Boosting China’s “common prosperity” doesn’t mean “killing the rich,” the official says

BEIJING, Aug 26 (Reuters) – China’s eagerness for “common prosperity” as President Xi Jinping seeks to alleviate inequality in the world’s second-largest economy does not mean “killing the rich to help the poor” , a sentencing official The Communist Party said Thursday.

China must also “protect itself from falling into the trap of welfarism,” said Han Wenxiu, an official with the Central Commission on Financial and Economic Affairs in Beijing.

Those who “get rich first” should help those behind it, but hard work should be encouraged, he said.

“We can’t expect help, trust other people or ask for help. We can’t support designs.”

Investors have been shaken by a number of measures, including crackdown on various industries, which are partly aimed at curbing cost-of-living pressures as well as tightening antitrust and data protection rules. Read more

Han said the recent policies governing Internet companies targeting irregularities and illegal behaviors and that they “absolutely” are not aimed at private companies or foreign companies.

The reforms of four decades ago that triggered China’s market economy allowed the accumulation of great personal wealth, with hundreds of billionaires minted in the still socially declared country, deepening inequality, especially between urban areas and rural.

Meanwhile, the high cost of urban life has contributed to a sharp slowdown in births, which has caused China this year to allow families to have up to three children instead of two. The slowdown in economic growth and intense competition have also prompted some urban youth to adopt a passive attitude known as ‘stretching’.

EXCESSIVE INCOME

Legal revenues should be protected, but China should rationally adjust excessively high revenues, according to a meeting chaired by Xi earlier this month. High-income groups and companies are also being encouraged to contribute more to society.

They should encourage charitable donations through tax policies and can improve the “distribution structure,” but donations “were not mandatory,” Han added.

Several heavyweights in the technology industry have recently announced major charitable donations and support for relief efforts. Online gaming giant Tencent Holdings (0700.HK) said this month it would spend 50 billion yuan ($ 7.771 billion) to promote “common prosperity.” Read more

“Larger corporations will create social responsibility funds if they have not already done so, and the size of their donations should increase,” Iris Pang, chief economist of Greater China at ING, said this week.

“Companies need to take bigger steps to improve their corporate governance and social responsibility. They need to work to get ahead of regulators.”

China’s rich eastern Zhejiang province, which is a “demonstration zone” of common prosperity, also announced Thursday that by 2025 rural residents should have an average annual disposable income of 44,000 yuan a year. .

This compares with the nationally available rural income of just over 17,000 yuan in 2020, according to official data.

(1 $ = 6.4830 Chinese yuan renminbi)

Reports by Gabriel Crossley; Edited by Himani Sarkar and Tomasz Janowski

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