On Friday, April 8, 2022 at 1:04:10 AM UTC+8, David P. wrote:
> Xi Jinping’s ‘Common Prosperity’ Was Everywhere, but China Backed Off
> By Stella Yifan Xie, Apr. 3, 2022, WSJ
>
> China’s apparent retreat from one of its most important policy
> initiatives is showing how hard it is to remake the country’s
> economy and reduce inequality nearly a decade into Xi Jinping’s rule.
>
> For most of last year, Xi trumpeted a signature program known as
> “common prosperity” aimed at redistributing more of China’s wealth,
> amid concerns that elites had benefited disproportionately from the
> country’s economic boom. The program underpinned many of Xi’s policy
> drives, including a clampdown on tech companies that were seen as
> exploiting their market power to boost profits.
>
> But while some aspects of the tech crackdown continue, other parts
> of the program have fizzled, as China shifts its priorities toward
> shoring up slowing growth.
>
> Last year, the phrase “common prosperity” seemed to be everywhere,
> in state media, schools, and speeches by Xi and others. A historic
> resolution passed during Communist Party meetings in the fall, which
> puts him on equal footing with Mao Zedong, used the phrase 8 times.
>
> This year, it turned up just ONCE in a 17,000-word govt work report
> on the economy delivered by Premier Li Keqiang in March.
>
> The Finance Ministry’s latest budget report didn’t spell out
> specific targets for the central govt to allocate resources to
> the campaign. In Zhejiang province, which was designated as the
> primary testing ground for the program, new economic plans make
> little mention of policies that could put more money in the pockets
> of less affluent households.
>
> Beijing has walked back some measures related to the campaign.
> The govt last month shelved plans to expand a new property tax
> that could have funded social-welfare programs but faced opposition
> from elites and policy makers who worried it would push property
> values lower. Trial runs of the tax currently apply only to Shanghai
> and Chongqing. The Finance Ministry cited “unripe” conditions for
> expanding it, without elaborating.
>
> Part of the reason common prosperity is fading is that the policies
> enacted spooked business owners and slowed growth when Xi needs
> China’s economy to stay robust. He is preparing for political meetings
> expected to return him for a third term in power later this year.
>
> But economists and scholars say it's also becoming clearer that
> common-prosperity goals can’t be met without more drastic—and
> potentially painful—changes that Xi doesn’t appear willing to countenance.
>
> That includes overhauls in China’s taxation and social-welfare
> systems. China’s tax system is less progressive than developed
> countries’, with burdens falling mostly on lower-income workers.
> Raising tax rates on the upper class, who tend to be more politically
> connected, has faced resistance.
>
> More fundamentally, economists say, China’s tax system doesn’t
> raise enough money to fund education, health and other services
> at levels implied by Mr. Xi’s common-prosperity agenda—a problem
> that has led it to pressure private companies and tycoons to
> redistribute money.
>
> Personal income taxes in China add up to 1.2% of GDP, compared
> with about 10% in the U.S. and U.K. Revenue from social-security
> contributions, at about 6.5% of GDP, is lower than the 9% average
> among members of the OECD, according to the IMF.
>
> “All those changes involve a lot of political initiatives,” said
> George Magnus, an economist and associate at the China center at
> Oxford University. “I don’t think the govt is willing to take them.”
>
> The State Council, which is China’s top govt body, and the Zhejiang
> govt didn’t respond to requests for comment.
>
> The phrase “common prosperity” dates back decades. It was used
> by both Mao Zedong and Deng Xiaoping to describe the socialist
> ideals of reducing inequality and polarization in society.
>
> Yet data show that wealth inequality has widened and social
> mobility has stalled since China’s economy began opening to the
> outside world—trends Xi views as threats to the party’s continued
> rule. In 2021, the wealthiest 10% of people in China owned 68% of
> total household wealth, according to the World Inequality Lab.
>
> Signaling his attention to the problem, Xi told officials in
> January last year that carrying out a common-prosperity initiative
> couldn’t wait. With China’s economy rebounding strongly after the
> first wave of Covid-19, policy makers saw an opportunity to push
> changes they hoped would satisfy the leader’s aims.
>
> The regulations that followed mainly involved crackdowns on
> industries seen as making too much money or running too much
> financial risk, without deeper change to motivate innovation or
> enhance opportunity for lower- & middle-class Chinese, economists say.
>
> Tighter regs on property developers reduced some of their risk-
> taking but helped trigger a real-estate slump. Clampdowns on
> tech companies and for-profit tutoring firms discouraged
> monopolistic behavior but led to mass layoffs in those industries,
> while billions of dollars in market value among listed Chinese
> companies got wiped out.
>
> Overall growth slowed sharply, and many economists now say China
> will struggle to hit a govt target of around 5.5% growth this year.
>
> Although tech companies and entrepreneurs pledged to donate
> billions of dollars to common-prosperity initiatives, economists
> say such one-off gifts don’t amount to a sustainable strategy for
> long-term social changes, while damage from the crackdowns, which
> suggested that private entrepreneurship was out of fashion, could
> last for years.
>
> The common-prosperity slogan “almost became a rallying cry among
> some enterprises who use the term sarcastically to infer a whole
> set of policies aimed at controlling or even destroying private
> entrepreneurship in China,” said Victor Shih, an associate prof
> of political economy at UC San Diego. “I don’t think that’s the
> message the Chinese govt would like to send.”
>
> With growth slowing more than expected, VP Liu He pledged in
> March that further regs would be more “transparent and predictable.”
>
> Some economists say China could revive common prosperity after
> the party congress this fall, if growth rebounds strongly.
>
> But it's unclear whether Xi ever had any intention of taking
> more radical steps to help Chinese people reap a bigger share
> of growth. One of the simplest ways to do that would be by
> diverting more income—and control—from the government to the
> private sector, but that runs counter to Mr. Xi’s impulses,
> said Mr. Magnus at Oxford and other economists.
>
> Gan Li, a prof of economics at Texas A&M U., said another
> approach might be to introduce inheritance or capital-gains
> taxes on individuals, which would redirect more wealth from
> richer families, but that would also likely face opposition.
>
> Other economists say China needs to change the way local govts
> are funded—yet another tough task in China’s political climate,
> as it could reduce Beijing’s authority.
>
> Right now, local govts are charged with providing many social
> benefits, but they are typically heavily indebted and limited
> in their ability to raise funds on their own. So they have
> little incentive to underwrite large-scale welfare programs.
>
> Instead, local officials tend to favor investing in projects
> that deliver quicker results, like infrastructure, or ones
> deemed strategically important to Chinese leaders, such as
> achieving semiconductor independence or achieving more military
> strength, said Shih at UC San Diego.
>
> https://www.wsj.com/articles/xi-jinpings-common-prosperity-was-everywhere-but-china-backed-off-11648978380

There are phases of things that could be done in the changing of policies that will be initiated to correct the imbalances of growth of prosperity of majority people without unbalancing the minority of wealthy people. These policies will drive self-sufficiency in financial saving for care by every citizen on their own in their own life, without emptying the state coffers of the country to support them. Otherwise, the country has to undertake the high costs to be made in coming years in order to underwrite large scale of welfare programs in the years ahead when more people aged.

A good example to see how this is Japan ageing population and retirees from employment. The lack of high sum of compulsory of national retirement saving policy in Japan has caused Japan to finance for medical and pension support to the retirees and elderly population. The rich became richer but the majority of working population and retirees and elderly did not have much had in their wealth from their life long work earned for their wealthy Japan..