China makes solid strides toward common prosperity
Shang Chunling (second left) teaches residents of Jiefang Village, Benxi in Liaoning Province to make corn husk weaving products that can bring extra income in their spare time. Photo: Lin Lin/PROVIDED TO CSST
The Fourth Session of the 13th National People’s Congress (NPC) opened on March 5, 2021. The State Council has drawn up a draft outline of the 14th Five-Year Plan (FYP) for national economic and social development and the long-range objectives through the year 2035, which has been submitted to session attendees for review.
The draft outline included “achieving more substantive progress in common prosperity for everyone” as one of the long-range goals, which is the first time it was mentioned in the country’s mid-and long-term development plan. This move signals that common prosperity will make substantive progress during the 14th FYP period.
Historical course
In the PRC’s early years, China established a basic socialist system which benefited hundreds of millions of working-class people through rural land reform and the socialist transformation of urban industry and commerce. Thanks to implementation of the reform and opening-up policy, the country has achieved sustained and rapid economic growth and remarkably improved people’s lives.
Since the 18th National Congress of the Communist Party of China in 2012, General Secretary Xi Jinping pointed out that “eliminating poverty, improving people’s livelihood, and gradually achieving common prosperity are the essential requirements of socialism and an important mission of our party.” This guideline led to China’s victory in its fight against absolute poverty. Presently, a victory is in sight in building a moderately prosperous society in all respects. While sustaining the healthy development of the national economy under the new normal, the fruits of reform will benefit all people more equitably.
Current situation
The common prosperity promoted in our new development stage covers all people. It refers to a form of comprehensive prosperity in both material and spiritual life. Therefore, pursuing common prosperity is an abiding and arduous task.
First of all, China’s low-income group is huge and the income gap between groups is still wide, which has constituted a major shortcoming that can hinder progress towards common prosperity. A long-term downward trend continues in the proportion of residents’ income when it comes to the total income of governments, enterprises, and residents. Between 2000 and 2010, the proportion of residents’ income in the primary distribution fell by 7.08 percentage points. Between 2010 and 2020, the proportion increased by about 4.5 percentage points when considering both primary distribution and redistribution, but it remained at a low level. As a result, the number of low-income people remains large.
At present, approximately 300 million Chinese people have a disposable income of less than 1,000 yuan each month, and about 700 million people have less than 2,000 yuan in disposable income. Also, there is a relatively large income gap among residents.
Since the 18th National Congress of the CPC, the Gini coefficient of Chinese residents’ income has generally declined, reaching 0.465 in 2019 as rebounds occurred in recent years. This situation constrains the improvement of people’s livelihoods. Most people have a limited consumption capacity, which impacts consumption structures and levels, this in turn slows the stamina of national economic growth. It may even damage efforts to foster a new development pattern where domestic and international markets can boost each other, with the domestic market as the mainstay.
People’s livelihoods and social security systems desperately require optimization. We should address the existing shortcomings. For example, the quality of employment is still not high, and employees’ wages are relatively low, even though more than 10 million new urban jobs are created each year. In terms of social security, there are wide gaps between urban and rural areas, between regions, and between different groups.
In 2020, the average monthly pension of most residents was 107 yuan. Major diseases still worry urban and rural residents. In the context of the accelerated aging process, our service structure is incomplete, and elderly care services, such as professional nursing staff, are in short supply. Child welfare systems are underdeveloped, resulting in high child-raising costs and a significant drop in the birth rate. Also, an imbalance in educational, medical, and health resource allocations still exists. The high-quality resources are densely distributed in first-tier cities. In addition, the personal income tax system has yet to benefit middle- and low-income groups. All of these factors will impede the pursuit of common prosperity.
Alternative approaches
Therefore, we should adhere to the principles of co-construction, co-governance, and sharing, and apply supporting policies and measures to double the size of middle-income groups in the next 15 years, while ensuring that low-income groups can continuously improve their quality of life. While sustaining national economic development, we should start by adjusting the social distribution pattern, focusing on primary distribution, secondary distribution, and tertiary distribution at the same time. In the next 15 years, the country is expected to basically equalize basic public services.
The second mission is to incrementally expand labor remuneration shares within the primary distribution. It is advisable that the index should be increased to more than 60% from less than 50% (at present), meaning that we can no longer rely on the advantage of low labor costs brought by the demographic dividend in the past. Instead, we should raise labor remuneration while increasing labor productivity.
To this end, the minimum wage standard should keep climbing, along with migrant workers’ wage levels. Subsidies should cover employees working in underdeveloped areas and those serving industries such as elderly care, child welfare, and services for the disabled. Workers’ salaries in the fields of medical and healthcare, education, and scientific research should truly reflect the value of intellectual labor. Also, decision-makers should build a complete policy system that promotes residents’ property income.
The third approach is to further straighten out the social security system and unleash its redistributive function. Today, the fundamental reason for the weak material foundation of China’s social security system is that inadequate public investment fails to leverage social investment. In the past over ten years, the absolute value of state financial investments in social security has been increasing year by year, but its proportion within the public financial budget has not seen a significant increase. The social investments brought by market entities and social forces have not seen substantial growth in the context of the constant and rapid accumulation of social wealth.
Meanwhile, the social security system’s redistribution mechanism has yet to fully function, which is not conducive to the solid promotion of common prosperity in the new development stage. Therefore, during the 14th FYP period, we should cement institutional uniformity, standardization, and fairness, and further restructure fiscal expenditures, so that public finance can support the people’s well-being through social security systems. Also, precise policies should impact and guide the active participation of market entities and social forces, as well as individuals and families, to drive the growing material foundation of China’s social security system.
Philanthropy demands vigorous development before this third distribution method has significant beneficial effects. In recent years, the accumulation of private wealth in our country has been rising, but the development of philanthropy has been lagging. At present, donations raised on an annual basis across the country are only about 0.15% of China’s GDP, meaning there is immense potential for the development of philanthropy. Therefore, the most pressing task is to optimize the unified charity fiscal and taxation policy as soon as possible and begin philanthropy’s integration with social assistance, social welfare, and related services. Also, a formal introduction of new policies such as inheritance and gift taxes will help create a social atmosphere where all people are pursuing kindness, and a favorable policy environment for service-oriented charitable organizations. In this way, the final distribution pattern of social wealth will become more reasonable.
Coordinated institutional arrangements should gain importance. We should adopt a promotion strategy featuring systematic integration, collaboration, and efficiency, such as gradually eliminating the household registration system’s negative effects on the migrant population in terms of income, welfare, and basic public services, so that basic public services can cover all permanent populations. We should focus on expanding services that meet people’s needs and enhance their well-being.
Therefore, people’s livelihoods and the national economy can develop complementarily. Normalized assistance should be channeled to low-income rural populations. We should continue to consolidate and scale up the achievements of poverty alleviation, helping underdeveloped areas and low-income groups to keep up with the modernization of national governance and the solid promotion of common prosperity.
Zheng Gongcheng is an NPC deputy and president of the China Association of Social Security.
Edited by MA YUHONG