China Common Prosperity
"Common prosperity" is China's new development strategy, which is in line with the medium-long term objectives of the country’s 14th five-year plan (2021-2025) and is one of the nation's key long-term targets through 2035, when China is expected to achieve basic modernization.
In fact, President Xi, announced on July, during the celebration of the 100th anniversary of the founding of the CPC, that China had accomplished its first centenary goal - building a moderately prosperous society in all respects. Then in mid-August, Xi stressed efforts to promote common prosperity in the pursuit of high-quality development and coordinate work on forestalling major financial risks.
The concept of common prosperity is not new in Chinese politics. It appeared when former Chinese leader Deng Xiaoping initiated economic reform in the late 1970s, and at the 1992 14th National Congress of the CPC that declared its aim was to build a socialist market economy.
In order to achieve a more equal distribution of wealth, the CPC has implemented a series of tax policies to increase disposable income for low-income families by including additional deductions in tax calculations. Furthermore, new wealth taxes will be imposed at the national level on inheritance and real estate, which will reach the richest segments of society.
China’s per capita GDP is predicted to increase from USD 10,687 in 2020 to USD 23,000 in 2035. In such a span of development, according to cross-national data, the average proportion of government expenditure to GDP increases from 26% to 36%. This indicates a huge leap in the expansion of the welfare state which can significantly narrow the income gap.
The Chinese economy is experiencing a period of steady growth and the domestic recovery remains solid, according to vice president of the National Development and Reform Commission Ning Jizhe.
While Beijing has not included any average annual growth targets in its 2021-2025 economic plan, unlike the previous five-year plan released in 2016, it has committed to keeping growth within a reasonable range over the five-year period, setting the 2021 GDP target higher than 6 percent, according to Premier Li Keqiang's statements.
Beijing has showed an exceptional ability to react to the pandemic, returning to growth levels seen in the pre-pandemic period: GDP growth in the first half of 2021 recorded +12.7%, while international trade, of which China is the main actor, increased by 37.6%. Also, consumption and retail sales increased by over 23% in the first six months of the year.
In the second half of the year, major international organizations, such as the IMF and the World Bank, and major investment banks expect a slight change in their GDP estimates, due to various factors, however, GDP growth for 2021 is expected to be between 8% and 9% on an annual basis.
China thus confirms itself as the main engine of economic recovery in Asia and continues to be a very popular destination for foreign investors: after being one of the few economies to have seen positive numbers in relation to foreign direct investments in 2020, Beijing recorded investment inflows in the period January - June of over USD 90 billion, an increase of 34% compared to the previous year, and of 27% compared to the first half of 2019.
It is also interesting to note a growth in investments from the ASEAN countries (+51%) and the European Union (+ 10%). Investments mainly concerned the service sector (+29%), and the high-tech industry (+ 34%).