The history of "Common Prosperity" in a nutshell

While we wait for the historic resolution scheduled to be unveiled after the sixth plenum, your host thought it might be nice to entertain you with a brief history of the phrase Common Prosperity.

The bulk of this newsletter is taken from what your host had shared at an AmCham policy+ luncheon on Nov.2.

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First, as many news reports have done, that the term common prosperity，or 共同富裕 in Chinese is nothing new.

For the early uses of this term, your host took the liberty of turning to the Xinhua database to find some clues. Xinhua has served as the MOST official news source since the early days of the Communist party, and in this case, also as a useful historical record.

As a Reuters report pointed out, the term was first used by Mao Zedong in the 1950s. In fact, Mao first coined this phrase in a 1953 paper on communal farming, the scope under which Mao raised this was to promote common prosperity among all farmers.

In the Xinhua database, the first mention of the phrase common prosperity, in 1957, was not a story about any political leader or national policy, but rather how a grade school student aspired to achieve “common prosperity” in China by helping out with farm work.

For a few decades, mentions of the phrase were scarce. But by the late 1980s, it made a comeback and this time made it into the official lexicon. Various national leaders referred to common prosperity as a goal to be achieved by China, Li Peng, then premier, and Deng Xiaoping, the man actually running China at the time, have all made frequent mentions of the word.

One thing to note though was that it seems that during this period the term common prosperity is used somewhat interchangeably with the word socialism as if the two can be synonyms because a prominent feature of socialism was everyone becoming prosperous.

For instance, in May 1988, during a meeting with a Czech leader, Deng said

There is no socialism in which the people are impoverished，socialism is not poverty, but rather common prosperity.

Perhaps a landmark occasion that the phrase common prosperity was elevated to national fame was during Deng’s visit to Shenzhen in 1992. On that trip, Deng made a strong push for reform and opening.

During this trip, Deng made some specific comments on common prosperity. He said

To continue down the path of socialism, we shall gradually realize common prosperity. Here’s the framework of common prosperity. A number of regions are better suited to develop first, while other regions may develop slower. Those regions that develop first help those that develop slower and finally common prosperity is achieved. If those who are rich become richer and richer while the poor become poorer, polarization is created, but socialism should and can prevent polarization. One of the solutions is for those who got rich first to hand in more tax and support the development of the lesser developed regions. Of course, this can not be implemented prematurely, we can’t undermine the vigor of fast-developing regions now, and shouldn’t encourage egalitarianism.

Looking back at Deng’s words, it serves as a perfect prophet of how the CPC dealt with the idea of common prosperity over the years.

Fast forward to the current leadership. A search in records showed that Xi Jinping’s mentioned the word on various occasions even before becoming a national leader. 

In 2006, while serving as party secretary of Zhejiang, Xi highlighted how the province had already shifted to a more balanced model of development. Here’s what he said.

Development isn’t for GPD but for people. Development relies on people rather than the consumption of resources and investment. The fruit of development should be shared among all people, the road of common prosperity is chosen over polarization.

Very early in Xi’s tenure, he clearly made common prosperity one of his priorities. For this second trip as Secretary-General, he chose the impoverished Fuping County in Hebei province as his destination and emphasized the aim of the trip is to see how poor farmers were doing.

Eliminating poverty, improving the standard of living, and achieving prosperity are the fundamental requirements of socialism. The people who endure hardships deserve our exceptional attention and care.

Of course, we later came to know it was the beginning of China’s campaign to eliminate extreme poverty, but it can also be viewed as a prelude to the major drive of achieving common prosperity. So if you look carefully there’s a lot of consistency in Xi’s policies.

It’s also worth noting that this Xinhua news report on Xi’s visit to Fuping county, was actually titled 中共最高领导人踏雪看望困难群众昭示走共同富裕之路决心, or

Top CPC leader visits the impoverished in the snow, underscoring dedication to achieving common prosperity.

We can see that Xi kept mentioning the term common prosperity throughout his tenure and party secretary-general. The term would appear in his speeches before party cadres, public addresses, and in his meetings with foreign leaders.

After the 19th party congress, common prosperity has gained further visibility, and especially as the country began to wrap up the fight to eliminate extreme poverty, common prosperity sort of emerged as the next phase goal.

This time last year marked another change. Common prosperity finally made it into official policy papers. During the 19th party congress fifth plenum, a guideline was released for the 14th five-year plan and long-range goals through 2035. 

The guideline explicitly called for that during the 14th five-year plan period, that is between the years 2021and 2025, the country “makes substantial development toward common prosperity”.

And of course, the final draft of the 14th five-year plan announced during the two sessions in Spring this year adopted this recommendation, solidifying common prosperity’s place in official texts.

The keyword here, in your host’s opinion, is substantial development. One sense that it’s a subtle departure from the past in that it had been more of a distant goal, that now has become a more tangible KPI for the party and government.

At the beginning of 2021, common prosperity makes two more appearances, though one is more subtle than the other.

For the not-so-subtle mention was when Xi addressed the opening of a study session at the Party School of the CPC Central Committee attended by provincial and ministerial-level officials on Jan. 11.

实现共同富裕不仅是经济问题，而且是关系党的执政基础的重大政治问题。

The realization of common prosperity is not only an economic issue but a grave political issue that concerns the party’s ruling foundation.

Feel free to take a moment to fully grasp the gravity of the above statement.

For the more subtle nod to common prosperity, you may turn to the hit TV show 山海情（Minning Town）， that premiered early this year. The story is widely viewed as the dramatization of a major campaign that Xi oversaw when he served in Fujian province, namely how that coastal province lend a hand to the landlocked Ningxia Autonomous region to achieve, you guessed it, common prosperity.

Since making it into the 14th five-year plan, we do start to see more concrete steps taken in the name of promoting common prosperity. For instance, in June this year, the CPC central committee and state council released a policy supporting the province of Zhejiang to become a pilot zone of common prosperity.

In the case of Zhejiang, the state goal was to establish a working module if you will, of how to achieve common prosperity, such as KPI that needs to be set, or policies that are proven effective, and of course, evaluation standards that can serve as a tool to award or punish officials.

Ironically, and your host really wants to stress this point, it’s safe to say that up until now, these moves by the CPC and the Chinese government have largely gone unnoticed by the outside world, such as the western media and the international market.

But that really changed in August this year, when the Central Committee for Financial and Economic Affairs held its 10th meeting chaired by Xi. This meeting’s primary agenda was to discuss how to push forward common prosperity and since it was a finance committee meeting, it implied that there will be changes in how the state will see the market and the financial sector.

During this meeting, many policies were laid out as part of a road map of achieving common prosperity. Some of the more reported include 三次分配，or third redistribution, and 清理规范不合理收入，shoring up unreasonable income. 

And that brings us to where we are now. Obviously, a lot has happened especially in terms of the market in recent months, there’s a lot of hype as to if China is fundamentally shifting its position on market economy, but your host just wants to say that as the party leadership repeatedly said, common prosperity is not about egalitarianism, and many regulations that are rolled out are not installed to so-called capping the rich or reining in the market. One example to give is the regulations on the tutoring sector and the gaming sector. They are more about protecting the youth than achieving common prosperity.

Now that has been a very rough walkthrough of the timeline of common prosperity.

If your host were to make some observations, it is that while the phrase has been around for a long time, there are still distinctions to be made between under the current leadership and previous ones. 

Disclaimer, all of the following are strictly personal thoughts and do not reflect anyone else’s view.

1st, the emphasis has changed. When spoken by Deng Xiaoping, or his contemporaries, your host gets the sense that the emphasis of common prosperity is on prosperity. Because let’s face it, no one was prosperous, or rich in this context in his time. So when he called for common prosperity, he was probably encouraging everyone to get on a fast track for development. But under Xi, especially in the current atmosphere, there is no illusion that the emphasis has shifted to common. Many parts of the country, and indeed many Chinese people have done pretty well for themselves, so now is the time for the party to deliver on the second part of the promise, that is to have the haves give a hand to the have nots.

2nd, the demand of the public has changed. Many of you may be familiar with the Chinese phrase 不患寡而患不均， which was a Confucious quote saying people have less problem with having little compared with unequally distributed wealth. As the wealth gap widened in recent years, negative sentiment against the rich has grown noticeably stronger on social media, and especially among the younger generation. They see flamboyant figures like Jack Ma touting 996 as bliss and can’t help but feel resentful. So in a way you can say the common prosperity is somewhat of an answer by the CPC to what it has gauges as a trend in Chinese society. 

3rd, the underlying policies and directives have changed. With the emphasis on prosperity, the policies of the 1990s and 2000s focused on giving favorable policies and encouraging officials to pursue high GDP growth. The plan worked, and China has achieved an economic miracle. But now as the August meeting has underscored, there will be more policies to make sure everyone gets a slice of the pie. There will be more regulation on the financial sector, or internet companies, while a stronger safety net for the most vulnerable is created. Make no mistake, economic growth is still very much important, it's just no longer the trump factor that outweighs all others.

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The bottom line is that common prosperity isn’t some whim of one Chinese leader but built into the party’s DNA. Historical context is important in that it signifies the party’s commitment to carrying out this mission, while it can also as your host hopes help allay some of the fears that what happened to Jack Ma and Zhao Wei will repeat on others.

This newsletter is penned by Yang Liu, founder of Beijing Channel.