If the Central Committee for Financial and Economic Affairs, which met yesterday under the chairmanship of President Xi Jinping, had held its meeting three weeks ago, much of the guessing-game played by foreign investors since then could have been avoided. It is now clear what is going on: China is transforming its “Socialism With Chinese Characteristics” economic development model, with the primary aim of reducing inequality.
This is how it happens sometimes in China: policies are launched that wipe trillions from stock market valuations, and only a couple of weeks later are they explained, often by an oblique reference.
The official document released after the big meeting is worth reading in its entirety. Here is the version supplied by CCTV. Reading between the lines, it appears to make three key points. First, to get rich is still glorious. Second, to get obscenely rich is not so much. Third, wealth is protected by the law, but obscenely rich people had better start thinking about how they can give it back. “Common prosperity” is now the primary goal for all.
Or, put another way (by the SCMP): The meeting vowed to “strengthen the regulation and adjustment of high income, protect legal income, reasonably adjust excessive income, and encourage high-income groups and enterprises to give back to society more.”
It also urged the country to “properly deal with the relationship between efficiency and fairness”.
Readers might be forgiven for thinking this is just political banter, of the sort regularly espoused by left-leaning groups around the world. But this is the committee, chaired by the president, responsible for setting economic policy in China. This is going to happen.Continue reading Full steam ahead for Common Prosperity