Xi Jinping targets serious inequality in China’s “Gilded Age”


China Social Update

The new style of egalitarianism sweeping China will never work Kweichow Moutai, The manufacturer of spirits. The problem is not only that drunk business banquets were officially labeled “disgusting”, or there was a corruption case involving an official bribes 4,000 bottles of wine.

A deeper problem is that the company found itself on the wrong side of China’s latest great social enterprise. It took four years to create one of the most unequal societies on the planet, and Beijing is now attracted by the slogan of “common prosperity” – or, to redistribute the spoils to hundreds of millions of poor people.

Moutai, drunk in a small glass, costs thousands of dollars a bottle, and has always been a spicy symbol of China’s “gilded age”. Toasting helps to consolidate the comfortable symbiotic relationship between elite traders and government officials, creating amazing wealth for a few charming people.

Therefore, the recent sharp reversal of the fate of Kweichow Moutai may herald the scale of the social engineering project in the minds of President Xi Jinping. The market value of the world’s most valued beverage company has shrunk by US$207 billion since its peak in early February-more than the combined market value of Suntory in Japan and Heineken in the Netherlands.

“The way the Chinese Communist Party views its legitimacy has changed drastically,” said Yu Jie, a researcher at the Chatham Institute, a think tank in London. “Xi Jinping is addressing the pain ordinary people face due to uneven income distribution and the inability to equal access to basic social welfare and certain services.”

A committee led by Xi Call for this week. It stated that China will “regulate excessively high incomes and encourage high-income groups and enterprises to give back to society more.” For a long time, the party has allowed some people and regions to “get rich first.” Now it puts “common prosperity” first.

Yu said that the key lies in the social contract between the CCP and the Chinese people. “If the party defends the current status quo, which is clearly unfair in the distribution of wealth and opportunities, the trust of ordinary people will collapse.”

But the task before Beijing is huge. Last year, the number of Chinese billionaires reached 1,058, surpassing the 696 in the United States. Hurun Global Rich ListHowever, about 600 million Chinese live on a monthly income of about 1,000 yuan ($154).

Detailed information on how and at what speed China plans to resolve such inequality issues is sketchy or non-existent. But it is clear that some of China’s wealthiest private entrepreneurs are all aiming.Tens of billions of dollars have been wiped out of the tycoon’s wealth, such as Ma YunAlibaba founder Ma Huateng and Tencent founder Ma Huateng, because the new regulations depressed their company’s stock price.

The reaction of some savvy entrepreneurs is to fall behind Beijing’s agenda. Wang Xing, the founder of the food delivery group Meituan, donated US$2.3 billion to a charity fund that supports education and science. Tencent announces the establishment of a $7.7 billion fund Committed to “shared prosperity”, it defines it as increasing the income of low-income groups, health care coverage, rural economic development, and education for disadvantaged students. “As a Chinese technology company blessed by China’s reform and opening up, Tencent has been thinking about how to use its own technology and digital power to help society develop,” the company said.

Other potential measures to narrow the gap between rich and poor in China may include major changes to the tax law.Loose tax treatment for technology companies can be removed in whole or in part, forcing them to be closer to The national corporate tax rate is 25%, The analyst said. Another measure under consideration is the collection of property sales tax.

But no matter what specific measures are taken, the overall policy direction is firm. This is because of the special way the party issues and formulates its rules.

At the 19th National Congress of the Communist Party of China in 2017, Xi Announce the change In the party’s “main contradiction”-the philosophy that guides all its efforts. The previous concept formulated in 1981 emphasized accelerating economic growth. Since 2017, the party has focused on reducing the inequality that threatens its legitimacy and improving the quality of life of the people.

Chinese analysts say it took Xi Jinping four years to fully support the new policy direction, but he now seems determined. At the 20th Party Congress to be held next year, he must show the progress he has made in achieving his newly set goals.

However, Yuen Yuen Ang, an associate professor at the University of Michigan, said that overall, the clearest way to understand what is happening in China is to compare it with the history of the United States in the 19th century.

The Gilded Age lasted approximately from 1870 to 1900. As millions of impoverished immigrants arrived in the United States, wealth was concentrated in the hands of powerful industrialists. This was a period of rapid growth and severe inequality.That period gave way to Progressive age, An era of extensive social and political reforms. “Xi Jinping is trying to summon China’s own progressive era,” Ang said.

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