China: Is Common Prosperity Possible?

Against the background of the aggravation of the US-Chinese rivalry, as well as the increasing level of criticality of internal socio-economic problems, Beijing is trying to accelerate the implementation of national development strategies, the main of which are the general “Great revival of the Chinese nation” and more focused “Common prosperity” and “Double circulation”. In general, these programs are interrelated and interdependent, and without the implementation of one of them it is impossible to implement the rest. They are designed to reduce the criticality of socio-economic imbalances formed in China during economic reforms and especially after 2008, as well as lay the foundation for the future socio-economic development of the PRC based on the dominance of domestic final consumption of households in order to avoid Beijing’s dependence on external economic and political conditions. This article considers, first of all, the “Common prosperity” program, the implementation of which in the medium term should level the social situation in China, as well as expand demand from the middle class. In addition, “Common prosperity” also has a pronounced ideological character, since it is a relatively new idea of the CPC General Secretary and, ultimately, the reputation of both Xi Jinping himself and the Communist Party of China as a whole depends on the success of its implementation. In an economic sense, “Common prosperity” is one of the stages of achieving the “Second centennial goal”, according to which Beijing plans to become in 2049, if not the first power, then the “second” first power at the level of the United States. That is, victory or at least parity in strategic rivalry with the United States depends on “Common prosperity”. At the same time, despite the importance of “Common prosperity” the final clear plan still doesn’t exist. The main question remains: where, in the context of a decrease in the effectiveness of traditional growth factors of the Chinese economy, to take resources for its implementation. If you increase the taxation of the Chinese middle class, which is already not rich by world average standards, then you can reduce the demand on its part and hit the “double circulation”. If you introduce taxes on real estate, you can hit the Chinese real estate market on the income from which provincial budgets depend a lot. If rely on tertiary distribution, that is, to form a tradition of charity, it is not clear whether this will be sustainable. In a difficult economic environment, Beijing will have to look for mutually satisfying and balanced solutions to very difficult tasks.