With ‘common prosperity’, China signals more spending on social policies

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“Common prosperity” (from Chinese, gòng tóng fù yù 共同富裕) will return to the Communist Party’s agenda and should be established as a strategic objective at the congress that will re-launch Xi Jinping for a third term, the South China Morning Post reported.

• The term, which Xi began to use more frequently in 2021 and was forgotten in the face of the difficulties caused by the pandemic, has been part of Mao Tse-tung’s lexicon since 1950 and refers to policies to combat inequality.

According to the newspaper, citing statements by Han Baojiang, director of economics at the Party’s Central School in Beijing, the new Chinese leadership will be busy producing “a clearer and more detailed roadmap to boost common prosperity before the Congress begins on the 16th.” of October.”

Showing signs that the topic will indeed be revived, Social Security Association President and Standing Committee member of the National People’s Congress of China, Zheng Gongcheng, attended a seminar last week and addressed the issue.

• “A market economy cannot automatically solve the problem of social equity, and if the distribution system is not fair, polarization will result. […] China learned from the lessons of the planned economy and insisted on opposing egalitarianism, which spurred unprecedented vitality but also formed a pattern of vast disparity. […]. The time has come to encourage everyone to legally enrich themselves by building a fair distribution system,” he said, as compiled by the American newsletter Sinocism.

The vice president of the Chinese Academy of Social Sciences —the main research institution in the country and responsible for the theoretical basis of several public policies—, Gao Peiyong, was present at the same event and added that it was necessary “to give full emphasis to the role of groups and high-income entrepreneurs, encouraging them to give more back to society, which is by no means ‘taking from the rich to give to the poor’.”

why it matters: No one knows exactly what Xi Jinping means by “promoting common prosperity”, leading to speculation about how the policy will be implemented. The signs point to greater taxation of wealth, regulation against monopolies, more specific rules regarding the right to use land, transfer of income and disbursement of subsidies to families. In short: a more interventionist China willing to spend more on social spending.

Local companies won’t wait and are already rushing to make a good impression with regulators: Tencent and Alibaba, for example, announced billion-dollar funds to support common prosperity initiatives. How will they be used? Perhaps the answer will be clearer after the National Congress, scheduled for the 16th.

Tip of the week: In May, the Asia Society published a report assessing what “common prosperity” means in practice and how the concept should shape various Chinese public policies. In its favor, the think tank counts on former Australian prime minister Kevin Rudd in the presidency, known for having several contacts in the high wheel of power in China and being an enthusiast of the topic. Available here (in English).

what also matters

Negotiations for the release of the vaccine against Covid-19 produced by the pharmaceutical company Moderna in China collapsed.

According to the British newspaper Financial Times, Beijing demanded that the company cede the intellectual property behind the formula based on mRNA technology. Moderna declined the request citing “commercial and security concerns” and withdrew from entering the Chinese market for the time being.

Two weeks ago, the company’s CEO, Stephane Bancel, confirmed that it was trying to receive the green light from Chinese regulators for the vaccine. If talks had advanced, the immunizer would be the first foreign authorized for use in mainland China.

Taiwan is stockpiling “critical supplies” in preparation for possible lockdowns or a conflict with mainland China, the island’s Deputy Economy Minister Chern-Chyi Chen told reporters.

According to him, preparations are centered around essential supplies like minerals, chemicals, food and energy. “We have a system and we are doing an inventory every month. We want to make sure we have enough for a certain period of time,” said the representative.

The concern is justified by Beijing’s siege of the island in August. At the time, mainland China fired real missiles at Taiwan and blocked some shipping lanes with military exercises that lasted several days. The initiative was in retaliation for US House Speaker Nancy Pelosi’s visit to Taipei.

keep an eye

The Solomon Islands decided to sign an agreement between the Pacific island nations and the United States that provides for cooperation in more than 11 areas, including sustainable development, combating climate change and regional security.

The signature, however, only came after the Americans agreed to remove all passages interpreted by Solomonic as veiled attacks on China. The country’s foreign minister, Jeremiah Manele, told the press that the previous text forced his people to “choose sides”. The original agreement did not refer to China at any time, although it condemned the Russian invasion of Ukraine and called for international proactivity to resolve the issue.

why it matters: The package established by this agreement – something in the region of US$ 800 million (R$ 4.57 billion) – is an American attempt to “get back in the game” and try to contain Chinese influence in the Pacific.

• Washington was startled in May when the Solomon Islands announced a comprehensive security agreement with the Chinese that even allowed military and police forces to be deployed to the country. The move would open the way for the Chinese approach to the Australian coast, located about 2,000 kilometers away;
• The initial resistance of the Solomon Islands is perhaps an indication that island nations in the region may not be easily convinced. So geographically close to two military powers, most may choose to turn a blind eye to Chinese expansion or even seek to profit from it.

to go deep

The South China Morning Post tells in this excellent report how the Chinese language has survived centuries of failed reforms, different methods of transliteration and predictions of extinction. (porous paywall in english)

Another portal to bring a good report this week is Sixth Tone, which writes about the difficulty of young Chinese women to find suitors in rural areas (and how they are stigmatized for being single). (free, in english)

Harvard University will hold a roundtable discussion on November 8 on the transformations in China after the National Congress of the Communist Party. The event will be a hybrid and anyone who wants to watch it online must register here. (free, in english)