Chinese President Xi Jinping speech at World Economic Forum’s (WEF) on 18 January 2022 highlighted that the policy of “common prosperity” was aimed at reducing income inequality within China by creating a larger cake to share rather than dividing up a small cake.
“The common prosperity we desire is not egalitarianism,” Xi told WEF delegates via a video link.
He said: “We will first make the pie bigger and then divide it properly through reasonable institutional arrangements. As a rising tide lifts all boats, everyone will get a fair share from development, and development gains will benefit all our people in a more substantial and equitable way.”
The Chinese government has via its National Congresses and Five-Year Plans set out a phased approach of achieving modernisation and common moderate prosperity.
China’s overall economic construction objectives were clearly stated in the Three-Step Development Strategy set out in 1987:
Step One – to double the 1980 GNP and ensure that the people have enough food and clothing – was attained by the end of the 1980s;
Step Two – to quadruple the 1980 GNP by the end of the 20th century – was achieved in 1995 ahead of schedule;
Step Three – to increase per-capita GNP to the level of the medium-developed countries by the mid-21st century – at which point, the Chinese people will be fairly well-off and modernisation will be basically realised.
On July 1 last year, President Xi announced China had realised the first centenary goal of building a moderately prosperous society in all respects.
“This means that we have brought about a historic resolution to the problem of absolute poverty in China, and we are now marching toward the second centenary goal of building China into a great modern socialist country in all respects,” he said.
As the world’s second-largest economy, China accounts for just over 17% of the global total as its economy grew from only RMB 67.9 billion in 1952 to RMB 101.6 trillion in 2020.
This meant that its per capita GDP soared from less than US$100 (R1 500) per annum in 1952 to over $10,000 (R150 000) in 2020, almost double South Africa’s R79 913 per capita GDP in 2020.
That allowed China to achieve a historic transformation from a low-income country to an upper-middle-income country. Xi said that despite China’s strict zero-Covid-19 policy that has seen people exchanges being drastically cut, China was still open for business as reflected in the foreign trade data and it welcomed foreign direct investment into China with open arms.
“All types of capital are welcome to operate in China, in compliance with laws and regulations, and play a positive role for the development of a country,” he said.
China saw a 20% rise in 2021 to a record $179bn in foreign capital inflows according to the United Nations Conference on Trade and Development (Unctad).
China’s foreign trade surplus widened to a record high of $94.46bn in December 2021 from $71.72bn in November and easily beating the consensus forecast of a $74.5bn surplus.
Exports extended their double-digit growth for the 15th consecutive month with a 20.9% year-on-year gain to $340.5bn, while it also sucked in imports worth $246.04bn, which was 19.5% more than a year ago.
For the full year 2021, the trade surplus widened to a record $676.4bn from $524bn in 2020, as exports surged by 29.9% and imports soared by 30.1%.
This robust foreign trade activity allowed China to register an economic growth rate of 8.1% in 2021 from only 2.2% in 2020. Xi said the strong growth should not come by sacrificing the environment and he described economic development at the cost of environment as “draining a pond to get fish” and sacrificing growth to protect the environment as “climbing a tree to catch fish”.
* Preuss is an economist at Forecaster Ecosa
** The views expressed here may not necessarily be that of IOL.