Common Prosperity on the Road to Socialism With Chinese Characteristics

Gary Olson

China's President Xi Jinping.

“Common Prosperity” was mentioned at the 10th meeting of the Central Finance and Economic Committee of the Communist Party on August 17, 2021 where it was stated that it was was an essential requirement of socialism and a key feature of China-style modernization. In that context, President Xi Jinping called for China to “clean up and adjust high income and rectify income distribution.” And, in his recent speech to the 20th Chinese Communist Party Congress, Xi said, ”We will steadfastly push for common prosperity. We will improve the system of income distribution… we will increase the income of low income earners and expand the size of the middle income group. We will keep income distribution and the means of accumulating wealth well-regulated.”

We know that ”Common Prosperity“ has been employed by many Chinese leaders since first used by Mao Zedong in the early 1950s and it appeared as slogan # 38 in a series of 65 that were approved and listed in The People’s Daily on September 25, 1953. The slogan urged peasants to strive ”for lives of common prosperity.” An article appeared in the People’s Daily on December 12, 1953, titled ”The Path of Socialism is the Path to Common Prosperity,” clarifying that common prosperity required collective ownership of the resources of production. The following was cited as the goal for Chinese farmers:

Therefore, the development of mutual aid and cooperatives can only avoid division
among peasants and avoid the path of capitalism, but can also enable peasants
to achieve common prosperity step by step and finally reach a socialist society.

Four days later, the Communist Party of China (CPC) under the Chairmanship of Mao Zedong, released a resolution specifying ”common prosperity” as a primary objective of the country‘s socialist construction. As the late, great anti-imperialist and Marxist intellectual Samir Amin points out, Mao was successful (unlike the Bolsheviks) in convincing the vast majority of peasants that land held in common was preferable to obtaining individual plots. In this way, land was not transfomed into a commodity. [1 ]

Recall then, that in the 1970s and 1980s, Deng Xiaoping promoted reform and opening or gaige kaifeng and this meant      ”letting some get rich first” and others would be pulled along and enjoy common prosperity later. He said “from many aspects, right now we are merely implementing what Mao Zedong already put out, but unable to do himself.” In keeping with this admonition, Deng stressed that ”the nature of socialism is to emancipate productive forces, develop productive forces, abolish exploitation, elimination, polarization and finally achieve common prosperity.” Continuity, the link between Mao and Deng was there even though some Western China-watchers found it incongruous and chose to ignore it. In any event, Ken Hammond adroitly sums up three decades of reforms and opening to the outside as follows:

China had largely subordinated itself to the interests of the global bourgeoisie, in order
to gain access to state- of-the-art productive technologies, and to accumulate capital
through the production of export goods. The overall goal was to use mechanisms of
the marketplace to develop the productive economy,with the CPC playing a guiding role
and with the ultimate goal of reaching a level of social wealth which allows for the
beginnings of new forms of social distribution, an initial step on the path to true socialism. [2]

Simultaneously, expanding material wealth through state capitalism generated major structural contradictions that have yet to be resolved. As GNP grew 9.3 percent per year from 1979-1994, China also became one of the the most unequal societies on earth. In both 2003 and again in 2007, the CPC seemed determined to modify this course. But in 2012, private companies accounted for 70 percent of China’s GNP and the top 20 percent of China’s population owned 70 percent of the total wealth.

In 2017, Xi said that that a new era of common prosperity had begun and those ”left behind” would make solid progress by 2035 and become part of a “great modern society by 2050.“ Further, at that date, inequality should be “narrowed to a reasonable range” although the gaps have not been fleshed out. At the 2002 World Economic Forum, Xi spelled out that “The common prosperity we desire is not egalitarianism. To use an analogy, we will first make the pie bigger, and then divide it properly through reasonable institutional arrangements. As a rising tide lifts all boats, everyone will get a fair share of development, and development gains will benefit all our people in a more substantial and equitable way.” Beyond that, little was spelled out although Xi warned against ”slipping into the trap of welfarism that feeds the lazy.” [3]

China has admirably succeeded in eradicating extreme poverty among impoverished rural residents although some 600 million people still live on $154 a month. For example, there is a major disparity between rural and urban areas. Further, China has 607 billionaires, second only to the United States. This is 87 fewer than last year, and Forbes reports that China’s billionaires are some $500 billion pooer than last year and worth $1.96 trillion to $2.5 trillion in 2021.(Forbes, April 5, 2020). A series of regulatory reforms wiped out over $1 trillion in market value for Chinese-linked firms, mostly in the high-tech sector. It’s notable that outside investors are still looking for opportunities but shifting to the Chinese domestic business sector. For example, Goldman Sachs recently came up with a 50-stock ”common prosperity” basket, presumably connected to domestic needs and demands.

A recent program on CGTN, a news channel based in Beijing and controlled by the Communist Party of China, may help in further discerning the future. The show’s panelists opined that common prosperity was about providing a “level playing field” and opportunities for poor people to “get ahead.” Echoing Xi, it’s not about scaring rich people with a social engineering project that would retard growth and “create common poverty.” It’s not a Robin Hood scheme of “robbing the rich to give to the poor.” Another important component is “encouraging” philanthropy, including the provision of tax incentives for rich people to donate money to common prosperity fund. TenCent’s ponying up of 100 billion yuan was cited as an example. [4]

Another possibly more explicit clue about the future occurred in August of last year: Li Guangman, a little-known blogger and retired editor of a marginal state-owned newspaper, wrote an incendiary essay on the need for radical reform in China. Li had authored over a thousand mostly ignored pieces but this one, entitled “Everyone Can Sense That A Profound Transformation Is Underway,” was quickly picked up and embraced by neo-Maoists and then by at least eight major Central Party state media sites, including The People’s Daily, Xinhua News Agency, and CCTV television broadcasting.

Li characterized the ongoing regulatory reforms as part of a “profound revolution” that “re-prioritizes socialism over capitalism.” After listing some of the punitive actions taken against tech executives and others, Li wrote “This change will wash away all the dust and the capital market will no longer be a paradise for capitalists to grow rich overnight. The red has returned, the heroes have returned, and the grit and valor have returned.” And then this seemingly ominous warning: “All those who block this people-centered change will be discarded.” I haven’t seen recent references to Li’s essay although I may have missed them. Was this a one-off by a frustrated, old school Maoist or a piece sanctioned by and/or coordinated by elements with the party for their own purposes? [5]

In the past, when talk has arisen about income adjustments, increased national autonomy, promoting domestic production, and less dependence on other countries, pro-market types and liberals have come to the defense of free markets and the need to reassure foreign investors who might be tempted to flee. However, just the reverse may be the case. On November 4, 2022, German Chancellor Olaf Schulz met with President Xi in Beijing, the first G-7 leader to visit China in almost three years. Schulz had 12 of Germany’s leading industrialists in tow and this was not surprising, given that China is Germany’s largest trading partner. For example, China is the destination for 40% of Volkswagen’s worldwide deliveries.

It’s also reasonable to assume that there are powerful and privileged elements within China, including higher levels within the party — those advantaged by inequality — who are opposed to Xi’s initiatives. Personally, I find it both baffling and dismaying that some “socialist friends of China” are quick to label anyone raising this subject, a China-basher, someone doing Washington’s dirty work. In response, this quote from Samir Amin in 2013 remains acutely on point:

…beginning in 1990 with the opening to private initiative, a new more
powerful right began to make its appearance.  It should not be reduced
to “businessmen” who have succeeded and made (sometimes colossal)
fortunes, strengthened by their clientele — including state and party
officials, who mix control with collusion, and even corruption.  This success,
as always, encourages support for rightist ideas in the educated middle
classes. It is in this sense that growing inequality — even if it has nothing
in common with inequality characteristic of other countries in the
South — is a major political danger, the vehicle for the spread of rightist
ideas, depoliticization and naive illusions. [6]

How this plays out behind closed doors is impossible to detect although the outcome of the recent party congress would indicate a consensus regarding Xi’s position.

[Externally-induced deformations]
Further, I would be remiss not mention one important caveat regarding the challenging context for realizing Xi’s program: that is, the primary existential threat to China is U.S.-led imperialist aggression and Washington’s renewal of the Cold War. Emblematic of this behavior is Washington’s sanctions program which aims to use “choke points” to impede Chinese access to cutting edge chip capabilities. In his 2022 NPC report (not in the speech) Xi warned of external threats to “blackmail, contain, blockade, and exert maximum pressure on China.” The extent to which the need to prioritize national security may hobble progress toward realizing common prosperity cannot be discounted.

Finally, it’s indisputable that what China has achieved on the long road to a possible socialist future is nothing short of spectacular and my reading of the available evidence suggests that from Mao to Xi continuity exists in the quest for common prosperity. Today, Xi appears determined to correct the contradictions arising from using state capitalism to accumulate sufficient social wealth.

The praxis of liberation is a continuing struggle with an uncertain future but it’s reasonable to assume that serious efforts are underway to give further concrete meaning to social, economic and cultural “common prosperity.”

About the author

Gary Olson is Professor Emeritus of Political Science, Moravian College, Bethlehem, PA. His email: garyleeolson416@gmail.com