From Pyramids to Olives: The Pursuit of Common Prosperity

Time is reputed to pass more quickly with increasing age. With the People’s Republic of China (PRC) in its eighth decade, it seems only yesterday that the 19th National Congress of the Communist Party of China (CPC) held in 2017 was looking forward to 2020, 2035 and beyond.

So much has happened and so much has been achieved since then. Milestones have been accomplished: the 14th Five-Year Plan; the introduction of the first ever Civil Code; the pledge to achieve carbon neutrality before 2060; the eradication of rural poverty and the focus on common prosperity.

Anniversaries were celebrated: 73 years since the founding of the People’s Republic of China; the centenary of the creation of the CPC; and 25 years since the return of Hong Kong from foreign occupation.

And unanticipated events have also occurred worldwide: the COVID-19 pandemic; the Ukraine crisis; the increasingly intense geopolitical situation; and, this year, record-breaking heatwaves, severe drought, and heavy rainfall in China. According to the late British Prime Minister Harold Macmillan, it is events that cause governments most difficulty. When asked what he had found most problematic, he reputedly replied: “Events, dear boy, events.”

It is surprising, therefore, how much China has been able to remain focussed on long-term goals and to achieve them one by one. Clearly, its system of government helps. Under the lead of the CPC, other political parties – there are eight – play an advisory rather than an oppositional role. Politics, therefore, is not subject to ideological turmoil; policies can be pursued and developed over the long-term rather than becoming the victims of party-political disputes.

However, China’s principal motor for systematic and sustained policy development is provided by the system of national five-year plans. Each planning period commences between the quinquennial meetings of the CPC National Congress which typically ensures that changes in policy direction are transitional rather than disruptive.

Explicitly referring to the requirements of the 16th, 17th, and 18th National Congresses of the CPC, the 19th National Congress in 2017 predicted that the period to 2020 would be “decisive in finishing the building of a moderately prosperous society” that “earned the people's approval and would stand the test of time.” To achieve this would call for targeted poverty alleviation, pollution control and the forestalling and defusing of major risks.

The 19th CPC National Congress also envisaged that the five years to the 20th Congress would witness the converging of the timeframes from two centenaries of the Party’s history. With the goals of the first century met, this would then entail the government embarking “on a new journey toward the second centenary goal of fully building a modern socialist country.” It would also require socialist modernization to be “basically realized” by 2035, and for China, by 2050, to develop “into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful.” Politics in most countries precludes such long-term planning because events divert attention and incoming governments undo the policies of their predecessors.

If politics are shaped by words, policy requires action. Extreme rural poverty has been eradicated through combinations of policies trialled and developed from 1986 onwards. With a database constructed recording all persons experiencing poverty, public officials took personal responsibility for the financial well-being of named individuals in addition to their normal duties. Prosperous businesses and regions were mobilized to support poor counties and villages.

The 14th Five-Year Plan, 65 chapters long and officially endorsed by the National People’s Congress (NPC) on March11, 2021, takes the centenary goal of building a modern socialist country as its core objective. Responding to the successful elimination of rural poverty, it does not, as many had expected, focus on tackling urban poverty. Rather it proposes the more ambitious pursuits of rural revitalization – in a bid to narrow the gap of rural and urban living standards – and common prosperity for all by 2050.

In addressing rural revitalization, the Plan acknowledges that the strategy of encouraging “the manufacturing sector and urban entities to support agriculture and rural development” to help to promote rural revitalization is “a uniquely Chinese approach,” the strategy of mobilization successfully employed to eliminate rural poverty. It might have added that no other country has succeeded in this goal because uncontrolled market forces always favour cities through economies of scale.

Common prosperity, like rural revitalization, was mentioned only once in the resolution on the CPC Central Committee report of the 19th CPC National Congress. In the former case, this was in the context of international relations and the desire for “a community with a shared future for mankind” that would enjoy “lasting peace, universal security, and common prosperity.” However, the 14th Five-Year Plan includes common prosperity as part of the first substantive guiding principle: to “commit to a people-centred approach. We must ensure the principal position of the people, and work towards common prosperity.”

Contrary to some international opinion, achieving common prosperity is not a new objective. It was identified as “the ultimate goal” of Chinese farmers as early as 1953 with the formation of agricultural cooperatives. The goal did not change with the opening up of the economy, but the means of attaining it did through “allowing some peasants to get rich first.” Unparalleled economic growth followed and, by 2011, China had transitioned from a low- to an upper middle-income country. It is now expected to have become a high-income country by 2025.

In the new environment of comparative national wealth, the policy instruments for achieving common prosperity need to change again. The era of rapid economic growth inevitably resulted in imbalances between resource-rich regions and those that were less well-endowed, between urban and rural areas and between individuals, some of whom were better placed to take advantage of market opportunities.

Although extreme rural poverty has been eradicated, some 200 million remain poor according to international standards for upper middle-income countries, and income inequality, though falling, remains comparatively high. With few people getting rich first and others following, the income distribution is pyramid-shaped – with few persons at the top and many more towards the bottom. Policies are being trialled in Zhejiang Province to achieve common prosperity. These seek to transform the pyramid into an olive shape by substantially expanding the middle-income group and reducing the proportion with excessively high or very low incomes.

The strategic commitment to common prosperity was announced despite the impact of events. In early 2021, economies globally were still coping with the consequences of the COVID-19 pandemic and vaccines were in short supply. China’s zero-tolerance policy, in contrast to many strategies abroad, prioritized human lives above profits but simultaneously meant that the Chinese economy recovered before most others, thereby preventing a sustained global recession.

The pandemic, though, was used to heighten the turn in Western public opinion against China that had begun one or two years before. To divert attention from mishandling of the pandemic in the United States, Presidents Trump and Biden both exploited the theory that COVID-19 leaked from a laboratory in Wuhan, a theory thoroughly discredited in scientific publications this year. Likewise, Western newspapers amplified the impression that China had not cooperated with the World Health Organisation in finding the source of the pandemic despite rebuttals from the scientists involved.

Negative public opinion probably aided the Trump administration in placing further trading restrictions on Chinese companies in 2020 and 2021, restrictions that President Biden has largely retained. Ostensibly instigated for various reasons, the intent was – being fearful of competition – to stem the economic advance that had enabled China to lift nearly 800 million people from abject poverty. To the extent that the American policy continues and proves successful in curtailing China’s growth, it will undermine the global goal of halving poverty by 2030.

The same negativity could explain why many Western commentators have misrepresented common prosperity as a “war on rich capitalists.” Neoliberal capitalism does promote massive concentrations of global incomes in rich countries and among mega-rich individuals. This largely accounts for why income inequality in the United States is high and comparable to that in China even though it industrialized a century earlier.

However, responding negatively to common prosperity in this way is perverse. After all, the 19th CPC National Congress envisaged common prosperity as a goal for all humankind, a complement to “lasting peace and universal security.” In the West, the olive tree has long been viewed as a symbol of peace, wisdom and prosperity. How fitting, therefore, that the pursuit of common prosperity means transforming the world’s income distribution into the shape of an olive.