Xi defends drive for common prosperity

China’s “common prosperity” drive is not a pursuit of egalitarianism, President Xi Jinping said in a rare international defence of the policy that last year rattled markets.

Xi, whom many perceive as China’s most powerful leader since Mao Zedong, was speaking via video link at the World Economic Forum’s annual meeting, held online this year rather than at the Swiss alpine resort of Davos.

“The common prosperity we desire is not egalitarianism,” Xi 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.”

Xi’s government is grappling with its most daunting economic challenges since the beginning of the pandemic.

Data from the National Bureau of Statistics yesterday revealed China’s gross domestic product grew at its slowest pace in 18 months in the fourth quarter. GDP expanded 4 per cent year on year, exceeding economists’ forecasts but short of the 6.5 per cent growth over the same period in 2020.

The People’s Bank of China also cut an important lending rate for the first time since April 2020, adding to a series of easing measures over recent months that have coincided with a property slowdown and coronavirus restrictions.

The common prosperity drive has seen the Chinese Communist party reshaping the country’s business and cultural landscape via a months-long series of crackdowns.

This has targeted industries including fintech, education and entertainment as well as perceived societal ills such as celebrity culture, gaming and “effeminate” fashion trends.

The moves, which have wiped billions of dollars from Chinese and foreign investors, have sparked international debate over the political and economic motives of the policy and made the future of investing in China uncertain.

Xi attempted to ease some concerns, insisting to the WEF audience that China remained committed to be open to foreign business. “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.

The speech comes as China faces criticism for the erosion of democratic freedoms in Hong Kong, the treatment of Uyghurs in Xinjiang and expansive military posturing. In response, Beijing regularly rebukes the US and its allies and partners for interfering in China’s domestic interests.

On the global economy, the Chinese president warned of “serious negative spillovers” if “major economies slam on the brakes or take a U-turn in monetary policies” as they grapple with rising inflation. Developing countries would also “bear the brunt” of the changes.

Problems with supply chains, tight energy supplies and rising commodity prices also posed challenges, he warned. “These risks compound one another and heighten the uncertainty about economic recovery,” he said.

Additional reporting by Sun Yu in Beijing

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