It has been more than 40 years since Deng Xiaoping, the former supreme leader of the People’s Republic of China, changed the course of the country and its politics. Mao Zedong’s Cultural Revolution took a back seat, ushering in an era of openness and liberalization of the economy. “We will let some people get rich first,” were the Chinese leader’s words.
Since then, the importance of the country in the world capitalist system has been practically hegemonic, putting the nation that champions economic liberalism at the global level, the USA, on the warpath. In fact, China’s leading role in the markets has recently made it carry out a plan against inflation and the rise in energy prices, puncturing the value of oil by releasing part of its strategic reserve.
A really strange economic position for a communist state. However, Deng’s decision, despite being effective, was implemented with an expiration date. Now, Xi Jinping, the current leader, has warned China’s tycoons that the time has come to share more wealth with the rest of the country. By 2025, the average income per person should reach $ 11,500 in Zhejiang, an area chosen by the president to demonstrate the validity of state plans, this will mean an increase of 40% compared to current levels.
China will start introducing ‘socialist’ measures
As Xi himself has explained, the Communist Party will seek to achieve “shared prosperity” – a term used by Mao Zedong in the 1950s – by 2035, in order to reduce the economic gap that has plagued the country for several decades. . “A powerful China should also be fair and just,” Yao Yang, a professor of economics at Peking University, told The New York Times .
According to the party’s plans, and although most of the measures that will affect the companies are still unknown, the intention is to achieve an increase in the average income of the people, promote collective contracts so that workers have greater bargaining power and granting employees part of the companies’ means of production .
Measures that in any other country would set off the alarms of large companies, starting a war against the government. However, given the power of Chinese leaders, national multinationals have been quick to show their support for the party’s decision.
Alibaba co-founder Jack Ma recently said that it was “the responsibility and duty” of entrepreneurs to strive for “shared prosperity.” Also last week, the company announced that it will invest $ 15.5 billion in wealth-sharing projects that include rural health care and insurance for pay-as-you-go workers.
Similarly, Tencent, the country’s largest technology multinational, also recently announced that it will allocate 15.5 billion dollars, the same amount as Alibaba , to the implementation of social aid programs.
Xi Jinping makes this decision months before a possible third term as general secretary.
Precisely, this decision comes at a time when the Chinese leader faces the possibility of directing a third term as secretary general of the party in early 2022. The country’s administration is aware that the gap that has been generated between classes it goes against the principles of socialism and the foundations on which today’s China was founded.
In fact, Xi Jinping has warned his administration that failing to respond to the complaints of the Chinese people could put a strain on the economy and endanger the future of the party . The reality is that China is one of the worst countries in terms of wealth redistribution, as Yao explains. Public spending is concentrated in the wealthiest classes. The richest one percent of the country currently owns nearly 31% of the nation’s wealth, according to the Credit Suisse Research Institute. A figure that in the US rises to 35%, as reported in The New York Times .
For this reason, the government is promising that education, housing, and health care will be accessible to all citizens. In the same way, the intention of the party is to extend services to all population areas, since they are currently concentrated in large cities. Xi’s intention is to get a large part of the population to access the middle class , something that in itself twists the principles of communism, but which is urgently implemented in the country.
Specifically, the party has explained that the purpose of these measures is not to achieve a European-style welfare state or egalitarianism like that of the Mao era, on the contrary, the claims are to achieve a society “in the shape of an olive ” that is, a massive middle class and a few people at the extremes of poverty and wealth.