China insists that its policies to reduce the wealth gap will provide it with what it wants at this time in its economic history. However, critics argue it is accompanied by greater control over business and society.

This “common prosperity drive” is primarily focused on the people of India, but it could have enormous repercussions across the globe.

Common prosperity is reflected in the shift of priorities of Chinese corporations to the domestic market.

Technology giant Alibaba, which in recent years has seen its global profile rise, has now committed $15.5bn (£11.4bn) to help promote common prosperity initiatives in China, and set up a dedicated task force, spearheaded by its boss Daniel Zhang.

According to the firm, it benefits from the country’s economic growth and believes that Alibaba will succeed if the economy and society are doing well.

Tencent, a rival tech company is also pitching. The company has contributed $7.75bn.

China Inc. wants to demonstrate that it’s in line with Party mandate. But when China’s push for more businesses backing Xi Jinping first began, one Chinese major told me it was a surprise.

We got used to it. This is not about taking from the wealthy. Restructuring society and creating a middle class is the goal. We are also a consumption company at the end, so we like it.”

Global businesses who cater to this market could benefit from common prosperity if they are able to place more emphasis on China’s middle class.

Joerg Wouttke, President of China’s EU Chamber of Commerce, said that it was clear to see the importance of young people finding jobs.

It is beneficial for them to feel that they have been part of the social mobility system in this country. There is always more chance when there’s a growing middle class.

He warns, however, that luxury-related businesses may not be as successful.

China accounts for approximately 50% of global luxury consumption. If China’s wealthy decide to purchase less Swiss watches and Italian ties, then the industry could suffer.

However, Mr Wuttke recognizes that China’s economy needs to undergo critical reforms in order to raise the average Chinese worker’s income. But he believes common prosperity is not the best way to achieve this.

The British Chamber of Commerce in China’s Steven Lynch also stated that common prosperity does not guarantee that China’s middle classes will experience the same growth as it did in the past forty years.

He enjoys telling stories about how fast the Chinese economy has grown over the past several decades.

I spoke to him on the telephone from Beijing. He said that 30 years ago, a Chinese family could have a bowl full of dumplings at least once per month. Perhaps they were able to have a bowl of dumplings once per week 20 years ago. That changed to every day ten years ago. They can now buy a car.

Yet, Lynch states that the common good has not yet translated into concrete results, except for the various corporate social responsibility measures taken by Tencent and Alibaba.

He said that there were also many instant regulations that had been imposed on various sectors. This was in reference to the crackdown against technology companies. That creates uncertainty and raises many questions. Are they turning inwards more? Do they really have any need for the rest of this world?

The Communist Party believes that common prosperity means making Chinese society more egalitarian. This has the potential of changing the meaning of socialism in the global context.

Wang Huiyao from the Centre for China and Globalisation in Beijing said, “The Party now concerns average workers – such as taxi drivers and migrant worker and delivery boys.”

China wants to be a more polarised country than some Western nations, as we’ve seen lead to nationalization and deglobalization.

However, long-time observers of China say that common prosperity does not exist if the Party is intent on transforming socialism with Chinese traits into an alternative model.

George Magnus (associate at Oxford University’s China Centre) says, “It is part the leftward lurch” and “part of the lurch to ever more control that has been indicative Xi Jinping’s tenure.”

Magnus says that even though there is common prosperity, it does not mean that we should replicate a European social welfare model.

“The Party’s implicit pressure is for you to follow its goals,” he said. “It will be taxed on very high incomes and those that are deemed ‘unreasonable’, and there will also be pressure on the private sector to contribute to Party economic objectives,” says he. “But no significant move to progressive taxation.”

It’s clear that common prosperity plays a key role in the way China’s society and state will operate under Xi Jinping.

This promises a better society, a larger and more wealthy middle class and businesses that are more charitable than they take.

The Party hopes that this type of Utopian China will be an alternative to the West’s model.

It does have a drawback: the Party has even more power and control.

China is a challenging environment to do business in. Common prosperity has made it even harder for foreign companies to work there.

This article is part 3 of a series that examines China’s evolving role in the global world.

Explore Parts 1 and 2. The background of Xi Jinping’s transformation in the Chinese economy How Beijing is changing the rules for doing business

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