Evidence has been mounting in recent months that the Chinese leadership may be carrying out a tough axis toward asserting greater state control over society and the economy. In the months following Beijing’s sudden decision in November 2020 to ban Alibaba’s Ant Group List On the Shanghai and Hong Kong stock exchanges, the Chinese authorities launched a The chain of crackdowns widens On tech giants, wealthy people, education providers, celebrities and even young video game enthusiasts. It has become difficult to determine the limitations of Beijing’s interventions in society and the economy.
Beijing’s string of actions has raised questions among policymakers, investors, journalists and interested observers about the motives for China’s actions. Why would the normally tightly controlled Chinese media communicate such sweeping changes in such a clumsy way that they might lead to it? More than 1 trillion dollars In the market value of listed companies in China to be eliminated? Is China teetering on the cusp of social unrest, or is the leadership seizing a moment when it feels empowered at home to make major policy adjustments?
What is happening?
According to Chinese business and technology reporter Zhang Qi, China has 14″Campaigns“Concurrently underway on business and individuals at the time of writing. Many – but not all – crackdowns fall under the umbrella of the concept of ‘shared prosperity.’ President Xi Jinping highlighted this concept while working on it. comments To the CPC Central Financial and Economic Affairs Committee on August 17, noting that “common prosperity” is a prerequisite for socialism and necessary to balance growth and financial stability. After the committee meeting called for “reasonably adjust excess incomes” and encourage individuals and companies with high incomes to “give back more to society.”
This sweeping series of regulatory actions sparked a rare spark public debate within China. On the one hand, there are those who favor bold actions that lead to a large-scale reorientation of China’s economy and society. Lee Guangman, a previously unknown blogger, captured this feeling in a file article Which was widely circulated and republished on the Internet by party and state-controlled media. In his article, Lee called for a “deep revolution” to correct the inequalities created by capitalism.
On the flip side, there are more foundational-minded advocates of reforms in order to steadily promote social progress while still nurturing conditions conducive to innovation and entrepreneurship. A supporter of this an offerHu Xijin, editor-in-chief of the nationalist newspaper Global Times, rebuked those defending the “revolution,” noting that such loose rhetoric provokes unwelcome comparisons with earlier periods of turmoil within China.
The concept of “common prosperity” has deep roots in the Chinese Communist Party. People’s Daily, the party’s mouthpiece Use this term for the first time In a major address on December 12, 1953, as part of an effort to support the cause of socialism over capitalism. The paper warned that capitalism would allow a few to get rich while the vast majority of people would remain poor.
As director of the China Media Project David Bandorsky datedUnder former Supreme Leader Deng Xiaoping, Chinese propagandists turned the argument on its head, proposing instead that “letting some peasants get rich first is a pragmatic policy to achieve shared prosperity.” They suggested that it would be best to let some get rich first and then attract others behind.
In the decades that followed, China’s economy boomed and social inequality rose. These dual developments prompted the Chinese Communist Party to wage war to eradicate poverty. Beijing has done it commendably eradicate extreme poverty In China earlier this year. However, there are still about 600 million workers Live on a monthly income of $154 or less. The fact that a large population of poor people twice the size of the entire US population lives alongside a wave of first-generation billionaires and millions who are Consume about half Of all the luxury goods sold globally, there are complexities of social cohesion in China.
In launching the latest wave of measures to tackle social inequality and economic inequality, China’s leaders may view themselves as correcting some of the excesses of Deng’s decision to “allow some people to get rich first.” These efforts are in line with Xi’s efforts to Re himself from a prince to a populist leader. As some of the initial dread for Xi’s anti-corruption efforts begins to wane, his efforts to advocate for greater equality, including by sucking out the wealthy, offer Xi a new opportunity to stand with the people against the powerful. These efforts also have the natural benefit of punishing the new Chinese oligarchy against challenging his authority or that of the Chinese Communist Party in governing China.
Xi Jinping is also a committed believer of superiority for the governance model in China. He might think that the latest wave of repression is necessary to bring about socialism at home to distinguish it from capitalism as practiced in the West. To do this, an important step is the redistribution of wealth, the leveling of opportunities for social progress, and the reduction of social inequalities. A more traditional approach to advancing these goals may be to implement measures such as a property tax, a more progressive income tax, or an inheritance tax, but these measures can be controversial and likely to be resisted by partisan elites.
There may also be a national security dimension to the Chinese leadership’s decision to continue such large-scale crackdowns. in a Speech At the Central Party School on September 1, Xi spoke dimly of the growing challenges of China’s rejuvenation. He pointed out that the complications that have led to “changes that we have not seen in a century” are exacerbating, and he told the cadres: “It is unrealistic to expect a peaceful life without struggle.” He seemed to be trying to rally the public to the prospect of mounting challenges on the horizon.
The Chinese leadership also appears to be signaling that it wants to play a greater role in allocating resources within society to meet future challenges. They don’t seem impressed by the improvements in e-commerce platforms, video games, or food delivery services. Instead, they seem to want talent and capital focused on enhancing China’s competitive position in key strategic sectors, such as high-end manufacturing, green technology, semiconductor production, electric vehicles, and other national priorities identified in the Made in China 2025 initiative and Fourteenth Five-Year Plan.
Is there a bottom?
In recent years, the public attitudes of the United States and other developed countries toward China has been tension so far. The latest wave of Beijing’s crackdown may add to anxiety abroad about China’s overall trajectory, including by sending chills to the international business community, which has traditionally been among the most active supporters of constructive relations with China.
Perhaps, realizing this dynamic, senior Chinese officials in recent days have sought to reframe the narrative around China’s regulatory tightening and “shared prosperity.” The state-run economic daily newspaper published In an opinion piece dated August 20, he notes that recent regulatory actions and subsequent market sell-offs have been a short-term cost to achieving healthy long-term growth. A senior economic official, Han Wenqiu, built on this topic at a press conference in Beijing on August 26, when to explain, “Shared prosperity means doing a proper job of expanding the pie and dividing the pie… We will not kill the rich to help the poor.”
In the event that Han’s message does not clearly reach Western observers, China’s official Xinhua news agency reported published Explanatory essay in English on ‘shared prosperity’ on the same day. In this article, Xinhua explained, “Shared prosperity is a basic requirement of socialism… Shared prosperity is not equality. It is in no way stealing from the rich to help the poor as it is misinterpreted by some Western media.”
President Xi emphasized this point several days later. in a Notes At the Global Trade in Services Summit of the 2021 China International Trade in Services Expo on September 2, Xi stressed, “We will work with all other parties to support openness, cooperation, mutual benefit and win-win, share opportunities for growth in service trade, and promote global economic recovery and growth.” Less than a week later, Vice Premier Liu publicly Certain Chinese government support companies for the private sector. On September 8, People’s Daily published Reassurances on the front page that China “will unswervingly promote high-level openness, protect property and intellectual property rights, and enhance policy transparency and predictability.”
Even with this wave of official clarifications, it is still too early to know where this regulatory crackdown will end. Has the Chinese leadership decided to rely on a one-way method of immutably tightening control over society and the economy? Or have recent steps like declaring a file Beijing Stock Exchange, was a signal that Beijing is looking for ways to restore the relationship between the party, society and the market, but in ways that do not stifle the dynamism that will be required to maintain high-quality growth?
While the answers to these questions are not yet known, it is already clear that Beijing’s actions in the coming months will require careful monitoring of signs of the direction the country is heading. Actions – not words – will be the currency in which Beijing’s intentions should be understood.