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Toward common prosperity


Since the launch of the reform and opening-up policy in 1978, China has registered remarkable achievements, especially in eliminating absolute poverty and raising the income of its residents.

China's per capita GDP has exceeded $10,000, but the per capita disposable income of residents in 2021 was about $8,709(based on the purchasing power parity conversion of the World Bank), a level that is still far from that of developed countries. According to the National Bureau of Statistics standard, the proportion of Chinese people with low incomes was estimated at more than 50 percent of the population in 2018. China's Gini coefficient--an indicator of the fairness of income distribution in a country--has stayed between 0.46 and 0.48 in the past decade, higher than 0.4 that is usually considered the warning level in terms of income gap.

Therefore, the focus of China's pathway to common prosperity, a concept emphasizing greater equality, should be on increasing the incomes of those in the low-income group and steadily expanding the size of the middle-income group. The process involves improving residents' income both at the overall and the individual level. A steady rise in income expectations is an important basis for achieving common prosperity at the individual level.

The stability of the income expectations of all people can be enhanced from three aspects.

First, provide equal education opportunities for all. The focus of education issues includes two aspects--enabling the equal distribution of education resources and adhering to scientific education and teaching methods. The biggest problem in China's school education system is the uneven distribution of resources, especially between urban and rural areas. There is a sizeable gap in teachers' pay, quality of education and schooling conditions between remote rural areas and the more developed eastern regions. It is important to tackle the unbalanced distribution of resources so that every child has an equal opportunity to receive high-quality education. The 2021 policy initiative aims to rid primary and secondary school students of the burdens of homework and private extracurricular tuition. Going forward, it is important to create an education environment that can better align with the personal development needs of children.

Second, broaden the income channels for low-income groups. Diversified sources of income can give residents more choices. The proportion of income from salaries and wages and from business operations is relatively high in the current composition of residents' incomes, while the proportion of property income is gradually increasing.

There are two major ways for expanding the channels to bolster the income for low-income groups: Increase the property income of low-income groups and stabilize the net income from the operation of businesses. For example, the income of rural residents from their landed properties needs increasing. Fiscal measures such as taxation and transfer payments, as well as those for improving grassroots governance, can be rolled out to fully guarantee the stability of income for those who rely on business operations for their livelihood (especially those on flexible payrolls).

Third, improve the stability of social aid programs. It is important to optimize the tax structure, increase the proportion of direct tax properly and enable the tax system to play a more positive redistribution effect. It is also important to improve the pension, medical system and social aid programs to respond to risks associated with health and poverty. Besides, we need to improve the employment and insurance system, and reduce large fluctuations in income caused by various factors, including market changes, disasters and personal accidents.

A rapidly aging Chinese society is exposing the elderly people to risks such as poverty, diseases, disability, and loneliness. To solve the aging problem, the central government has issued several policy documents offering an aged care service system for the elderly. Communities and families should be encouraged to assume their due responsibilities. A sound security network from various levels needs to be built, including healthcare and spiritual support for the elderly people.

To sum up, China's development achievements over the past few decades provide a solid foundation for moving toward common prosperity. While focusing on indicators at the aggregate and per capita level, equal attention can be paid to income growth and stability at the individual level to improve individual capacity, broaden sources of income and provide everyone with stable income expectations.

The author is a research fellow of the Institute for Common Prosperity and Development at Zhejiang University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn