China's road to common prosperity held up by wealth gap

BEIJING • China's road towards common prosperity will not be easy, given the current wealth gap in the country, officials said yesterday during the release of a government White Paper on the country's path to become 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.

The 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). Unbalanced and inadequate development still poses a stern challenge," it said.

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 that 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 0 to 1, with 0 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 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.

Technology giants Alibaba and Tencent have already 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 donated billions to social causes.