Tough challenges ahead to achieve common prosperity given wealth gap in country, says China

China was taking steps to address its income inequality problems, and more would be done to achieve common prosperity. PHOTO: REUTERS

BEIJING - China's road towards common prosperity will not be easy given the current wealth gap in the country, officials said on Tuesday (Sept 28) at the release of a government White Paper on the country's path to becoming a moderately prosperous society.

They stressed the government's commitment to bridge the inequality gap in the country.

Mr Ning Jizhe, vice-chairman of the National Development and Reform Commission, said that China would continue to prioritise economic growth in its next phase of development, more commonly known as "common prosperity".

"We need to make the pie even bigger and better distribute the pie... We need to create more jobs," said Mr Ning, who is also director of the National Bureau of Statistics.

China's drive to narrow the gap between the rich and poor, evident after policymakers vowed to "adjust excessive incomes", triggered concerns last month among economists about heavier government intervention in the world's second-largest economy.

The country's economic strategy in the early years of opening up under former paramount leader Deng Xiaoping was to allow some groups to get rich first, with the aim that wealth will eventually be spread across the country as the economy develops.

But the strategy has led to a severe problem in wealth disparity, with the top 1 per cent owning more wealth than the poorer half of the population in total by some estimates.

China's inequality problem was addressed in the White Paper, titled China's Epic Journey From Poverty To Prosperity'.

"China still faces tough challenges in spite of (realising moderate prosperity)," it said, adding that "unbalanced and inadequate development" is still a big obstacle to overcome.

The paper noted that "income disparities and the gap in development between urban and rural areas and between regions remain a severe problem".

Mr Ning said that China was taking steps to address its income inequality problems, and more would be done to achieve common prosperity.

He pointed to how China's Gini coefficient fell to 0.468 last year, down from a peak of 0.491 in 2008. A country's Gini coefficient measures income inequality from zero to one, with zero being most equal.

He also noted that disposable income for rural residents in China had grown by 10.6 per cent in nominal terms between 2011 and 2020, 1.8 percentage points higher than for urban residents.

Building more roads, boosting agricultural production technology and raising rural residents' literacy levels had contributed to economic growth in villages, according to the White Paper.

"We will continue to control and narrow the wealth gap," Mr Ning said, pointing to the charity sector as one way to do so.

Some of China's biggest companies have jumped onto the bandwagon to ensure common prosperity.

Technology giants Alibaba and Tencent have pledged 100 billion yuan (S$21 billion) each to support China's march towards common prosperity. Other big names that have done likewise include Pinduoduo, Xiaomi and Meituan, which collectively have donated billions to social causes.

The White Paper also reaffirmed China's resolve to stay open to the world in what appeared to be an effort to allay growing concerns elsewhere that it is boosting domestic demand to lessen the country's reliance on exports as part of its dual circulation strategy, which places greater focus on the domestic economy.

"China will not close its doors in the face of spreading opposition to globalisation; it will only open them wider.

"It will remain committed to its mutually beneficial opening up policy and build an even more open economy, so as to provide other countries with more opportunities in markets, investment and growth."

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