In a meeting with the country’s Economic and Financial Commission, Xi Jinping reportedly said, among other things, that the government should “encourage high-income earners and businesses to give more back to society,” according to reports from state media.
The commission says it intends to pursue the “common welfare agenda”. The issue has become the focus of China’s decision-makers after reports of internal dissatisfaction within the Communist Party with the country’s new class of wealthy businessmen.
“need to reduce”
Niklas Swannstrom, president of the Institute for Security and Development Policy (ISPD), says China’s economic disparity is “epic”. He notes that the country has some of the world’s richest people, but also some of the poorest.
They need to narrow the gaps to curb social unrest.
Xi’s comments can be seen as part of Beijing’s aggressive attempt to rein in the country’s largest private company. Tighter controls over the financial sector and stricter environmental regulations for industrial companies sent stock prices down on the Shanghai Stock Exchange.
As a result, China’s richest pregnant Pampers have seen their fortunes shrink. The total net worth of about two dozen Chinese tech and biotech billionaires has fallen 16 percent since the end of June, according to analysis by the Financial Times.
Wealth tax increase
– China has a strategy to reduce the gaps and reduce the extreme poverty in the country. But I can’t really see what Xi Jinping should do to drastically reduce it, says Swanstrom.
Xi is expected to propose an increase in both the wealth and income tax. At the same time, wages are expected to rise in the public sector, to combat corruption among public officials.
This does not mean that you are creating an economically equal society. There is still a huge difference between privileged and non-privileged Chinese, and it will remain so as long as you cannot pursue it independently of state, says Swanstrom, and continues:
Corruption is rampant in China. They did things to fight corruption, but then basically hit political opponents. I don’t think loyal followers will be affected.
It is against this background that Shi’s message should be seen.
One does not intend to reduce the area of power for oneself or an ally. It is undoubtedly very selective, says Swanstrom.
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