Xi Jinping warns push for “common prosperity” will be “long-term”

The campaign would be based on several fundamental principles, starting with encouraging innovation as a means of prosperity.

Chinese President Xi Jinping has warned that his government’s current push for “common prosperity,” which is likely to see a major overhaul of many sectors of the Chinese economy in the months to come, will be “long-term. “.

The campaign for “common prosperity” gained prominence after it was highlighted by Xi at a meeting of the Central Finance and Economic Affairs Committee in August. Observers considered this to underline many of the recent major regulatory measures announced by the Party leadership that have alarmed foreign investors and wiped out nearly $ 1 trillion in market value from China’s large private tech and education companies since. February.

These include antitrust investigations of large private sector companies, such as Alibaba and Tencent, and the overhaul of the burgeoning private education sector, which could be doomed to become nonprofit.

The broad campaign ranges from limiting the growing influence of fintech and e-commerce giants to cracking down on the gaming industry and even celebrities and fan culture in China.

On Friday, the Party’s official newspaper Qiushi or Seeking the Truth first published Mr. Xi’s full speech at the August meeting, which provides his most detailed comments to date. on the campaign for “common prosperity”.

He said the campaign would be long term and was here to stay, and would be “the focal point” for ensuring both the welfare of the people and the “long term governing foundation” of the Party. He pointed to growing income inequality around the world as a serious threat that would lead to the collapse of the middle class as well as social and political polarization, saying it offered “deep lessons” for China.

The campaign, he said, would be based on several core principles, starting with encouraging innovation as a means of prosperity. This would require “more inclusive and equitable conditions for people to improve their education” in order to “prevent social stratification“. In July, the Party essentially banned the burgeoning private education sector from raising funds and going public, which led to a collapse in the share prices of large companies, and ordered the sector to become purposive. non-profit.

The measures, Xi said, would be aimed at “avoiding ‘involution’ and” staying flat, “” referring to two buzzwords among young Chinese people who push back the race for education and employment, and a consuming work culture known as “996” – 9am to 9pm, six days a week. “Involution” refers to a feeling of stagnation, while “staying flat” has been seen by some as the solution, withdrawing from the race and doing the bare minimum to survive.

The second principle was “adherence to the basic economic system” and “the public sector as a pillar”. Regulators “will accelerate the reform of monopoly industries” and “support the development of small and medium enterprises,” he said. The purpose of these measures, Xi said, was “to expand the size of the middle-income group.” The authorities will more strictly regulate “high income” and “excessive income”, notably by reforming the personal income tax system.

With fintech and e-commerce companies, including Alibaba, Tencent, and ride-sharing app Didi Chuxing, among those currently in the crosshairs of regulators for “monopoly” practices, the “common prosperity” campaign is expected to be broadened in countries. months to come. include the financial sector and the many heavily indebted real estate companies, which have been warned that they cannot expect bailouts from the state.

Xi “focuses on the links that Chinese state-owned banks and other financial pillars have developed with big players in the private sector,” the Wall Street Journal reported this week, with a “large round of inspections “financial institutions expected to come. weeks as part of a “wider push to curb capitalist forces in the economy”.

The campaign is expected to continue in the coming months and in the run-up to next year’s 20th Party Congress, a five-year event scheduled to take place next fall, which will see Xi, who abolished the mandates. , begins his third five-year term.

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