Make Solid Progress Towards Common Prosperity

Make Solid Progress Towards Common Prosperity*

August 17, 2021

Following the launch of reform and opening up in 1978, through a thorough review of both positive and negative experiences, our Party came to a clear understanding that poverty is incompatible with socialism, and began to break conventional institutional constraints, encourage some people and some regions to become prosperous first, and unleash and develop the productive forces.

Since the 18th CPC National Congress held in 2012, the Central Committee has identified the changes in a new stage of development, and given greater weight to achieving common prosperity for all our people. Strong measures have been adopted to promote coordinated development across different regions, ensure and improve people’s wellbeing, eradicate absolute poverty, and achieve moderate prosperity, thereby creating favorable conditions for bringing about prosperity for all. Currently, we are in the stage of taking concrete steps towards common prosperity.

Now, we are working towards the Second Centenary Goal – to build China into a modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful by the centenary of the PRC in 2049. To adapt to the principal challenge facing Chinese society as it evolves, and to meet the growing expectation of the people for a better life and work for happiness for all of our people, we must focus on promoting common prosperity, which will in turn strengthen the foundations of our Party’s long-term governance. High-quality development requires a high-caliber workforce. Only by promoting common prosperity, raising urban and rural income levels, and boosting human capital, can we increase total factor productivity and create the driving force for high-quality development. Currently, income inequality has become a glaring problem worldwide. In some countries, the wealth gap is widening and the middle class is shrinking, resulting in social disintegration, political polarization, and a surge of populism. This is a profound lesson. China must prevent polarization between the rich and the poor, promote common prosperity, and ensure social harmony and stability.

At the same time, we must be fully aware that China’s development remains strikingly imbalanced and insufficient, as seen in the wide gaps in income distribution between urban and rural areas and between regions. A new revolution in science, technology and industry has significantly boosted the economy, and has had a profound impact on employment and income distribution, including some negative consequences that we must address and resolve.

Achieving common prosperity is a basic requirement of socialism and an important feature of the Chinese path to modernization. The common prosperity that we pursue, both material and cultural, is for all of our people; it is not for a small minority, nor does it imply an absolute equality in income distribution that takes no account of contribution.

Based on thorough research, we should map out phased goals of common prosperity for different development stages:

By 2025, the end of the 14th Five-year Plan period (2021-2025), a solid step will have been taken towards common prosperity, steadily narrowing the gap between people’s income and consumption.

By 2035, more substantial progress will have been made in promoting common prosperity, ensuring equal access to basic public services.

By the middle of the 21st century, common prosperity for all will have largely been achieved, narrowing the gap between people’s income and consumption to a reasonable level.

To realize the above phased goals, we must lose no time in devising an action plan that contains an effective system of indicators, and a set of evaluation methods suited to China’s actual conditions.

In promoting common prosperity, we must uphold the following four principles:

– Encouraging people to pursue prosperity through hard work and innovation. A happy life is earned by hard work; common prosperity is achieved through diligence and ingenuity. We must seek to ensure and improve people’s wellbeing through development, and prioritize high-quality development. We will create more inclusive and equitable conditions for all to receive a better education, so as to improve their capacity for development; we will also improve China’s human capital, and the professional skills, employability, entrepreneurial competency, and the ability to create wealth through its workforce. We must encourage social mobility, facilitate smooth channels for people to move up the social ladder, and create opportunities for more people to become prosperous. The aim is to create an enabling environment in which everyone participates. We do not want a rat-race, nor do we want a society of layabouts.

– Upholding the basic economic system. As China remains in the primary stage of socialism, we must consolidate and develop the public sector, and at the same time encourage, support and guide development of the non-public sector. We must follow the principle that public ownership plays the dominant role while developing together with other forms of ownership. We should give full play to the key role of the public sector in promoting common prosperity, and at the same time facilitate the sound development of the non-public sector and of people working in this sector. We should encourage part of the population to prosper first and urge these people to guide and help the rest on their way to a better life. We should encourage people to become leaders in pursuing a better life through hard work, bold entrepreneurship, and lawful business operation. Accumulating wealth through dubious means must not be encouraged, and any action that breaks laws or regulations must be punished in accordance with the law.

– Doing everything within our capacity. We must establish a system of sound public policies and a rational distribution system in which everyone enjoys a fair share of benefits. We should adopt more robust and solid measures so that people have a greater sense of gain.

At the same time, we must be aware that there is still a wide development gap between China and the developed countries. We should strike a balance between what is necessary and what is feasible, securing and improving people’s wellbeing on the basis of ensuring economic growth and financial sustainability. We will not set unrealistic goals, neither will we make unfulfillable promises. The government cannot take on everything. Instead, it should focus on providing inclusive public services, meeting people’s essential needs, and ensuring basic living standards for people in difficulty. Even in the future when China develops further to a higher level and has more financial resources, we still should not set over-ambitious goals, nor should we provide excessive social benefits; otherwise, we will slip into the trap of encouraging idlers by providing excessive welfare.

– Pursuing incremental progress. Common prosperity is a long-term goal. It takes time and is a step-by-step process. It cannot be achieved overnight. We should be fully aware of the long duration, arduous nature, and complexity of this mission. It can neither wait nor be rushed. Some developed countries have been pursuing industrialization for centuries, but have not achieved common prosperity due to institutional and systemic problems; instead they are facing an ever widening gap between the rich and the poor. We must have the patience to do things well, practically, and efficiently, one step at a time. We should work hard on the project of the Zhejiang Demonstration Zone for Common Prosperity Through High-quality Development, encourage all localities to explore feasible and effective approaches to common prosperity in light of their local conditions and their distinctive strengths, sum up their experience, and then steadily roll out their successful experience nationwide.

The overarching principle is to uphold the people-centered development philosophy and promote common prosperity through high-quality development. We must balance efficiency and fairness in income distribution and devise an institutional framework within which distribution, redistribution and third distribution are coordinated and operate in parallel. Efforts should be intensified to improve the role of taxation, social security and transfer payments in adjusting income distribution, particularly for targeted social groups. The proportion of the middle-income group in the entire population should be increased, the low-income group should have their incomes raised, the high-income group should have their incomes reasonably readjusted, and illicit income should be confiscated, so as to form an olive-shaped distribution structure. The goal is to increase social fairness and justice, promote well-rounded development of the individual, and enable the people to make solid progress towards common prosperity.

To achieve this goal, we will take the following measures.

First, pursue more balanced, coordinated and inclusive development. We will quicken our pace in improving the socialist market economy, and seek more balanced, coordinated and inclusive development. We will balance regional development by implementing major regional development strategies and the strategy for coordinated regional development by improving the transfer payment system to narrow regional disparities in terms of per capita fiscal expenditure, and by giving more support to underdeveloped areas. We will coordinate the development of various industries by accelerating the reform of monopolies and by coordinating the development of finance and real estate with the real economy. We will support the development of small and medium-sized enterprises, and create a business ecosystem in which small, medium-sized and large enterprises are interdependent and mutually reinforcing.

Second, enlarge the middle-income group. We will focus on priorities, implement targeted policies, and help more low-income people to join the middle-income group.

University graduates have high prospects of entering the middle-income bracket. We will improve the quality of higher education, ensure that university graduates acquire expertise and useful knowledge, and help them to adapt to the needs of social development as early as possible.

Technicians are an important component of the middle-income group. We will train more skilled personnel, raise the incomes of technicians, and attract more high-caliber people to join their ranks.

Owners of small and medium-sized enterprises and self-employed individuals are major contributors to entrepreneurial growth. We will improve the business environment, cut taxes and fees, and provide more market-oriented financial services, so as to help them to maintain steady business operations and achieve sustained revenue growth.

Rural migrant workers in urban areas constitute a major source of the middle-income group. We will further reform the household registration system, improve access to education for children of migrant workers who have moved with them from rural areas to cities, and enable rural migrant workers to settle and acquire stable employment in cities.

We will raise the incomes of public servants as appropriate, particularly those on the frontline posts at the grassroots level and low-level employees of state-owned enterprises and institutions.

We will increase people’s income from property such as urban and rural housing estates, rural land estates, and financial assets.

Third, promote equitable access to basic public services. The low-income group should be the priority in our efforts to achieve common prosperity.

We will increase investment in human capital to cover all social groups, reduce the burden of education costs on families with financial difficulties, and raise the education level of children from lowincome households.

We will improve the pension and healthcare security systems by bridging the financial and benefits gaps between working and non-working populations in the city and between urban and rural populations, and by steadily increasing the basic pension level for both urban and rural residents.

We will improve the social assistance system to help those most in need, reduce disparities in assistance standards for urban and rural residents, and steadily increase subsistence allowances for both urban and rural populations to meet their basic needs.

We will improve the housing supply and security systems. Acting on the principle that housing is for living in, not for speculation, we will improve access to both rental and purchased properties, adopt city-specific policies, refine policies for long-term rental housing, increase the supply of government-subsidized rental housing, and ensure housing security for new urban residents.

Fourth, adopt rigorous measures to regulate and adjust high incomes. While protecting legitimate incomes in accordance with the law, we must prevent polarization and eliminate unfair income distribution. We will adjust excessive incomes as appropriate, improve the system of individual income tax, and standardize the management of capital gains. We will actively yet prudently proceed with legislation and reform on property tax through pilot programs. We will improve the regulatory function of excise taxes, and consider expanding their scope. We will better regulate public welfare undertakings and charitable endeavors, improve preferential taxation policies, and encourage high-income individuals and enterprises to do more to give back to society. We will bring excessive incomes under control, strengthen management of income distribution in monopolized industries and SOEs, rectify irregularities in income distribution, and prohibit practices such as raising the incomes of senior executives under the guise of reform. We will prohibit illicit income and prevent people from trading power for money. We will take firm action against anyone who makes illicit gains through insider dealing, stock market manipulation, financial fraud, tax evasion, and so forth.

After years of experimentation, we have developed a complete package of measures to end absolute poverty, but we still need to build up experience on how to achieve prosperity. We must strengthen the protection of property rights and intellectual property rights, and ensure that the pursuit of legitimate wealth is protected. We must firmly oppose unbridled expansion of capital, establish negative lists for access to sensitive fields, and tighten regulation and supervision of monopolies. At the same time, we must mobilize the initiative of entrepreneurs, and promote sound and well-regulated development for all types of capital.

Fifth, promote common cultural prosperity. Bringing prosperity to all is congruous with our goal of promoting well-rounded human development. We must highlight the guiding role of the core socialist values, and strengthen education on patriotism, collectivism, and socialism. By developing public cultural undertakings and improving the public cultural service system, we will continue to meet people’s diverse, multilevel and multifaceted demands in the cultural and intellectual sphere. We must also do a better job of guiding public opinion on common prosperity and clear up any confusion on this matter. We should not shy away from challenges while avoiding the rush for quick results, thereby cultivating a public opinion environment favorable to our pursuit of common prosperity.

Sixth, promote common rural prosperity. The most arduous and formidable tasks in promoting common prosperity still lie in rural areas. We must lose no time in pressing ahead with common rural prosperity, but it is inadvisable for us to quantify targets as we did in the poverty alleviation campaign. We will consolidate and build upon the success we have achieved in the fight against poverty. To this end, we will strengthen the monitoring of people at risk of lapsing or relapsing into poverty, and be prepared to take quick action to help them if needed. We will also continue to provide support to counties that have recently shaken off poverty, so as to counter new causes of poverty and prevent any large-scale relapse into poverty. In implementing the rural revitalization strategy, we will accelerate agricultural industrialization, put rural assets to effective use, and increase the property income of rural residents, thereby helping more and more of them to become prosperous through hard work. We will also improve rural infrastructure, rural public services, and the rural living environment.

To sum up, achieving common prosperity for all is a holistic concept similar in nature to realizing moderate prosperity in all respects. Common prosperity is a goal for all of society, and therefore we should not break it up into separate goals for urban and rural areas, or for eastern, central and western regions. Instead, we should adopt an overall perspective. In order to enable 1.4 billion people to realize common prosperity, we must maintain a realistic attitude and make a sustained effort. We cannot make everyone wealthy at the same time, nor bring all regions to the same level of wealth simultaneously. There will be different levels of prosperity among different groups of people and different regions, realized on a different time scale. It should be a dynamic process where consistent efforts result in steady progress.

* Part of the speech at the 10th meeting of the Commission for Financial and Economic Affairs under the CPC Central Committee.

(Not to be republished for any commercial or other purposes.)