’s 1956 speech, On the Ten Major Relationships, as a turning point in the development of a specifically Chinese socialism that rejected the “mechanistic copying of foreign models.”

Pereira does not shy away from the contradictions of modern Chinese socialism, including the existence of a capitalist class, a large private sector, and stark inequality. The danger always exists that these by-products of market reforms will corrode the economic foundations of socialism. Yet, the author notes, China’s handling of the Covid-19 pandemic, and the fact that “political criteria were weighted above market mechanisms”, highlight the reality that the capitalist class is not the ruling class. The same is true of the government’s commitment to poverty alleviation and its renewed emphasis on common prosperity.

Comrade Pereira concludes that “the current model in China, including the corrections introduced at each stage, remains on the path to socialism”, and indeed that sinicized Marxism deserves to be widely studied, as many of its innovations may well have relevance beyond China.

This article was first published in Spanish – La sinización del marxismo, las ciencias sociales y la cuestión del modelo propio – in the Cuban journal Política Internacional. The English translation was kindly provided to us by the author.

ABSTRACT

The present analysis begins with a call for attention to the discussion about the existence or not of a “Chinese Marxism”, that is, the sinicization of Marxism, an officially coined formulation within the Chinese narrative and understood as the adaptation of the Marxism to the conditions and particularities of China and which comes to life in the notion of socialism with Chinese characteristics.

The above-mentioned element is key to understand, and even to clarify, how both nature and the national peculiarities of each country affect – or might affect – and if that gives rise to the existence of their own models of socialist construction.

The analysis focuses on the period from 1978 to the present, which coincides with the beginning and development of the reform process, considered by Chinese sources as a “driving force” for the improvement and development of the socialist system within the Chinese conditions. For this, it has been considered essential to provide criteria that allow establishing, without any doubt, that the current model in the Asian country –which includes the corrections introduced at each stage– remains on the road to socialism; also to verify how the political narrative produced and reproduced by Western theoretical development has been contrasted with another Chinese-own narrative, based on the concepts that are analyzed in this work and that reflect the important role of social sciences and theoretical and academic debate as an important regularity of the Chinese socialist process.

Keywords: China/Reform/Socialism/Marxism/Social science

Continue reading On the sinicization of Marxism

Book launch: Socialist Economic Development in the 21st Century

We are excited to be co-hosting, with the International Manifesto Group, this online book launch for the English version of Socialist Economic Development in the 21st Century, by Elias Jabbour and Alberto Gabriele.

Date: Saturday 28 May 2022
Time: 9am US Eastern, 9pm China, 2pm Britain
Location: Zoom and YouTube
Registration: Eventbrite

In this launch event for the English-language edition of ‘Socialist Economic Development in the 21st Century’, authors Elias Jabbour and Alberto Gabriele are joined by several experts in Marxist political economy from China, Britain and Canada to discuss the book’s central thesis: that, a century since the first socialist revolution broke the global monopoly of capitalism, socialist economic construction continues to offer the most viable alternative to the globalized capitalist crisis. We will pay particular attention to the achievements, complexities and contradictions of the evolving model of socialist economic development in China, Vietnam and Laos. This panel is jointly organised by the International Manifesto Group and Friends of Socialist China.

Speakers

Elias Jabbour is Adjunct Professor at the Faculty of Economic Sciences, Postgraduate Programs in Economic Sciences, and International Relations at the State University of Rio de Janeiro. He is co-author of Socialist Economic Development in the 21st Century.

Alberto Gabriele is a Senior Researcher at Sbilanciamoci, Rome, Italy. He is co-author of Socialist Economic Development in the 21st Century.

John Ross, Senior Fellow at Chongyang Institute for Financial Studies, Renmin University of China. Since 1992, and the publication in Russia of his ‘Why the Economic Reform Succeeded in China and Will Fail in Russia and Eastern Europe, ’he is the author of over 500 published articles on China’s economy and geopolitical relations. He has more than one million followers on Weibo, the Chinese equivalent of Twitter. His articles on China’s economy have won several prizes in China. He is author of two best-selling books published in Chinese ‘ –The Great Chess Game ’and ‘Don’t Misunderstand China’s Economy’. His new book in English ‘China’s Great Road ’is published this month.

Radhika Desai is a Professor at the Department of Political Studies, and Director, Geopolitical Economy Research Group, University of Manitoba, Winnipeg, Canada. She is the author of Geopolitical Economy: After US Hegemony, Globalization and Empire (2013)Slouching Towards Ayodhya: From Congress to Hindutva in Indian Politics (2nd rev ed, 2004) and Intellectuals and Socialism: ‘Social Democrats’ and the Labour Party (1994), a New Statesman and Society Book of the Month, and editor or co-editor of Russia, Ukraine and Contemporary Imperialism, a special issue of International Critical Thought (2016), Theoretical Engagements in Geopolitical Economy (2015), Analytical Gains from Geopolitical Economy (2015), Revitalizing Marxist Theory for Today’s Capitalism (2010) and Developmental and Cultural Nationalisms (2009).

Mick Dunford is an Emeritus Professor, University of Sussex, Visiting Professor, Chinese Academy of Sciences, Managing Editor, Area Development and Policy.

Cheng Enfu (video recording and with Liu Zixu’s assistance) is an academician at the Chinese Academy of Social Sciences (CASS), Director of the Research Center for Economic and Social Development (CASS), principal professor at the University of the Chinese Academy of Social Sciences, President of the World Association for Political Economy, president of Chinese Society of Foreign Economic Theories, and member of the People’s Congress of China.Cheng Enfu spoke through his translator, Zixu Liu.

Prof. Peng Zhaochang taught at Rollins College in the US before going back to China and now working at Fudan University in Shanghai. He received his Ph.D. from UMass Amherst where Prof. David Kotz was his chief adviser.

Michael Roberts worked as an economist in the City of London for various financial institutions for over 40 years – in the heart of the beast! He has written several books including: The Great Recession – a Marxist view (2009); The Long Depression (2016); Joint ed: World in Crisis (2018); Marx 200 (2018); and Engels 200 (2020). He is joint author with G Carchedi of a forthcoming book published this summer by Pluto Press: Capitalism in the 21st century – through the prism of value.

Moderator – Jenny Clegg an independent writer and researcher, a long time China specialist, and a lifelong member and now a vice-President of SACU. A former Senior Lecturer in International and Asia Pacific Studies, her published work includes China’s Global Strategy: towards a multipolar world, Pluto Press, 2009). She is active in the peace and anti-war movement in Britain

Developing nations should jointly deal with fallout of Western sanctions on Russia

We’re pleased to republish this thought-provoking opinion piece from Wang Jiamei in the Global Times. Wang notes that the unilateral sanctions being imposed by the major Western countries are causing significant economic harm around the world, driving up energy and food prices, along with inflation. Furthermore, the extreme financial sanctions (such as removing Russia from the SWIFT system) may affect the ability of developing countries to trade with Russia, and serve as a reminder that the developing countries need to deepen their coordination in order to insulate themselves from the negative effects of the decisions taken by the imperialist countries.

It seems that a gradual embargo on Russian oil has become the focus of the latest round of US-led economic sanctions against Russia, which may lead to further volatility throughout the world economy.

Leaders of the Group of Seven (G7) nations committed on Sunday to “phasing out or banning the import of the Russian oil” in an aim to remove reliance on Russian energy supplies, according to a joint statement.

The G7 decision came just days after Ursula von der Leyen, president of the European Commission, announced a plan last week to phase out Russian crude oil within six months and refined products by the end of the year.

Continue reading Developing nations should jointly deal with fallout of Western sanctions on Russia

Book review: China’s Great Road – Lessons for Marxist Theory and Socialist Practices

By John Ross, Praxis Press, 2021
Reviewed by Dr Jenny Clegg

Updated 09 April 2022: John Ross contacted us to note that the review incorrectly quoted him as describing Deng Xiaoping as “the greatest Marxist of all time”. This should have been “the world’s greatest economist.”

John Ross has, for some years now, been one of the most forceful advocates of the present Chinese road to socialism on the Western left. His ‘China’s Great Road’ (for which we held an online launch) presents his key arguments. In this detailed review, Dr Jenny Clegg, writer, China specialist, peace campaigner and Friends of Socialist China advisory group member, acknowledges Ross’s useful contribution to the debate, but also draws attention to what she considers its flaws, regarding both the complexities of China’s recent trajectory and the historical record of socialism under Stalin and Mao.

Introduction

Literature on China’s supposed ‘reversion to capitalism’, whether of the neoliberal or state-led kind, abounds. It has been argued over again that China’s success over the last four decades came as a result of its abandoning ideology for pragmatism so as to follow policies of ‘reform and opening up’.  Either that or the wholesale embrace of markets unleashing the creativity of its individual capitalist entrepreneurs.  John Ross, a Senior Fellow at the Chongyang Institute for Financial Studies at Beijing’s Renmin University, swims hard against this tide in his book, China’s Great Road, arguing the exact opposite:that China’s remarkable achievements are the result, not of a reversal of Marxism, but in fact a return to basic Marxist tenets.

The book comprises a collection of recent articles, some originally published in Chinese, others in English, which makes for some repetition, but leaves no doubt as to the arguments.  Ross’s aim is to persuade others on the international left to look seriously at China’s socialism and see what can be learnt from its success.

The book presents two key propositions.

The first, that China has achieved far more than any other country in history in improving the well-being of its people, is set out with the help of easy-to-read graphs.  The evidence, as Ross shows, is all there in World Bank figures: China has lifted over 900 million people out of poverty, raising livelihoods and life expectancy at unprecedented rates, whilst exceeding every other economy in output, wage growth and household consumption over the last 30 years. 

Continue reading Book review: China’s Great Road – Lessons for Marxist Theory and Socialist Practices

Elias Jabbour: Understanding the possibilities the Chinese socialist experience offers for humanity

Below is the video and text of a speech by Elias Jabbour, economics professor and author of Socialist Economic Development in the 21st Century: A Century after the Bolshevik Revolution, at our recent event 21st Century Socialism: China and Latin America on the Frontline. Elias discusses how China’s model of socialism and its engagement with global markets is creating an invaluable space for the countries of Latin America to assert their sovereignty and more forward on the long road towards socialism.

I am immensely grateful for the opportunity to be with friends gathered in this group. In fact, one of the great honors I’ve had in my life has been speaking to comrades who have political clarity about how things work in the real world.

In Brazil and Latin America, we are still a long way from a level of political consciousness on the left to be capable of perceiving the centrality of China and the possibilities that the Chinese socialist experience offers for humanity.

I used to say that China has been noted for building the most advanced social and human engineering of our time. It’s in that country, although still embryonic and taking its first steps, that socialism presents itself as a clearer historical form.

Furthermore, I have said that the current historical form in which socialism presents itself is still far from abstract concepts, among them – for example – the abolition of private property.

Continue reading Elias Jabbour: Understanding the possibilities the Chinese socialist experience offers for humanity

When will China become a high-income country?

We are pleased to reprint this important speech, recently delivered at Peking University, by Dr. Justin Yifu Lin, one of China’s leading economists and a former Vice President of the World Bank, which addresses the speed of economic growth in China this year; the relationship between economic growth and innovation; how to achieve common prosperity; and when will China become a high-income country.

Dr. Lin concludes: “Up to now, the population living in high-income countries only accounts for 16% of the world’s population. If China also becomes a high-income country, the world’s population living in high-income countries will double, from 16% to 34%. I believe that we will have the opportunity to witness this history.”

The speech was published in English by Asia Times and originally in Chinese on guancha.cn

This article is compiled from a speech by former World Bank Vice-President Justin Yifu Lin at the Peking University National School of Development’s “China Economic Watch No 60: Interpretation of the Two Sessions and China’s Economic Prospects” event. This article has not been reviewed by the speaker himself.

Good afternoon, everyone, online and offline. As a member of the Chinese People’s Political Consultative Conference (CPPCC), I am glad to have this opportunity to talk to you about some of the hot issues that were of concern to the delegates and members of the CPPCC during the two sessions.

I will mainly talk about three points. First, the speed of economic growth this year; second, economic growth should be innovative; third, how to achieve common prosperity? When will China become a high-income country?

First of all, for China, the economic growth rate is the biggest big picture, because we want to build a new development pattern mainly based on a large domestic circulation. In fact, the larger China’s economy is and the higher the share of the service sector is, the greater the share of the domestic circulation is bound to be.

So, how to make the economy bigger and increase the share of service industry? Of course, we need to raise income levels and economic growth.

Second, we need to have two big pictures in mind. One is the overall strategic picture of the great rejuvenation of the Chinese nation, which includes politics, culture, and many other aspects, but the economy is the foundation.

To achieve the great rejuvenation of the Chinese nation, the goal is to set China’s GDP per capita at 50 percent of that of the United States at purchasing power parity (PPP) – about the level of South Korea in 2002 – a requirement that should be in place. But China’s GDP per capita at PPP is currently just over 20% of the US. To go from just over 20% to 50%, and to achieve it by 2049, would require a relatively high rate of economic growth.

Another big picture is that we are now facing a major global change that has not been seen in a century. How should we manage this big change? Only if China’s GDP per capita at purchasing power parity reaches 50% of the US, the U.S. will accept China as the number one economy by then, because by then, the US will probably have no means to jam our necks.

Continue reading When will China become a high-income country?

USA vs China: Whose Economy is Winning?

What is the real state of the world economy? This webinar on 28 January 2022, organized by the International Manifesto Group, assessed the relative strengths of the two most important protagonists, China and the US. As the rift between them deepens with the threat of direct military confrontation looming, propaganda has virtually replaced hard facts. Speakers included Michael Hudson, Mick Dunford, Michael Roberts and Alan Freeman. The webinar was introduced and moderated by Radhika Desai. This report was originally published on New Cold War.

Introduction by Radhika Desai

Rumour and speculation are swirling about the USA’s post-COVID recovery whilst allegations that China is suffering a ‘slowdown’ are hard to distinguish from simple Cold War hype. At stake also are the social systems of the two economies, as the USA still struggles to throw off the pandemic by opening the vaults to Big Pharma, whilst China reigns in its property speculators and private technology companies ,and goes ever more green, at the same time ambitiously recentring its economy in response to the USA’s aggressive trade and technology restrictions. Our panel’s three experts will dissect the war of words and detach facts from flimflam.

Continue reading USA vs China: Whose Economy is Winning?

A Comprehensive and Accurate Understanding of “The New Road of Chinese-Style Modernisation”

We are pleased to publish this paper by Han Qingxiang, from the Party School of the Communist Party of China (CPC) Central Committee, who is also a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC). Han presents a detailed outline and explanation of the CPC’s understanding of the new phase of China’s socialist modernisation, highlighting both the new aspects since the first phase of China’s reform and opening up, as well as the continuities, along with its antecedents in Marxist theory, specifically work by Marx and Engels in the 1840s and 1850s. The paper was delivered at the Cloud International Workshop on “New Forms of Human Civilization from a World Perspective,” held by the School of Marxism, Dalian University of Technology (DUT), 29-31 October 2021. We are grateful to the DUT Translation Team for their work, as well as to Professor Roland Boer for his meticulous sub-editing and cooperation.

General Secretary Xi Jinping’s speech at the celebration of the 100th anniversary of the founding of the Communist Party of China (referred to as the “7.1” speech) pointed out:

Following our own road – this is the firm foothold of all the theories and practices of our Party. More than that, it is the historical conclusion our Party has drawn from its struggles over the past century. Socialism with Chinese characteristics is a fundamental achievement of the Party and the people, forged through untold hardships and great sacrifices, and it is the correct path for us to achieve the great rejuvenation of China. By upholding and developing socialism with Chinese characteristics and promoting the coordinated development of material, political, spiritual, social and ecological civilisations, we have created a new Chinese-style path of modernisation and a new form of human civilisation.[1]

Here, from “following our own road” to “the road of socialism with Chinese characteristics” and then to “the new road of Chinese-style modernisation” provides a comprehensive exposition of the Chinese road’s formative and developmental logic, essential characteristics, important position, and comprehensive elaboration of global significance, all of which has rich political and scientific value.

Continue reading A Comprehensive and Accurate Understanding of “The New Road of Chinese-Style Modernisation”

Unmasking Imperialism podcast about Chinese socialism and Xinjiang propaganda

In this interview with Ramiro Sebastián Fúnez for his show Unmasking Imperialism, Carlos L. Garrido and Edward Liger Smith take on a series of common misconceptions regarding the Chinese revolution and socialism with Chinese characteristics, including the relationship of socialism to the market, the questions of Tibet and Xinjiang, and the Belt and Road Initiative (BRI). Amongst their many important points, they make clear that the great achievements scored since the adoption of the reform programme in the Deng Xiaoping era would have been impossible and inconceivable without the foundations laid in the period of Mao Zedong’s leadership.

Elias Jabbour: The “fundamental law” of the new Chinese socioeconomic formation

This brief original essay by Elias Jabbour, Professor at the School of Economics, Rio de Janeiro State University, introduces a key idea from his book with Alberto Gabriele, China: Socialist Economic Development in the 21st Century (due to be released by Routledge in English in March 2022), emphasising that China’s combination of a hybrid economy, Communist Party leadership and innovative and effective governance collectively constitute an important development of Marxist political economic theory.

The task of each and every social scientist dedicated to the evolution of humankind runs through understanding in which stage the human anatomy is, what we must keep in mind in order to better understand the progress of the monkey´s anatomy.

Likewise, in socio-historical terms, it is central to comprehend which is the most advanced formation in course in the world today. This is how we arrived at the Chinese “Market Socialism” and its particularities, what led us to designate it as a “new socioeconomic formation”. As President Dilma Roussef pointed out at the launch of our book, it is “not emerging as a result of a pre-existing capitalism”. The challenge now is to discover the nature of its functioning, its internal coherence, the “universal in the particular”.

Continue reading Elias Jabbour: The “fundamental law” of the new Chinese socioeconomic formation

A question of State and Revolution: China and Market Socialism

We are very pleased to republish this important article from the website Workers Today on the important question of China and market socialism. Rigorously argued and theoretically well grounded, it puts forward six main theses:

  • That Chinese market socialism is a way to address the backward state of productive forces
  • That market socialism in China is a Marxist-Leninist tool that is important to socialist construction. Here it draws on both Marx’s Critique of the Gotha Program and Lenin’s The Tax in Kind
  • That the CPC’s continued leadership and control of this economy is central to Chinese socialism
  • That Chinese socialism has catapulted a workers state to previously unknown economic heights
  • That China’s successful development of a modern industrial economy has laid the basis for higher forms of socialist economic organisation
  • That China’s application of market socialism to its relations with other developing countries plays a major role in the fight against imperialism

Although issued by Workers Today on 18 November 2021, the article originally appeared on the Return to the Source website in May 2011. It may have been written a decade ago, but its analysis and conclusions remain highly relevant.

Though each face very specific obstacles in building socialism, these five countries–the Republic of Cuba, the Socialist Republic of Vietnam, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and the People’s Republic of China–stand as a challenge to the goliath of Western imperialist hegemony. Among them, however, China stands unique as a socialist country whose economic growth continues to supersede even the most powerful imperialist countries.

Continue reading A question of State and Revolution: China and Market Socialism

From poverty to prosperity, China’s century

This very interesting article by University of Glasgow professors Asit K Biswas and Cecilia Tortajada provides an overview of the extraordinary economic, political and scientific progress China has made since liberation – with a particular focus on the strategy of Reform and Opening Up – and analyses how this progress provides the foundations for achieving the country’s ambitious goals around sustainable development. The article was originally published in China Daily on 12 November 2021.

The speed, scale and span of the economic and social transformation of China during the past 40-odd years have been unprecedented in human history.

One hundred years ago, times were not good for China. Its 400 million people lived mainly in rural areas, mired in poverty. It was a nation ravaged by imperial mismanagement, foreign colonialism and civil wars.

On July 23 1921, 13 disillusioned Chinese young men and two representatives from the Communist International, met secretly in an inconspicuous house, 106 Rue Wantz, in Shanghai’s French Concession, which began the first national congress of the Communist Party of China (CPC). The police interrupted the meeting on July 30, and the Chinese members shifted their discussions to a tourist boat on the South Lake in Jiaxing, Zhejiang province, to continue the first National Congress. The first congress marked the founding of the CPC.

Continue reading From poverty to prosperity, China’s century

The totality and emphasis of Mao Zedong’s Four Modernization strategies

We are very pleased to publish this important paper on Mao Zedong and the Four Modernizations presented by leading Chinese Marxist theoretician Jin Minqing at last month’s Cloud International Workshop organised by Dalian University of Technology’s School of Marxism. We are grateful to Professor Roland Boer for his comradely assistance in sub-editing the translation.

In his paper, Jin Minqing seeks truth from facts to clearly establish and demonstrate Mao Zedong’s key role in the formulation and elaboration of the Four Modernizations strategy from the time of Liberation and even before.

This is extremely important as it refutes both right and ‘left’ opportunist positions, that spuriously seek to draw a line between Chairman Mao and the Four Modernizations. Right opportunists seek to ascribe the line of Four Modernizations solely or overwhelmingly to other important CPC leaders, negating or belittling Mao’s central role and the achievements made under his leadership. ‘Left’ opportunists present the Four Modernizations as somehow being a revisionist departure from Marxism and as running counter to Mao Zedong Thought.

As Zhou Enlai said: “One tendency covers another.” And these two currents certainly fuel and provide a specious credibility to each other. The present generation of Chinese communist leaders, with Xi Jinping as the core, draw a very clear line of demarcation with historical nihilism and stress the essential continuity of the Chinese revolution through its successive and distinct phases. It is in this context that Ji Minqing’s paper acquires great importance and needs to be widely read internationally.

Author: Jin Minqing. Secretary of the CPC Party Committee of the Institute of Modern History, Chinese Academy of Social Sciences; Vice President and Secretary General of Chinese Historical Materialism Society

(Text of a paper delivered at the Cloud International Workshop on “New Forms of Human Civilization from a World Perspective,” School of Marxism, Dalian University of Technology, 29-31 October 2021).

Translated by DUT Translation Team.

Continue reading The totality and emphasis of Mao Zedong’s Four Modernization strategies

Carlos Garrido: Why Western Marxism misunderstands China’s use of markets

We are pleased to republish this thought-provoking piece in Midwestern Marx by Carlos L Garrido, on the philosophical underpinnings of Reform and Opening Up and of the left critique of it often found in the Western left.

Continue reading Carlos Garrido: Why Western Marxism misunderstands China’s use of markets

Elias Jabbour: Three great transitions in the Chinese economy

This interesting article by Brazilian economist Elias Jabbour, first published in People’s Daily on 4 November 2021, explores the various predictions by Western economists of China’s “imminent collapse” (repeated ad nauseam for at least 30 years) and seeks to explain the reasons this collapse never arrives. Jabbour details the current challenges facing the Chinese economy and provides some context for the focus on common prosperity and ecological civilisation.

Interesting sign of the times. Anyone who reads the economics section of a Western newspaper for a moment will have the impression that the Chinese economy is on the verge of collapse. This time, the signs are coming from the Chinese GDP growth forecasts for 2021, which according to Goldman Sachs, have dropped from the initial projection of 8.2 percent to 7.8 percent. It is worth mentioning that no capitalist economy in the developed world will grow above 5.7 percent.

Continue reading Elias Jabbour: Three great transitions in the Chinese economy

John Riddell: Effort for social equality in China arouses concern on Wall Street

We are very pleased to republish this insightful piece by the Canadian Marxist John Riddell, general editor of the Communist Publishing Project. The article, originally posted on the author’s blog, assesses the significance of ‘common prosperity’ and the anxiety it has induced among the imperialist ruling classes. John calls on socialists worldwide to oppose the evolving New Cold War and to demonstrate solidarity with China.

Addressing the Chinese Communist Party’s Central Committee on 17 August 2021, Xi Jinping, president of the Chinese People’s Republic, stressed the need for “common prosperity” as a fundamental requirement of socialism.[1] The Central Committee responded by calling on high-income individuals and businesses to “give back more to society.”[2]

Big-businesses media in the West have reacted to this development with expressions of concern. “The End of a ‘Gilded Age’: China is Bringing Business to Heel,” declared A New York Times headline. “Where once executives had a green light to grow at any cost,” the Times continued, “officials now want to dictate which industries boom, which ones bust.”[3]

From a capitalist viewpoint, it’s a troubling prospect. A study by the Brookings Institute, a U.S.-based corporate brain trust, warned darkly that the “common prosperity” policy could lead to a possible $1 trillion wipe-out of Chinese corporate market values.[4] In fact, stock markets in the People’s Republic of have remained stable.

According to Brookings, the government’s new regulatory measures provoked a public debate within China between “those favoring bold measures” and “more establishment-minded advocates” who support the nurturing of “innovation and entrepreneurship.”

Brookings highlighted the role of a “previously low-profile blogger” in China, Li Guangman, who called for a “profound revolution” to correct the inequalities capitalism has wrought.” According to Brookings, Li’s essay went viral and “was republished online by party and state-controlled media.”[5]

China’s commitment to “common prosperity” follows on two major social mobilizations aiming to put this principle into practice. Firstly, a massive campaign to end “extreme poverty,” more ambitious than any similar effort in world history, succeeded in lifting the living standards of hundreds of millions of Chinese citizens, assuring that each individual had access to food, shelter, clothing, basic medical care, and education.

In February 2021, China reported the achievement of these ambitious goals. The gains were made in large part through the efforts of a host of Chinese revolutionary cadres who spent months in the villages helping to work out individualized solutions for impoverished residents.

Even as the anti-poverty campaign was wrapping up, China was undertaking a new collective effort – this time to combat the Covid-19 pandemic. The People’s Republic has now become a unique pandemic-free zone embracing one-fifth of humankind.

These gains have been consolidated in the teeth of an ominous U.S.-led “cold war” marked by unprovoked trade, diplomatic, and military reprisals against China. China’s recent social achievements were recently evaluated by a global webinar of the International Manifesto Group, with participation of a prominent Chinese Marxist.[6]

China’s economic gains have been achieved though an economy in which capitalist market relations play a significant role – albeit under close government direction. Some observers within the international Left have publicized the social conflicts that arise in this environment. A comment received recently by this blog, for example, highlights the 2018 protest of workers at Jasic Technologies, which employs about a thousand workers at several locations in China. According to this submission, the response of state bureaucrats and repressive forces was to “fire the workers, beat the workers, jail their leaders and outlaw the various political groups” that began to form to support them.

This blog is not in a position to pass judgment on the events at Jasic. However, reports from a variety of sources indicate that social protests in China, often related to workplace relations, are relatively frequent.[7] Surely this is a testimony to the health of Chinese society. China’s 300-million-member trade unions are sometimes criticized as lacking independence. Still, the scope of labor representation in China contrasts favourably with the situation in the United States, where 90% of workers have no form of union whatsoever and labour protests are correspondingly infrequent.

The comment received by my blog went on to call on the Chinese proletariat “to sweep away the bureaucratic-military and capitalist classes which have sold their labor power by the tens of millions to foreign imperialists.” It is hard to find evidence that could lend credence to this projection. The population of China is on the Internet down to the village level. The country enjoys a culture of intense online discussion. Despite this fact, we do not see many reports of revolutionary anti-government groups in China. Political refugees from China are relatively few. The reported level of incarceration in China is no higher than that in Canada and only one-fifth of that in the United States.

The people of China travel freely: 166 million tourists left the country in 2019; more than 99% returned home. In recent years there have been close to 400,000 students from China studying in the United States. Most of them, after completing their education, return home. The Washington Post reports that there are fewer Chinese students in the U.S. these days, quoting a student from Hangzhou who abandoned his spot at the elite New York University: “America may be good, but it’s not too friendly to us nowadays,”

Eighteen months ago, I wrote on this blog that, given the prevalence of market relations in the Chinese economy, “the government, whatever its intentions, cannot avoid accountability to capital.” Social production, I added, “is shaped by capitalist ownership and exploitation, organized to maximize corporate profit and to withstand the challenge of cutthroat global competition and worker contestation. Predominantly capitalist production generates the all-too-familiar evils of inequality, alienation, and exclusion.”

In retrospect, I find that this statement gives insufficient weight to the social context in China or to prevailing class relations. Yes, Chinese society is marked by the contradiction between the capitalist sector of its economy and the needs of the people, between the goals of a handful of billionaires and those of a multitude of workers. But in China – unlike in the imperialist countries – the billionaires do not give instructions to the government. On the contrary, the government gives instructions to the capitalists.[8]

Elsewhere in my 2020 article, I described social inequality in China with reference to the “GINI” coefficient:

[B]y the “Gini” measure (2016-17), social inequality in China (38.5), although less than in the U.S. (41.4), is considerably greater than in Canada (33.8).

Here it should be noted that the largest factor causing social inequality in China is the gulf between economic conditions in the city and those in the countryside. This factor looms large among most peoples emerging from colonial oppression. In advanced capitalist countries such as the United States and Canada, this economic divide was largely overcome many decades ago. In China, the campaign against extreme poverty has brought massive resources to bear to reduce this gap.

Another sentence in my article provides a better guide:

“Chinese society today rests on the heritage of a great socialist revolution 75 years ago … deepened and developed by the efforts of working people and the revolutionary government they established.”

Surely what is most significant about China today is the degree to which, through its great revolution and subsequently, it has made headway in resisting the dehumanizing tendencies of colonialism and capitalism.

As for the longer term outlook, there is much discussion today among China specialists in mainstream Western media regarding the challenges they say China will soon face in terms of demographic distortions, ecological barriers, and the structure of its work force. While these issues are important, China’s future will surely be decisively influenced by the evolution of global politics. We must take warning here from recent revelations that former U.S. President Donald Trump, during the final weeks of his presidency, spoke of launching an unprovoked nuclear attack on China.

Trump’s threats were recently revealed by Mark Milley, then chief of staff of the U.S. armed forces. The U.S. general took the danger sufficiently seriously to twice inform his counterpart in China that he would not permit the U.S. president to launch a nuclear strike on the People’s Republic of China.

All indications are that China will not be left in peace to develop socialism.

Socialists worldwide need to actively oppose the threats against China. In so doing we can help ensure that the Chinese people can freely choose among the many possible paths of development now open to them. Even more, solidarity with China is urgently needed to help protect the planet as a whole from nuclear and climate disaster.

China Solidarity Groups

Notes

[1]. For a review of how the concept of “common prosperity” has been utilized during the history of the Peoples Republic of China, see Mick Dunford, “On Common Prosperity.”

[2]. Ryan Hass, “Assessing China’s ‘Common Prosperity’ Campaign,” at bookings.edu. Brookings also reported major donations by leading Chinese private corporations to support the “Common Prosperity” vision, including a donation equivalent to US $15.5 billion from technology giant Alibaba.

[3]. Paul Mozur in the New York Times, 5 October 2021.

[4]. The Brookings warning was based on an article in Wall Street Journal published on 5 August 2021, that is, prior to the “Common Prosperity” announcement. The WSJ article is concealed by a corporate firewall.

[5]. Brookings, op. cit.

[6]. See “State Capitalism or Market Socialism: The Social Character of the People’s Republic of China,” organized by the International Manifesto Group, of which I am a member.

[7]. For a critical report on workplace conflicts in China see China Labor Watch.

[8]. I owe this observation to Carlos Martínez.

Xi Jinping: To firmly drive common prosperity

We reproduce below an article by Xi Jinping titled ‘To Firmly Drive Common Prosperity’, published in Qiushi, the bi-monthly theoretical journal of the CPC. Based on Xi’s speech at the 10th meeting of the Central Financial and Economic Affairs Commission on 17 August 2021, the article provides indispensable insight regarding the concept of ‘common prosperity’ and its centrality to China’s overall strategy. This English translation by Adam Ni first appeared in China Neican on 17 October 2021.

Since the start of reform and opening up, our Party has thoroughly summarised both positive and negative historical experiences. We realised that poverty is not socialism; we broke the shackles of the traditional system; we allowed some people and regions to get rich first; and we promoted the liberation and development of socially productive forces.

Since the 18th Party Congress [in November 2012], the Party Central Committee has grasped the new changes to [China’s] stage of development and placed greater importance on progressively achieving common prosperity for all people. It has promoted coordinated regional development and taken effective measures to safeguard and improve the livelihood of the people. We have won the tough battle against poverty, completed the building of a moderately prosperous society, and created favourable conditions for promoting common prosperity.

Continue reading Xi Jinping: To firmly drive common prosperity

On common prosperity

We are very pleased to publish this original article by Michael Dunford, Professor Emeritus of Sussex University and currently Professor at the Chinese Academy of Sciences. Professor Dunford provides a detailed theoretical, empirical and historical treatment of the key Chinese political concept of common prosperity, outlining its evolution and interpretation through the various phases of the history of the People’s Republic since 1953. Its publication is particularly timely. On 16 October, Qiushi, the main theoretical organ of the Communist Party of China, released the full text of an important speech by President Xi Jinping, delivered in mid-August to the party’s Central Committee for Financial and Economic Affairs, in which the Chinese leader forcefully outlined that now is the time to boldly advance the common prosperity agenda.


By Michael Dunford.[1]

Abstract

In China the idea of common prosperity dates back to 1953. After 1979 China chose to let some people and places get rich first to accelerate economic development, with Deng Xiaoping arguing that public property could prevent social polarization. The result was extraordinary sustained economic growth but at the expense of large increases in urban-rural, regional and social inequalities in income and wealth themselves associated with the growth of private capital. In 1999 the Communist Party of China started to address urban-rural and regional disparities in the name of common prosperity, while under the leadership of Xi Jinping the emphasis on common prosperity has increased markedly alongside domestic goals relating to innovation, improved governance and ecological and spiritual civilization. Starting in 2020 this course has seen strong government action against the disorderly expansion of private capital, monopolies, speculation and the costs of privately provided education, housing and potentially health as well as the establishment of a demonstration zone in Zhejiang province to explore ways to address uneven development and reshape the primary, secondary and tertiary distributions of income.

1 The meaning of common prosperity

On 17th August 2021 in a meeting of the Central Committee for Financial and Economic Affairs ( 中央财经委员会) Chinese President Xi Jinping called on China to promote common prosperity (material, ecological and cultural) in a context of high quality development (在高质量发展中促进共同富裕- zài gāo zhìliàng fāzhǎn zhōng cùjìn gòngtóng fùyù). In circumstances in which indigenous innovation is desired, a new industrial revolution is on the horizon and ecological civilization construction is designed to address environmental challenges, high quality development of the productive forces remains and will remain of vital importance, alone enabling China to advance from an upper middle to a high-income country. However the combination of high quality development with a quest for common prosperity and the increasingly frequent use of this term in defining China’s development direction are particularly significant and increasingly seen as mapping a new phase in China’s path to socialism.

The phrase ‘common prosperity’ first appeared in an article in the People’s Daily on 25th September 1953. On 12th December 1953 it appeared in the headline of a People’s Daily article entitled ‘The Path of Socialism is the Path to Common Prosperity’ (社会主义的路是农民共同富裕的路). Advanced as a step in the path to rural mutual aid, cooperatives and collectivization, collective prosperity was associated with the holding of resources in common. Just four days later the Communist Party of China (CPC) released its ‘Resolution on the Development of Agricultural Production Cooperatives’ (关于发展农业生产合作社的决议). Drafted under the chairmanship of Mao Zedong, it invoked ‘common prosperity’ as a goal of China’s socialist construction.[2]

In the late 1970s the term was often used by Deng Xiaoping to characterize socialism (Deng, 1999, 2014 [1979]). Also in the 1980s it was frequently used in his insistence that common prosperity (entailing the avoidance of polarization) and the predominance of public ownership are fundamental socialist principles.

At the end of the 1970s, however, an earlier association between common prosperity and egalitarianism (平均主义 平均主义 – píngjūn zhǔyì) was rejected. On 15th April 1979 the People’s Daily carried an article entitled: ‘A Few Getting Rich First and Common Prosperity (一部分先富裕和共同富裕). Increasingly, it was argued that to speed up the development of the productive forces, achieve the four modernizations and accelerate the arrival of common prosperity, some people and some places should be allowed to get rich first, with others getting rich later. Deng Xiaoping’s words repeated on a number of occasions are particularly important:

In short, predominance of public ownership and common prosperity are the two fundamental socialist principles that we must adhere to. The aim of socialism is to make all our people prosperous, not to create polarization. If our policies led to polarization, it would mean that we had failed; if a new bourgeoisie emerged, it would mean that we had strayed from the right path. In encouraging some regions to become prosperous first, we intend that they should inspire others to follow their example and that all of them should help economically backward regions to develop. The same holds good for some individuals (Deng, 2014 [1985]-b).

In the capitalist mode of production, the means of production and exchange are privately owned. In societies in which the capitalist mode of production predominates, private ownership derives from multiple (often corrupt) processes of accumulation by dispossession, and the concentration and centralization of assets and wealth in the hands of a small share of the population. This concentration of property in the hands of a class of private owners is the root cause of the gap between the rich and the poor. Although these mechanisms can lead in the direction of monopolies, the concentration and centralization of capital derive from market competition which gives rise to unending turbulence. Measures preventing and addressing the emergence of monopoly power do help. However anti-monopoly measures do not prevent the polarization of wealth and income (in the sense of a large and widening gap between rich and poor), as the accumulation of capital in competitive conditions (especially where returns to scale are increasing) is self-reinforcing.

Capital-centred societies have created considerable material wealth, and the material living standards of working people have increased significantly, especially in the post-war Golden Age when the income of low-income groups grew faster than those of high income groups. This outcome was however a result of an economic and political compromise, deriving from the struggles of working class people and their social movements and political parties at home, and the challenge of Communism. In that era trades union wage bargaining saw real wages increase steadily with productivity growth, while welfare states/social security co-existed with the capitalist mode of production (combined in many cases with significant state capital). Welfare funded principally out or taxation paid by the wage earning classes provided citizens with significant minimum rights and life guarantees. This era was however exceptional, and since the 1970s the competitive accumulation of private capital along with governments that principally serve capitalist interests are the main reasons for polarization and the expanded reproduction of income and wealth gaps in capitalist countries. As wealth and income accumulate at one end of the spectrum, non-owners, comprising the great majority of the population, are denied similar rights due to extreme self-reinforcing disparities in the ownership of private assets.

After the 1970s western capitalist societies moved in the direction of marketization, privatization and internationalization and also in the direction of financialization. Alongside the profits of capitalist enterprises, the owners of marketized land, natural resources and natural monopolies acquire economic rents. These rents are associated with monopoly positions, scarcity and differential advantages that cause the market values of the goods and services involving their use (land uses) to exceed their prices of production. In capitalist economies rents accrue to real estate capital and are also financialized: assets are pledged as collateral for financial sector loans, owners incur debts, and revenues on rent yielding assets are transformed into compound interest payments. Credit drives asset price inflation, while debtors unable to repay are expropriated, leading to a greater concentration of wealth in the hands of the financial sector. A relative increase in rentier and financial incomes and asset values diverts income away from real production and consumption, while in the absence of effective regulation capital market liberalization permits capital flight, tax evasion and money laundering. In financialized economies debt grows faster than the real production of goods and services, and financial and real estate interests seek leverage over money, credit creation and quantitative easing. In these conditions inequality increased dramatically.

The aim of socialism is people-centred rather than capital-centred development. The principal goal is to orient economic and social activities towards the production of goods and services that are socially useful, increase social well-being and enable all human beings to realize their potential and live happy and fulfilling lives (common prosperity). Although the material conditions for common prosperity (which itself involves an evolving and not a fixed standard) include development of the productive forces (although not the one-sided pursuit of GDP growth) the avoidance of polarization requires the development and improvement of socialist public ownership which also contributes to the development of the productive forces and national strength. Deng Xiaoping made this clear on repeated occasions. ‘As long as public ownership occupies the main position in our economy, polarization can be avoided,’ he said (Deng, 2014 [1985]-a, p. 149). In the public-owned socialist economy in the primitive stage of socialism, distribution should also depend on labour contributions, itself a way of avoiding social polarization. Contributions however vary. As a result incomes will vary but the differences should not be large. At the same time public ownership limits the possibilities of securing very high incomes as a result of personal possession/ownership of means of production and the exploitation of labour by capital (Wei, 2019)[3] as well as of real estate and financial assets.

The implication is that the eventual liberation of the working classes, realization of realm of freedom and comprehensive human development[4] require the replacement of private by collective ownership of economic assets and shared rights to and enjoyment of the fruits of their use in a communist society. The path to communism involves however a series of steps. These steps include a socialist stage (of to each according to his/her contribution) itself evolving from primitive to successively higher levels.

At present however common prosperity is not equality. Not only are people’s living needs differentiated requiring multi-channel supply systems. At the socialist stage (even after the elimination of private ownership of the means of production and exchange) the development of the productive forces remains limited. In the case of China it needs to advance socialist modernization, upgrade, innovate and escape the model of the recent past in which it imported high-end goods and exported low end assembled products. In this situation investment in skills and in indigenous science, technology and innovation are essential and will be associated with a distribution of rewards according to the quantity and quality of labour contributions. At present differences that are justified are moreover widely accepted. Differences that are not are widely condemned. Differences need not be large. In this new stage however the view that one ‘should give priority to efficiency with due consideration to fairness’ (Jiang Zemin, 2002)[5] is decisively giving way to a concept of shared development in which what is produced contributes to material, ecological and cultural needs, excessive primary income and wealth gaps are closed, distribution is reasonable[6] and all develop, building on China’s success in eliminating extreme poverty

The realization of common prosperity echoes the construction of a community of shared future for mankind: the establishment of an international division of labour has created a world in which developed countries with their relatively advanced industrial and military technologies and their financial power extract value from developing countries reproducing a global divide between the rich and the poor. Common prosperity as a national ambition has a counterpart in a global demand for shared development and common prosperity.

2 China’s path

The identification of a new path of common prosperity is a new step in the evolution of the new China. In 1949 China was virtually the poorest country in the world. In the next 30 years it grew at an average rate of 6.3% per year. China remained a low income country, but according to The World Bank (1981, p. 101), 1979 life expectancy of 64 was higher than the average of 51 for low income countries and 61 for middle-income countries, adult literacy stood at 66% compared with 39% in low income countries and 72% in middle income, while net primary school enrollment (93%) was just short of that for industrialized countries (94%). China’s population had nearly doubled. In the words of a glowing 1983 World Bank Report ‘China’s most remarkable achievement during the past three decades’ was to have made ‘low-income groups far better off in terms of basic needs than their counterparts in most other poor countries’ due to priorities attached to food, education and health. The authors of the report concluded that with the right policies China’s ‘immense wealth of human talent, effort and discipline’ would enable it ‘within a generation or so, to achieve a tremendous increase in the living standards of its people’ (The World Bank, 1983).

In the early 1970s after the visit of US President Richard Nixon to China a US embargo ended and China started to acquire western technologies. In 1979 it embarked on reform and opening up leading to historically unprecedented economic growth. As industrialization, urbanization and informatization advanced, China grew on average at 9.3% per year. By 2020 China was an upper middle income country with an average Gross National Income per head of US$ 10,610. At present it is expected to join the ranks of high-income economies during the country’s 14th Five-Year Plan (2021-25) period.

China’s extraordinary growth transformed it into the second largest economy in the world, the world’s largest exporter, the second largest exporter of capital, the holder of huge foreign currency reserves (US$ 3.20 trillion in January 2021, down from a peak of 3.8 trillion in 2014), the owner of a currency that is increasingly used to settle international payments, the owner of a vast, increasingly affluent and highly coveted domestic market where permanent urban residents account for 60% of the population, a country with (as a result of painful reforms) a powerful core set of state and collectively owned enterprises and a country that has led recent world economic growth.

As a result of the prioritization of GDP, growth occurred however at the cost of serious environmental damage, growing inequalities in income and wealth, growing rural-urban and regional disparities and a rapid increase (from 10,000 in 1994 and more quickly from 1997 to reach 87,000 in 2005 according to official Public Security Bureau figures) in mass incidents (involving in the new millennium at least 100 and up to 10,000 people and often involving petitions to central government relating to employment, land acquisition, demolitions, pollution and official conduct).

As already mentioned, after the restoration of national sovereignty and the establishment of a basic industrial system and minimum life guarantees, overall priority was given from 1979 to the development of the productive forces allowing, some people and places to get rich first. This phase lasted until 1999.with a more decisive change of course with the arrival of China’s new leadership group in 2013.  Commencing at first in a limited way in 1999 common prosperity came to mark a new phase of development in which everyone should get rich together and wealth is conceived in political, cultural and ecological as well as in material terms (Ge, 2021). More specifically, in 1998 the Third Plenary Session of the 15th Central Committee of the CPC (CCCPC) addressed the question of agriculture and the sān nóng wèntí (three rural problems of agriculture, farmers and the countryside). This discussion opened the way to a succession of reforms to grant farmers secure rights to contracted land and use rights transfer, improve infrastructure and public services, to establish a new socialist countryside by 2010 and from 2003 to introduce a New Rural Co-operative Medical System and minimum life guarantees.[7]

Figure 1 Provincial, prefectural and rural-urban inequalities. Source: elaborated from, national and provincial statistical yearbooks and (National Bureau of Statistics: NBS, 2021)

In 1999 western development was set in motion. The aims were to expand domestic demand and drive economic growth in the aftermath of the Asian Financial Crisis and to contribute to ‘common prosperity’.[8]These measures were followed by measures to support Northeast and Central China. In 2000 to 2007, central government financial transfers reaching nearly 1.5 trillion yuan and national debt, budgetary and departmental construction funds in excess of 730 billion yuan were allocated to the West.[9] In subsequent years regional gaps (with the exception of Northeast China) started to close (Figure 1).

In 2013-15 China’s new leadership adopted a new eight-year targeted poverty alleviation campaign to identify poverty households and lift them out of poverty. This campaign enabled the CPC to meet its first centenary target of ending extreme poverty by 2020. In the 5th Plenary of 18th CCCPC in 2015 a strong emphasis was placed on shared development and common prosperity. [10] At the opening of the 19th National Congress of the CPC President Xi Jinping announced that the principal contradiction was no longer ‘the ever-growing material and cultural needs of the people versus backward social production’ identified in 1981 but ‘the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life’. And in January 2021 at a seminar for provincial and ministerial level officials on the guiding principles of the Fifth Plenary Session of the 19th CPC Central Committee, Xi Jinping said:

At the Fifth Plenary Session, I underscored five characteristics in particular. China’s modernization must cover a massive population, lead to common prosperity, deliver both material and cultural-ethical progress, promote harmony between humanity and nature, and proceed along a path of peaceful development.

‘Realizing common prosperity is more than an economic goal. It is a major political issue that bears on our Party’s governance foundation. We cannot allow the gap between the rich and the poor to continue growing—for the poor to keep getting poorer while the rich continue growing richer. We cannot permit the wealth gap to become an unbridgeable gulf. Of course, common prosperity should be realized in a gradual way that gives full consideration to what is necessary and what is possible and adheres to the laws governing social and economic development. At the same time, however, we cannot afford to just sit around and wait. We must be proactive about narrowing the gaps between regions, between urban and rural areas, and between rich and poor people. We should promote all-around social progress and well-rounded personal development, and advocate social fairness and justice, so that our people enjoy the fruits of development in a fairer way.’ (Xi Jinping, 2021).

3 The growth in inequalities

As already mentioned, in 2019 China’s GNI per capita (Atlas method) reached US$ 10,390, making it an upper middle-income country. In Japan and the US it reached US$ 41,580 and US$ 65,910, respectively (World Development Indicators | DataBank (worldbank.org). China’s growth was fast, but growth rates and starting points varied, generating excessive disparities in wealth and income. These disparities increased from the start of reform and opening up in 1979 until well into the new millennium.

Figure 2 China’s income inequality

Inter-provincial and rural-urban inequalities declined in the early 1980s, but subsequently increased especially from the early 1990s until the western financial crisis when they started to decline (Figure 1) although they remained high. At present, China’s middle-income groups account for about 30% of the total population. The proportion of low-income groups is still large. In May 2020, Premier Li Keqiang caused shockwaves when he announced that 600 million people were making less than 1,000 yuan per month (US$153), although the country’s average disposable income per capita stood at 30,000 yuan. The income Gini coefficient increased from under 0.3 in the early 1980s to 0.49 in 2008 after which it declined slowly (Ravallion & Chen, 2007; Sicular, 2020). In 2019 it stood at 0.465 (Figure 2). World Bank estimates are lower, its estimate of 0.385 in 2016 (o.462 according to the National Bureau of Statistics) compared with 0.414 in the United States in 2018 and 0.329 in Japan in 2013. In the case of wealth China’s Gini coefficient increased very strongly from 0.450 in 1995 to 0.720 in 2013 (according to the Peking University China Family Panel Studies). In 2020 it stood at 0.704 compared with 0.850 in the US and 0.644 in Japan. (Credit Suisse, 2022),[11] while recent evidence points to a large increase in wealth inequality since the outbreak of the COVID-19 pandemic. Although almost all real incomes have increased overall since 1979 (but not in all sub-periods), common prosperity seems far off and presents an arduous and complicated task that will be promoted in a gradual and progressive manner.

The rich are predominantly private entrepreneurs whose wealth derives from privatization and the development of private industry, property development and finance. The rest are mainly superstars in the realm of media and entertainment. Generally speaking the richer they are the more likely they are to make money.

As already mentioned , the incomes of low income groups have increased overall and the size of low-income groups has declined. The income and wealth gaps between low income groups and the rich are however very large and have increased. These gaps are therefore relative. But relative differences matter a great deal for several reasons. On the one hand, an increase in real wages as a result of an increase in the stock of society’s wealth may involve a relative decline in wages as a share of society’s total wealth. On the other, as Marx pointed out in Wage Labour and Capital

‘An appreciable rise in wages presupposes a rapid growth of productive capital. Rapid growth of productive capital calls forth just as rapid a growth of wealth, of luxury, of social needs and social pleasures. Therefore, although the pleasures of the labourer have increased, the social gratification which they afford has fallen in comparison with the increased pleasures of the capitalist, … in comparison with the stage of development of society in general. Our wants and pleasures have their origin in society; we therefore measure them in relation to society; we do not measure them in relation to the objects which serve for their gratification. Since they are of a social nature, they are of a relative nature.’ (Marx, 1891 [1847], p. 16).

To address this issue and move in the direction of common prosperity China plans to make major efforts to increase the share of household income in total national income, increase the share of the compensation of labour in the primary distribution of income, increase the income of low income groups, expand the share of middle income earners, and address excessively high incomes, reversing the excessive widening of income and wealth gaps as quickly as possible. More attention will also be paid to secondary and tertiary redistribution and decommodification with measures relating to taxation, health insurance, social security, affordable housing, Hukou (household registration) reform, poverty alleviation, rural vitalization and charity. Other measures will address the structure of the economy dealing with monopolies and externalities, orienting investment towards real productive sectors, expanding consumer demand and improving people’s livelihoods.

4 Causes and measures

Addressing the wealth and income gaps and promoting common prosperity involves identifying causes and reforms that deal effectively with these causes. As already explained, the main driver of polarization is the development of the private sector where substantial private wealth accumulates at one pole and many workers are subject to insecure employment and wages and inadequate public service access at the other. In the private sector wages and social protection are usually far lower than in the state and collective sector: in 2015 the average wage was 65% higher in SOEs than in private enterprises. In the private sector the average wage was one-third less than the average disposable income of an employee in an urban household (Qi & Kotz, 2020, p. 10).

The distribution and ownership of material and financial conditions of production and exchange (mode of production) is the main determinant of the primary distribution of income. To argue that the initial distribution should reflect efficiency and not equity and that subsequent redistribution should address equity separates production from distribution and sanctions large inequalities as inequalities are fundamentally determined by an unequal, unfair and inequitable distribution of assets. As a result addressing the ownership of assets and limiting the marketization of assets are vital. The significance of this issue was highlighted by an estimate mentioned in 2020 by Ning Jixuan, Deputy Director of the National Development and Reform Commission when he announced at a State Council press conference that China’s state assets accumulated as a result of massive infrastructure investment stood at 1300 trillion Yuan.[12]

In this respect an important suggestion was recently made by Cheng Enfu (2021), namely that China conduct experiments with the implementation of a national dividend deriving from the surplus operating income earned on state-owned assets. Macao has already conducted an operation of this kind paying a ‘red envelope’ of 9,000 Yuan to each permanent resident and 5,400 to non-permanent residents in 2014, having started to make payments in 2008. [13] A dividend would provide a new income stream that reflects the ownership of collective and state assets by all of the population and is subject to the same market attributes and governance rules as other economic subjects.

Alongside ownership relations, corruption, monopolies, superstar phenomena and markets have been identified as causes of inequality. These factors are not however the root cause of social polarization. In the case of celebrity phenomena incomes are excessive but these incomes are not a cause of the existence of large numbers of low income people.

In the case of corruption President Xi Jinping China has launched a major anti-corruption campaign. In 2018 the governmnet organized a three-year campaign to ‘Combat organized crime and root out local Mafia’ [打击有组织犯罪, 铲除当地黑手党 – dǎjī yǒu zǔzhī fànzuì, chǎnchú dāngdì hēishǒudǎng]. The aim was to address rent-seeking relationships between government and business and it resulted in the eradication of 3,644 organizations and disrupted interest consolidation mechanisms. Addressing the corruption of government officials plays a vital role in establishing public trust in government. Although some people did secretly enrich themselves, corruption is however not the root cause of wealth and income divides: it does not adequately explain the wealth of the rich, nor does it explain the large size and limited wealth of low income groups (Wei, 2019).

Official corruption did play an indirect role: in some cases officials and managers acted corruptly in enabling economic initiatives and permitted the misappropriation of state assets through for example questionable management buyouts and restructuring of state-owned and collective enterprises. These privatizations made some people very rich almost overnight and saw many workers laid off (Wei, 2019). In each year from 1982 until 1992 state assets worth 50 billion Yuan were transferred to the private sector. In the 1990s this figure stood at 500 billion Yuan. According to a 2007 survey at least one-third of the private capital stock of 7 trillion Yuan was transferred from the state and collective sector (Wei, 2019) with significant layoffs and changes in employment conditions for their workers. These layoffs contributed directly to the existence of large numbers of people in low income groups.

At the end of the 1990s and In the new millennium opposition to privatization intensified. As a result from 2004 management buyouts of large State-Owned Enterprises (SOEs) came to an end with much stricter rules applied to acquisitions of smaller SOEs. In 2005 a draft property law was deferred for revision (Blanchette, 2019 chapter 2).

In social terms these reforms were extremely painful. As already mentioned, they led to the layoff and reduced social protection of millions of workers. The outcome was however the establishment of a smaller but highly competitive set of collective and state-owned enterprises that in 2020 accounted for more than one-third of capital investment (not far short of the private sector). Indeed since 2003 China’s Central SOES have experienced a significant rise and expansion under the leadership of the State Assets Supervision and Administration Commission (SASAC) and in the context of employing market competition as an instrument of a developmental state strategy (Chen, 2017).

The existence of monopolies can also affect the distribution of income. Monopolies are however not the root cause of income and wealth gaps. In 2012 90% of state and collective enterprises were in competitive sectors. In the case of natural monopolies SOEs pay high taxes and use profits to fund investment. In each case the main shareholders are public. In the private sector the quest for increased private wealth has led to the appearance of a series of problems of which some involve monopolistic practices, but it is ownership rather than monopoly market positions that explains increasing inequality.

In 2012 one China’s leading neoliberal economists, Zhang Weiying, claimed that in the new millennium market-oriented reform had been reversed on the grounds that ‘the state owned sector advances but the private sector retreats’ (Xiang, 2020). In the following year the World Bank and the Development Research Centre of the State Council published a report calling for a set of neoliberal economic reforms: redefinition of the role of government, a restructuring of state enterprises and banks, development of the private sector and reforms of land, labour and financial markets.

In 2012, however, in dealing with the need for structural economic reform, the 18th CPC National Congress called for consolidating and developing the public sector of the economy.[14] Although the state sector has contracted in the reform era, China still has a large SOE sector and has ruled out further privatization. In addition it has a state-owned banking system, and the public ownership of land is written into the Constitution (although land is leased and subsequent increases in value are not captured by the state but by private actors). In 2017 China had more than 150,000 SOEs (Lin, Lu, Zhang, & Zheng, 2020). In 2015 SOEs accounted for 30.9% of tax income. In industrial sector SOEs account for 38.8% of revenue (Qi & Kotz, 2020, p. 1). In the last few years SOEs and collective enterprises accounted for more than 35% of aggregate fixed asset investment with the private sector accounting for a similar share. SOEs occupy commanding heights of the economy, create economy wide externalities, invest in essential capital intensive industries, adopt a high road approach to employment, absorb labour to maintain social stability, undertake countercyclical investments and serve to limit foreign control. At the same time its existence limits the accumulation of private assets and provides opportunities to reduce social polarization and contribute to common prosperity.

5 Common prosperity in the new era

On August 29, 2021, Li Guangman’s Ice Point Commentary entitled ‘Everyone can feel a critical change is taking place’[15] was republished across Chinese state-owned media outlets. In it he declared ‘The capital market will no longer become a paradise for capitalists to get rich overnight. … The cultural market will no longer be a paradise for sissy (effeminate) stars, and news and public opinion will no longer be in a position worshiping Western culture.’

In the last few years the Chinese government has pursued the common prosperity agenda with a series of striking reforms. These reforms amount to a major crackdown on tech, platform economy and other monopolies (online food delivery, car and truck hailing, recruitment), on real estate (red lines controlling debt and associated risks)[16] and financial capital (shadow banking), on owners seeking to get rich by going public on foreign stock markets and on wealthy elites. Housing and education were other targets with the latter said to have been ‘hijacked’ by capital. As a result of liberalization, private initiatives and serious regulatory deficiencies or oversights the costs of housing, education and health have exploded, creating three mountains whose rising costs and declining affordability crowd out other household expenditure and limit the domestic side of dual circulation. A consequence of the large increase in the cost of living is an increase also in the cost of raising children which acts as a serious disincentive to couples giving birth to the three children the government hopes to see them raise. Measures were directed at property development and management, at private finance and speculation not only to reduce costs but also to reduce the risks of real estate and financial market crises. Other measures placed limits on increases in market rents and steps may be taken to deal with unoccupied housing. In May 2021 the Chinese internet finance, banking and payment clearance associations banned the use of crypto currencies (not the official digital yuan) about which it has been concerned since 2013. In June 2021 it finally shuttered crypto-mining operations that were present in energy-rich provinces. In addition some state-linked or very large corporations are allowed to teeter towards default.

In December 2020, at the Central Economic Work Conference, Xi Jinping tasked government agencies with curbing the ‘disorderly expansion of capital’ along with other important economic tasks including strengthening technological innovation, increasing domestic demand and moving in the direction of carbon neutrality and ecological civilization. In his words ‘lucid waters and lush mountains are as precious as mountains of silver and gold’.

To ‘prevent the disorderly expansion of capital’ China started to address the power of tech companies with a storm of regulation. This regulation was clearly already in preparation when in October 2020 Alibaba Group Holding founder Jack Ma criticized the Chinese government for excessive regulation and condemned the capital requirements imposed on financial institutions. Ma’s Ant Group initial public offering (IPO) on the Shanghai and Hong Kong stock markets was halted by the government authorities. A part of the Alibaba multinational e-commerce Group Ant Group uses mobile internet, big data and cloud computing to discover and provide highly leveraged micro financial services at high interest rates to vulnerable people creating a growing mountain of debt. Alibaba Group accounted for less than 2% of the funds Ant Group lends. All in all Alibaba poses risks that are too large (Tsui, He, & Yan, 2021). Alibaba, Tencent Holdings and Baidu have all been fined for anti-competitive practices (exclusivity arrangements, for example). New draft rules for overseeing Big Tech have been published, including for regulations concerning antitrust and personal data protection (a Personal Information Protection Law) and national data security (a Data Security Law). New video gaming rules that limit playing time for people under 18 years of age to just three hours per week will adversely affect the video games sector. These measures are a repudiation of the imported individualistic cultural values and addictions of western society and are designed to encourage science, technology, innovation and education, win the next technological race and alter the profile of the economy in favour of strategically important and socially useful industries. In the specific case of these industries measures are designed to address the threat their dominance poses to competition, privacy and through their fintech empires to financial stability. These measures also deal with their non-compliance with regulation. For example companies did not report acquisitions, while the use of Variable Interest Equity (VIE) that allowed largely unsupervised overseas Initial Public Offerings (IPOs) was questioned. VIE is a structure in which Chinese companies raise massive amounts of capital through offshore share issues which involve the sale of a majority of shares (in shell companies registered in tax havens) yet maintain a controlling interest. These companies can then invest in China circumventing restrictions on the entry of foreign capital.[17]

On 30th June Didi Global, a Chinese ride-hailing company, raised $4.4 billion on its debut on the New York Stock Exchange. On 2nd July 2021, it was accused by the Cyberspace Administration of China of illegally collecting users’ personal data and not adequately ensuring data security. Its app was removed from phones in mainland China and it will incur a large fine. In less than one month it lost about $29 billion in market value. In principle because of its VIE structure, DiDi, which is incorporated in the Cayman Islands, did not need Chinese government approval to list in New York. However, the cyber security administration was concerned about the sensitivity of its data and suggested DiDi postpone the floatation. DiDi ignored the warning.

On July 24, 2021, the General Office of the CCCPC and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education. The guidelines included some thirty measures to stop after school, weekend, national holiday and school vacation courses that were expected to earn private companies US$183 billion per year by 2023. After declaring that education had been hijacked by capital, it decided to stop licensing new tutorial centres and course providers for elementary and high school students, while existing ones will face stricter reviews and be regulated as not-for-profit entities whose programmes must be approved by the government. No foreign capital can invest in them (as had happened as a result of the speculative capitalization of Chinese education companies on the US stock market via VIE arrangements). These reforms follow a new education law that limits private sector involvement in core education and disallows the use of foreign education materials.[18]

These measures will reduce the enormous pressures on young people in a highly competitive education system oriented towards performance in the gaokao examinations which drive entry to China’s top universities and career prospects. The aims are to improve the school-life balance for children and their families, level a playing field on which the children of low-income and rural households were seriously disadvantaged, reduce financial pressures on parents faced with exorbitant fees for private lessons (US$60-220 per hour in Beijing) which absorb a very large share of their incomes and restrict ‘encroachment’ on public education including the poaching of teachers as part-time private sector tutors. The new measures will put an end to the extraordinary profitability of a $180 billion industry and decimated stock values. When the news of the measures leaked out, shares in New Oriental Education & Technology Group Inc plunged by a record 47% in Hong Kong, while those of Koolearn Technology Holding Ltd. tumbled 33% and China Maple Leaf Educational Systems Ltd by 10%. These losses spilled into other technology, healthcare and property sectors where regulation was expected to tighten. All in all these events erased $769 billion in value from US-listed Chinese stocks in just five months.[19]

On 26th July China’s State Administration for Market Regulation announced that food delivery firms will be required to guarantee the couriers their platforms employ a minimum income that is in excess of the minimum salary, relax delivery deadlines, strengthen traffic safety education and ensure that couriers join social insurance programmes. After this announcement the shares in Meituan, a food delivery giant, declined by 26%.

At the end of August 2021 China’s Supreme People’s Court and the Ministry of Human Resources and Social Security issued a lengthy condemnation of ‘996’, the practice of working from 9 in the morning until 9 in the evening six days per week (described in 2019 as a ‘huge blessing’ by Alibaba co-founder Jack Ma). This practice is said to be common among the country’s technology companies, startups and other private businesses. The document stated that ‘adhering to the national working hour system is the legal obligation of employers’. In January 2021 e-commerce giant, Pinduoduo was accused of over-working its employees after two died unexpectedly.

In its 2021 China Financial Stability Report the People’s Bank of China stated that it had comprehensively cleaned up the financial order as well as dealing with a number of other issues including high risk institutions, the risks of shadow banking, credit risks and the need for a system to prevent and manage risks and curb an excessive macro leverage ratio (People’s Bank of China, 2021). The China Securities Regulatory Commission Chief Executive Officer, Yi Huimian, recently announced resolute action to make private equity funds return to ‘the fundamental direction of private equity positioning and support entrepreneurial innovation and strictly regulate the operation of all links in the entire chain of equity investment management’.

In July and August 2021 the Ministry of Housing and Urban-Rural development pledged to stabilize property prices, and started to cap housing rents in cities, saying that they should not rise by more than 5% per year. In 2017 at the 19th Party Congress Xi Jinping announced that ‘houses are for living in and not for speculation’. In subsequent years steps have been taken to control house prices and increase government-subsidized rental housing. Other measures may address the existence of non-occupied homes. Credit availability along with a limited supply of new residential land has kept up the price of urban land. The initial sale of leases is a major source of local government revenue, but subsequent increases in land values are not captured, while low-cost construction land is provided to companies to drive local economic development. The government has also required local authorities to scrutinize closely all the activities of developers from the arrangement of finance to the transfer of ownership titles.

In early September 2021 the National Radio and Television Administration (NRTA) issued a document calling for strengthening of the management of cultural and entertainment programmes and personnel and giving specific guidance on what the entertainment industry can and cannot do. This step followed a series of celebrity tax and other scandals and the removal of TV shows and programmes featuring celebrities caught up in them.[20]

Centred on continuing steady increases in income and high quality development, common prosperity aims to increase the size of middle income groups, raise the earnings of low income groups and reduce excessive incomes in a three-stage income distribution and tax system. The first stage involves an increase in primary incomes. The goals included an increase in the wage share (seen as the main component of income), increased property income (equity transfer and dividends) from rural homesteads, contracted land, rural assets and collective land used for construction, enriched capital market income, an improved environment for urban self-employed whose incomes are predominantly low and whose work situation is unstable and employee stock ownership.

The second is the tax and social security system. New taxes will be imposed on property, inheritance and capital gains and on high-income groups. Excessive incomes will be reduced, illicit incomes prohibited and monopoly rents reduced. The capping of SOE executives’ salaries will be refined. As for social security the aim is equitable access to improved public services (with significant increases in the quantity, quality and accessibility of public provision of elderly care, health, pre-school and school education making use of information technologies. Universal social protection (while dependent on high employment rates) will narrow gaps in the primary distribution and share the fruits of growth, while a decline in savings rates will increase expenditure, reinforcing domestic circulation.

The third is an improvement of mechanisms and preferential policies that will encourage high-income groups and enterprises to give back some of what they have gained from society in the shape of voluntary gifts and charitable donations. Government documents have referred to tertiary distribution since at least the 1990s but the importance attached to it has increased with an emphasis on government-recognized charity and social assistance organizations and government projects (to help elderly, lonely, sick, disabled and poverty-afflicted people) has increased as has the attention paid to it.[21]

Zhejiang demonstration zone for Common Prosperity

In June 2021 the State Council issued an Opinion of the State Council of the People’s Republic of China on supporting high quality development and construction of a common prosperity demonstration zone in Zhejiang (The State Council Information Office of the People’s Republic of China, 2021). This document drew on aspects of the ‘Eight-Eight strategy’ (eight advantages and eight initiatives) identified by Xi Jinping in 2003 when he was provincial Party Secretary. One month earlier in 2021 the Ministry of Agriculture and Rural affairs and Zhejiang provincial government announced a series of rural vitalization demonstration zone measures.

The choice of Zhejiang as a demonstration zone was striking as in that province the state sector accounts for just 35% of GDP compared with 40% nationally. Although this choice reflects a comparatively high regional income per capita (1.63 times the national average with about one-half earning 100,000 to 500,000 per year) in rural and urban areas and a relatively small rural-urban income gap (1.96), it is probably designed to demonstrate that while the province’s dominant private companies have an important role to play the CPC rules.

The Opinions identified six aspects and twenty-eight measures. The first aspect concerned the guiding ideology, adherence to overall party leadership and the goals of high quality development, a high quality of life, ecological and spiritual civilization rooted in socialist ideals and Chinese civilization. As an experimental area for the reform of the income distribution system, the Opinions called for adherence to the principle that distribution depends mainly on work and protection of the compensation of labour which coexists alongside other sources of income where improved policies are required, continuous increases in urban and rural incomes and a narrowing of the income gap. Also development goals were set for 2025 and 2035 by when Zhejiang’ GDP per capita is expected to equal that of economically advanced countries.

The second point was that the quality and efficiency of development are to lay the material foundations for common prosperity. The Opinions called for vigorous improvements in independent innovation, scientific and technological self-reliance and self-improvement, the establishment with strategic support of new competitive advantages and the consolidation and expansion of the real economy, increased economic efficiency, and increased vitality of market actors giving ‘full play to the strategic supporting role of the state owned economy and preventing the ‘disorderly expansion of capital’.

The third aspect was deepening reform of the income distribution system and increasing the income of rural and urban residents through multiple channels. The document specified fuller and higher quality employment, life-long education and training, collective wage bargaining and an increase in labour compensation,[22] continuous improvements in incomes, expansion of middle income groups, an improved distribution system and encouraging the return to society of wealth and income (tertiary distribution).

The fourth point concerned the narrowing of the development gap between urban and rural areas and realizing the sharing of high-quality public services. The measures identified include equalization of the provision of basic social services, integrated development of urban and rural areas, improved living conditions in the city and countryside including new urbanization, adhering to the position that houses are for living and not for speculation, development of affordable housing and rural revitalization with an ecological, rational, collectively owned and cooperative rural economy, a strong social security system and improved assistance of less advanced by more advanced areas including stronger east (coast) west (mountain) counterpart assistance.

The fifth concerned development of a ‘cultural highland in the new era’ and an enrichment of people’s spiritual and cultural life. Involved are socialist ideology and core socialist values and support for traditional Chinese culture, revolutionary culture and advanced socialist culture.

The sixth aspect involved the practical application of the idea that ‘lucid waters and green mountains are as precious as mountains of silver and gold’ and the creation of a beautiful and livable living environment. Stronger land use planning and control, improved spatial organization, ecological protection, protection of arable land, reduced carbon emissions, green finance and recycling and a circular economy are all involved.

The seventh aspect refers to the Fengqiao experience [枫桥经验- fēngqiáo jīngyàn] considered a model of rural governance that involves ‘relying on the masses to resolve contradictions locally’. The aim is to improve governance capacity and efficiency with digital reform and establish a grassroots governance system which integrates autonomy, the rule of law, the rule of virtue and the rule of intelligence and improves democratic consultation. More generally the construction of a Zhejiang under the rule of law and a safe Zhejiang.

The eighth aspect concerns a series of safeguards: upholding and strengthening the overall leadership of the CPC, strengthening a system involving central government guidance and overall planning, provincial responsibility and implementation by cities and counties, improving approval and supervision mechanisms and establishing an evaluation system.

The next steps involved the fleshing out of a plan by the provincial government, a leadership group and individual departments and local government. In July 2021, Zhejiang Province launched a road map aiming amongst other things to increase provincial residents’ per capita disposable income to 75,000 yuan ($11,560) by 2025, raise the compensation of labour to more than 50% of GDP, increase higher education enrollment to more than 70% and reduce personal health expenditure below 26% of total expenditure. The first set of 28 pilot projects were announced, and municipal governments were asked to outline their three-year plans for achievements that could be replicated and promoted in other cities.

6 Conclusions

China’s development path is evolving. In a country accounting for nearly one-fifth of the world’s population the aim is to promote common prosperity, while making progress in material terms (indigenous innovation, industrial upgrading, and dual circulation articulating an expanding domestic market with international markets for exports and imports) and also in cultural, ethical and spiritual terms. At the same time it aims to promote harmony between humanity and nature (ecological civilization).

Strikingly western economic experts have claimed that China’s decision to crack down on finance, property and private tech is in growth terms suicidal. A system involving market-driven state and collective ownership, planning and investment with a wide range of co-existing enterprise types is considered incapable of performing as well as one centred on profit-driven private capital and free markets for resources and assets of all kinds. If one simply compares the past and current growth records of China (with China growing at some 6% per year and the US and EU at less than 1% recently with little prospect of reaching much more than 2% for a sustained period of time as well as the dubiousness of the measured contributions of real estate and finance to G7 growth), this claim is quite astonishing.[23] Almost certainly it reflects the mistaken view that China’s growth was driven by its private sector and the extraordinary view that unregulated tech, finance and property sectors make major contributions to human prosperity. In China as in the G7 private sector profitability has declined explaining in part why speculation and unproductive investment increased. The growth of labour productivity and investment in the real economy, innovation, new infrastructure and socially useful public services are what China’s economy can deliver, whereas G7 economies as currently constituted cannot.

The socialist public-owned economy with state-owned economy as its core is the necessary institutional arrangement. The socialist public-owned economy is not only the necessary condition and foundation to eliminate polarization and realize common prosperity, but also the institutional guarantee of rapid development of productive forces as China’s investment share testifies: in western countries investment has stagnated due to a decline in private profitability. In order to realize fairness and justice and common prosperity, China will adhere to and improve its economic system which is led by a state-owned economy that exists alongside a variety of other types of property including foreign and private capital and widespread and strongly encouraged innovative micro entrepreneurship. In a situation in which disorderly capital accumulation, monopolies and speculation will be brought under control, the rich will be able to remain rich, but the poor will not continue to be poor.

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Footnotes

[1] The author would like to thank Qi Bing for providing some of the Chinese language material.

[2] https://chinamediaproject.org/2021/08/27/a-history-of-common-prosperity/

[3] In some cases it is claimed that China is an example of state capitalism. Without entering this controversy it is important to note as Lenin emphasized that state capitalism under capitalism and socialism differ and that the former is a ‘step towards socialism’ (Lenin, 1983 [1921]) while Mao (and indeed Stalin) spoke of a need to ‘develop socialist commodity production and commodity exchange. The implication is that commodity production under socialism and capitalism differ (Coderre, 2019, 34).

[4] ‘in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic’ (Marx & Engels, 1968 [1845]).

[5] We should give priority to efficiency with due consideration to fairness, earnestly implementing the distribution policy while advocating the spirit of devotion and guarding against an excessive disparity in income while opposing equalitarianism. In primary distribution, we should pay more attention to efficiency, bringing the market forces into play and encouraging part of the people to become rich first through honest labor and lawful operations. In redistribution, we should pay more attention to fairness and strengthen the function of the government in regulating income distribution to narrow the gap if it is too wide. We should standardize the order of income distribution, properly regulate the excessively high income of some monopoly industries and outlaw illegal gains. Bearing in mind the objective of common prosperity, we should try to raise the proportion of the middle-income group and increase the income of the low-income group’ (Jiang, 2002).

[6] In official documents reference is made to ‘the income distribution system with labour distribution as the main body and multiple coexisting distribution modes, focusing on protecting labour income and perfecting the mechanism of factor participation in distribution.’ Alongside wages, the rents, interest, profits and capital gains of landowners/possessors, capital owners and owners of financial wealth co-exist.

[7] 中国共产党历次全国代表大会数据库 (people.com.cn), http://cpc.people.com.cn/GB/64162/64168/64568/65402/4429278.html

[8] 1999年中央经济工作会议 (www.gov.cn) http://www.gov.cn/test/2008-12/05/content_1168875.htm

[9] 1999年:西部大开发_中国财经新闻网 (prcfe.com)
http://www.prcfe.com/web/meyw/2009-10/12/content_564747.htm

[10] 中共十八届五中全会在京举行–新闻报道-中国共产党新闻网 (people.com.cn)

[11] Global wealth report – Credit Suisse (credit-suisse.com)

[12] 中国家底超过1300万亿元! [zhōngguó jiādǐ chāoguò 1300 wàn yì yuan – China’s patrimony exceeds 1300 trillion Yuan], 中国家底超过1300万亿元! (baidu.com)

[13] 澳门再发全民红包:居民9000元 非永久居民5400元 [àomén zàifā quánmín hóngbāo: jūmín 9000 yuán fēiyǒngjiǔjūmín 5400 yuán: Macao reissued a red packet for all people: 9,000 Yuan for residents and 5,400 Yuan for non-permanent residents. 澳门再发全民红包:居民9000元 非永久居民5400元_新闻_腾讯网 (qq.com)

[14] ‘The underlying issue we face in economic structural reform is how to strike a balance between the role of the government and that of the market, and we should follow more closely the rules of the market and better play the role of the government. We should unwaveringly consolidate and develop the public sector of the economy; allow public ownership to take diverse forms; deepen reform of state-owned enterprises; improve the mechanisms for managing all types of state assets; and invest more of state capital in major industries and key fields that comprise the lifeline of the economy and are vital to national security. We should thus steadily enhance the vitality of the state-owned sector of the economy and its capacity to leverage and influence the economy.’ 十八大报告全文英汉对照 [shíbā dà bàogào quánwén yīnghàn duìzhào – English Chinese comparison of the full text of the report of the 18th National Congress十八大报告全文英汉对照[5] (chinadaily.com.cn) http://language.chinadaily.com.cn/19thcpcnationalcongress/2017-10/16/content_32684880_5.htm
In 2013 the Third Plenary of the 18th CCCPC decided that the market plays a decisive role in resource allocation but as President Xi Jinping explained the government also plays a role that it should improve (Cheng, 2020).

[15] Everyone can feel a critical change is taking place

[16] A pilot affecting twelve large property developers subjects their debt to three red lines: a liability-to- presale -asset ratio of no more than 70%; a net debt-to-equity ratio of under 100%; and cash holdings at least equal to short-term debt,

[17] In sectors where China restricts or prohibits foreign participation Chinese companies set up shell companies in a tax haven such as the Cayman Islands with a similar name. The original company sets up agreements that give the shell company a claim on the profits and control over the assets of the original company. The shell company then registers on the New York Stock Exchange and sells shares to investors under the name of the Chinese company. Although these shares do not entail any company ownership claims, the Chinese company can raise international capital, and international investors secure a share of the Chinese company’s profits.
The Chinese government would prefer that capital is raised on domestic capital markets where it can also ensure that it goes to industries it wants to see develop and avoids areas it deems a threat to the common good.

[18] China Bans For-Profit Tutoring Firms: How Are Foreign Investors Affected? (china-briefing.com)

[19] Wipeout: China stocks in US suffer biggest 2-day loss since 2008 | Business and Economy News | Al Jazeera

[20] China orders showbiz to ban unpatriotic and unethical stars – Nikkei Asia

[21] In August 2021 tech giant Tencent Holdings donated US $7.7 billion towards ‘common prosperity’ to support low-income groups, rural revitalization, healthcare and education after having in April 2021 committed US $7.7 billion towards ‘sustainable innovations for social value’. Nasdaq-listed e-commerce website Pinduoduo announced that it would donate its second-quarter profit and all future earnings until the sum reached 10 billion Yuan ($1.5 billion) for China’s agricultural development.

[22] Any rebalancing of this kind will however raise the wage share affecting the owners of capital. Wealth gap sparks Xi’s call for ‘common prosperity’ – Asia Times

[23] In G7 countries the rate of growth of productivity in real sectors has almost progressively declined. In liberal market economics it is argued that capital is allocated efficiently to activities according to the marginal efficiency of capital (Keynes) or marginal productivity (neoclassics). Yet the marginal efficiency of capital in which capitalists are interested has declined and with it real productivity increasing investment (see also Wei, 2019).