China’s policy reset to ‘common prosperity’

Anil Kumar Kanungo | Updated on October 24, 2021

Xi hopes to correct the widening income inequality, rising debt levels and social disorder caused by market-driven policies

China has just changed its ‘hand’ in managing the economy. No longer is it Adam Smith’s invisible hand, later espoused by Deng Xiaoping, that has governed the trajectory of economic policy. Now it is the restraining hand of Xi Jinping that has come into play.

It is apparent that China is undergoing major political correction under the leadership of Xi Jinping. The message President XI is trying to send out to the world at large is that the policies of all hues followed after Mao, especially during Deng’s era, are not proving to be socially compatible for Chinese society.

Hence, there is a need to revisit such state policies, which would focus exclusively on ‘common prosperity’ rather than indulging in market-led socialistic pattern of economy which is resulting in a few becoming extravagantly rich and opulent, with the majority suffering from sharp income inequality and rising poverty.

A clarion call for ‘common prosperity’, though currently implicit, will be taken into account in the decision-making process soon. This new policy shift to ‘common prosperity’ is gaining ground as the government has mounted unprecedented crackdowns on Alibaba and other top corporate firms from various sectors within the economy, including technology, online education and real estate to tackle widening income inequality, rising debt levels and slowing of consumption.

The hugely indebted Chinese property giant, Evergrande, is a burning example of this mess.

Colossal damage

Realising a colossal damage to the economy Xi as a result of this transition, China’s ruling communist party is taking damage control measures.

The Communist party will hold its key conclave in November 8-11 ahead of next year’s Congress that promises to pave the way for major leadership changes and a possible unprecedented third term for President Xi Jinping. A major plank for such leadership will veer around ‘common prosperity’ as the immediate goal of Chinese society.

There is no doubt that the legacy of ideology and political culture weighs heavily on the decisions of political leaderships everywhere, but in the case of China it is more deeply entrenched. President Xi’s decision to arouse ‘common prosperity’ into a political campaign is an immediate concern for the party as it is seen as a move to secure his political future at the 20th Party Congress next year.

But what is it that China is aspiring to adhere to: Is it the Chinese model of socialistic market economy or return of Marxist-Leninist ideology? Or is it an assertion of ‘moving towards left’?

Nothing is quite clear, but what is apparent is that the current leadership is highly dissatisfied with the policies that have been driving the Chinese economy, society and politics for the last four decades. There is a conscious attempt to curb corruption, and change the policies to restrict the rich from becoming richer at the cost of society.

Hybrid model

China has been adopting principles of market capitalism with tenets of Marxist-Leninist ideology.

Adopting these dual ideological principles and mechanism, China has emerged as an economic powerhouse. During 1989 and early 1990 the erstwhile Soviet Union had attempted such a kind of policy shift by adopting Marxist-Leninist ideology and free market enterprise. Such a venture or hybrid model for Soviet Union ended in a disaster leading to balkanisation and disintegration of the country and forming CIS.

The political debate that is shaping up in China is, how this grand policy shift to ‘common prosperity’ can be effectively used to rewrite a kind of social contract that still draws its inspiration from Mao’s ideas.

Mao propagated this concept in the policies and campaigns of hundred flower movement and cultural revolution. However, Deng’s ascendancy to power put such ideas on the back-burner, and laid emphasis on ‘rich is glorious’.

Deng had expressed the idea that allowing some people and regions to get rich first would speed up economic growth and help achieve the ultimate goal of economic modernisation.

Such policy emphasis of Deng in hindsight, according to the current leadership, is seen as a societal disaster. Therefore, the push for common prosperity has encompassed policies ranging from curbing tax evasion and limits on the hours that the tech sector employees can work to bans on for-profit tutoring in core school subjects and strict limits on the time minors can spend playing video games.

Societal correction has gained priority under Xi’s leadership. Currently, it is signalling a heightened commitment to delivering common prosperity, not just as an economic objective but as a core to the party’s governing foundation.

The writer is Professor, LBSIM, Delhi

Published on October 24, 2021

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