[Global Focus] The Hidden Intentions of China in 'Gongdong Buyu'

"Let's All Eat Well and Live Well" Aligns with Mao Zedong's Study Theory
New Political Slogan Ahead of Xi's Third Term... Presenting a Shared Goal for 1.4 Billion People

[Asia Economy Beijing=Special Correspondent Jo Young-shin, New York=Special Correspondent Baek Jong-min] "Common prosperity (共同富裕) is itself an important goal of socialist modernization. We must always take meeting the people's new expectations for a better life as the starting point and goal of development, and we must address this issue continuously and gradually."

Chinese President Xi Jinping mentioned the term common prosperity at the 10th Central Financial and Economic Affairs Commission meeting held on the 17th. Common prosperity means "everyone eating well and living well together." It carries the meaning of redistribution. It is a fundamental theory of socialism.

As the term common prosperity emerged, Chinese companies' stock prices have plummeted. This is because it implies that Chinese companies' profits will inevitably decrease. The Chinese leadership's reinforcement of socialist theory is perceived as a political risk and a new regulation in China.

◆ China has been continuously hinting at common prosperity = "Dual circulation policy (domestic demand-centered economic growth)," "economic growth rate above 6%," "strengthening of antitrust laws," "Xiaokang society declaration," "socialist modernization power"....

The Chinese leadership has presented keywords for the future direction of China's economy at major political events such as the 5th Plenary Session of the 19th Central Committee of the Communist Party and the Two Sessions (National Committee of the Chinese People's Political Consultative Conference and National People's Congress). Domestic demand-centered growth means increasing the income of 1.4 billion people, growth above 6% means sustainable and stable growth, and Xiaokang means a society where all people are affluent and comfortable. Strengthening antitrust laws aims to prevent the social ills caused by wealth concentration, such as income inequality and educational disparities. All these keywords lead to common prosperity.

China has grown through reform and opening-up but has never abandoned the fundamental socialist ideal of common prosperity. The reform and opening-up policy has been promoted to build a common prosperity society.

◆ "Let's divide the pie" VS "Let's grow the pie" = Ahead of the 18th National Congress of the Communist Party of China in 2012, two factions clashed over growth and distribution. The person advocating dividing the pie was Bo Xilai, Party Secretary of Chongqing. Bo argued that income distribution was uneven, widening gaps between classes, regions, and urban-rural areas, and advocated a "Chinese-style socialism" focused on redistribution.

During the 12th Five-Year Economic Development Plan (2011?2015), Chongqing improved its distribution methods and even set a detailed plan to build a comprehensive middle-class society by 2015. For this, Chongqing introduced China's first property holding tax. Bo Xilai early on advocated sharing the fruits of China's reform and opening-up.

The opposing side was Wang Yang, the 4th most powerful person in China and Chairman of the Chinese People's Political Consultative Conference. Then Party Secretary of Guangdong Province, Wang insisted that growing the pie was the priority. Despite the side effects of capitalism such as wealth disparity, he argued it was time to grow the pie.

Bo Xilai's model emphasized the socialist ideal of redistribution, while Wang Yang's model focused on the Chinese-style socialist market economy. When Xi Jinping came to power, Bo Xilai was ousted, and the redistribution debate subsided for nearly a decade. Now, Xi Jinping is emphasizing redistribution again.

Photo by Xinhua News Agency Capture

◆ Achieving common prosperity through first, second, and third distributions = President Xi defined common prosperity as an important feature of Chinese-style modernization and high-quality development. He also presented concrete practical keywords: efficiency and fairness.

Xinhua News Agency explained that distribution to achieve common prosperity should be carried out in three stages. First, the primary distribution should be based on market mechanisms. Those who work harder should receive more benefits. This means following capitalist logic in the first distribution, emphasizing efficiency.

The second distribution (redistribution) emphasizes the role of the state (Communist Party), i.e., fairness. Through state regulatory mechanisms, illegal income of certain individuals (companies) should be prohibited, and institutional measures should be established and implemented to ensure wealth is evenly distributed to low- and middle-income groups.

The third distribution refers to social roles such as donations. Through these three rounds of distribution, the Chinese leadership envisions society having a jar-shaped wealth structure.

◆ Common prosperity from a political engineering perspective = Common prosperity is not new as it is a fundamental socialist theory. If everything went according to plan and thought, it would be a utopia. The question is why the term common prosperity suddenly appeared at this point.

Inside and outside China, there is speculation that this is a political move in preparation for the 20th National Congress of the Communist Party of China, expected around October next year. Common prosperity is explained as a political slogan for Xi Jinping's third term.

Deng Xiaoping, who advocated reform and opening-up, led Chinese society with the theory of "first getting rich" (先富論). At that time, starving Chinese society enthusiastically embraced Deng's theory. Jiang Zemin and Hu Jintao united Chinese society with the political slogan of Xiaokang society. The consensus is that the Chinese leadership, having achieved a Xiaokang society through the "first getting rich" theory, now needs a new goal and political slogan.

Common prosperity is essentially the same as Mao Zedong's theory of common wealth (共富論). It also implies that Xi Jinping has risen to Mao Zedong's stature.

The timing is also specifically mentioned. The People's Daily stated that at last year's 5th Plenary Session, it was announced that by 2035, common prosperity for all people would make more distinct progress, and that a roadmap for a common prosperity society has already been disclosed.

◆ The West's complex view of China = The West's view of China's common prosperity policy is inevitably complex. The emergence of the term common prosperity has caused some confusion. They are closely watching possible upcoming tax reforms and other changes in China's economic policies.

The Wall Street Journal editorial stated, "Although attention is focused on the Afghanistan situation now, China's economic policy direction deserves more attention than past Chinese policies." This reflects concerns that Chinese politics could impact the global economy. If Chinese companies engage in the third distribution, they will face the practical problem of reduced corporate profits.

In fact, Tencent announced on the 18th, the day after common prosperity was mentioned, that it would invest 50 billion yuan (about 9 trillion won) to start a common prosperity project. If common prosperity is not a one-time event, corporate profit margins will inevitably be limited.

On the other hand, there is also a forecast that China will adopt a pragmatic approach. Yu Su, Chief Economist at the Economist Intelligence Unit, predicted, "Since common prosperity restricts overseas investment and may cause capital outflows, the Chinese government will not completely ignore its impact on the economy."

The People's Daily, seemingly aware of the West's uncomfortable view of socialism's return, stated that the Chinese leadership intends to continue growing the "pie." Beijing=Special Correspondent Jo Young-shin ascho@asiae.co.kr