“Common prosperity” recognizes that the underlying problem is the distribution of income

CHINA FINANCIAL - Report 26 Aug 2021 by Michael Pettis

Special points to highlight in this issue:

* “Common prosperity” is Beijing’s new buzz phrase. It is already being applied to so many policy announcements that it is hard to grasp its meaning and to differentiate it from previous buzz phrases like “rebalancing” and “dual circulation”.

* In a meeting earlier this month attended by Xi Jinping, “common prosperity” was described as a means to “properly deal with the relationship between efficiency and fairness”. Since then, most explanations focus mainly on what “common prosperity” isn’t – e.g., it is not “robbing the rich to give to the poor”, according to the dean of Fudan’s School of Economics.

* In the end, however, it seems to represent a set of policies designed to address the same fundamental imbalances in the Chinese economy. Because this latest effort faces the same set of institutional constraints that earlier ones did, we should be skeptical about its prospects.

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