Can the first rich really drive the later rich?

07:37, December 21, 2015    Author: Jia Kang    ( zero ) +1

Article/Jia Kang of China Economic 50 People Forum

   In China today, there are some obvious misunderstandings about Deng Xiaoping's idea of "getting rich first and then getting rich". I'm afraid this has something to do with the emergence of income distribution contradictions and changes in social mentality after China entered the "middle-income society", and the emotional characteristics of people's demands in the Internet era and the "spiritual fast food" era.

 Can the first rich really drive the later rich? Can the first rich really drive the later rich?

The Proposal on Formulating the 13th Five Year Plan for National Economic and Social Development adopted at the Fifth Plenary Session of the 18th Central Committee of the Communist Party of China systematically expressed the new concept of development and gave guidance to the overall work during the 13th Five Year Plan period when the decisive stage of "building a moderately prosperous society in all respects" is approaching. While emphasizing that innovation is the first driving force for development, coordination is the internal requirement for sustainable and healthy development, green is the necessary condition for sustainable development, and openness is the only way to prosperity and development, it also emphasizes that "sharing is the essential requirement of socialism with Chinese characteristics", requires that "development achievements should be shared by the people", and "steady progress towards common prosperity".

In order to implement this important guiding development concept and its ideas, it has become extremely necessary and urgent to deepen understanding under the "problem orientation" and solve the problems in the field of income distribution that hinder the development of sharing in China's real life. The "Suggestions" of the central government on the 13th Five Year Plan clearly require that "the distribution pattern of national income should be adjusted, the primary distribution should be standardized, and the redistribution adjustment should be strengthened" and "the income gap should be narrowed". To implement these tasks as work and reform tasks during the 13th Five Year Plan period, we should first deeply understand and correctly grasp the "real problem" of income distribution of Chinese residents, and clarify Deng Xiaoping's important idea of "getting rich first from some to common prosperity", so as to provide the premise and basis for correct policy design.

   Where is the "real problem" of China's resident income distribution?

The Chinese society has entered the "middle-income stage", and the following contradictions have become prominent. The problem of residents' income distribution has already become a hot topic of social concern, with different opinions. Generally speaking, I feel dissatisfied, but what are the specific problems? The understanding is not clear enough. In the face of all the unsatisfactory aspects of the income distribution pattern and prominent contradictions, there are two very popular views that can be called mainstream and highly recognized by the society. One is that the income of the government and enterprises in China's national income distribution pattern in recent years is significantly higher, in other words, the share of residents' income is low. This mainstream understanding has been emphasized many times over the years, and specific data has also been calculated. For example, the share of residents' income has declined by about 10 percentage points in more than 10 years, and the consumption rate is very low.

Of course, such an understanding is also linked with the dissatisfaction of social members who have entered the middle-income stage in the social life, where contradictions are prominent. Considering that there are serious problems in the distribution pattern, many people have proposed that while expanding domestic demand, efforts should be made to increase the proportion of residents' income, so that consumption will become the main Power source In other words, in the future, it is necessary to shift from investment promotion to consumption driven new state - and whether there is something questionable about the basis of this basic quantitative understanding is almost invisible in the discussion.

Another recognition is that some scholars have made their own analysis, demonstration and several rounds of calculation and proposed that China's income distribution is characterized by a large number of gray and black incomes, which have been taken by some members of the society - although the official statistics do not provide data.

According to the latest round of estimates by scholars, there are actually more than 600 thousand billion yuan of gray and black income of residents in China's entire GDP, which is not shown in official statistics, but of course, these income should be included in a part of the community. In other words, according to the view that this society has a huge impact, is also a consensus among academics and many members of society, with mainstream characteristics, it can lead to a judgment: China as a whole, after recognizing the implicit income of about 6 trillion yuan residents, the previous understanding that the same is the mainstream will not hold.

Because China's GDP in recent years is about 60 trillion yuan. If more than ten points of it are actually personal income that is not counted, then the residents' income share that was accused earlier is low. According to the latter view, it becomes very normal: adding ten points to the low share that people recognize, it becomes at least 50% more.

So we have to ask, which of the above two widely recognized understandings with mainstream characteristics is right? I have not yet seen any official response from any scholar in this regard. I don't think we can quickly reach consensus in this regard, but it is worth thinking about. The two contradictory understandings, which are like ice and charcoal, are widely recognized in the society at the same time, which is worth our further observation and discussion.

So, what's the real problem? I don't think that there is a researcher who can clearly explain the value of the income pattern mentioned above: what is the value of the income share and the real investment rate and consumption rate of the Chinese government, enterprises and residents.

However, I think it is necessary to ask: What are the real problems that should be extracted from the observation of China's income distribution? I think we should go deeper into the internal structure of residents' income in China's income distribution. That is, under the condition of looking at the overall income distribution, in addition to the proportion of the government, enterprises and residents and the two major considerations of investment and consumption, we need to further explore whether the internal income distribution gap of our residents is too large, the rules are disordered Is the problem of injustice seriously affecting China's modernization process? I think this is the key to the problem, or we thinkers and researchers should pay more attention to the real problem.

The income gap is large, which has been proved by the statistical measurement results of the Gini coefficient (the official data is 0.49 in 2009, slightly reduced to 0.473 in recent years, which is still a significantly high state). What is more critical is that this gap expansion, while interacting with the property allocation, to a large extent, includes various unfair mechanisms, unreasonable rules Inadequate system. Therefore, the effective promotion of institutional anti-corruption and the implementation of redistribution system and mechanism construction (such as gradually increasing the proportion of direct taxes and reasonably constructing the income distribution rules and order) have become the historical test that we must undergo in building a modern country.

   It is Deng Xiaoping's wise and correct path design to allow "some people get rich first" and move towards "common prosperity"

In China today, many discussions naturally focus on the optimization path of income distribution. Regrettably, some comments on Deng Xiaoping's idea of "allowing some people and some regions to get rich first, and then achieving common prosperity" show obvious misunderstanding, especially on the Internet and microblog.

To objectively understand and analyze Deng Xiaoping's thinking, I think it is necessary to truthfully lay out the following cognitive framework and further clarify the key logical points.

First, in the overall framework of thinking, the strategic goal pursued by Deng Xiaoping is to achieve the "common prosperity" of the integration of "great national rejuvenation" with "three steps". "Allowing some people and some regions to get rich first" is only a process phenomenon "allowed" in the first half of the whole development.

Deng Xiaoping's pursuit of "common prosperity" and its determination are consistent and unswerving, and he raised this point to the highest position: it belongs to the "essence of socialism" that he said many times to clarify. He has repeatedly expressed this opinion on different occasions: if our reform and development cannot ultimately lead to common prosperity, it will be a failure; If there is serious polarization in China, there will be "the problem of revolution".

"What is socialism and how to develop and build socialism", the core issue dealt with by "Deng Xiaoping Theory", corresponds to the strategic framework of "getting rich first and getting rich together", which allows "getting rich partially" and must move towards "common prosperity".

Second, in terms of the path to achieve strategic goals and the characteristics of the evolution process, Deng Xiaoping clearly realized that "poverty is not socialism", but in order to get rid of poverty, it is impossible for China, the world's largest dual economy with more than one billion people and wide regional differences, to go hand in hand to get rid of poverty and become rich at the same time.

As a pragmatic and brilliant reform strategist, he firmly grasped the hard truth of development and explained that some people and some regions must be allowed to become rich first in development. This clearly reflects the "seeking truth from facts" after "bringing order out of chaos", and also fully conforms to the theoretical analysis of the "inverted U curve" (also known as the "Kuznets curve") formed in economic analysis.

This is one of the concrete manifestations of Deng Xiaoping's correct decision-making on key points under complex circumstances. Just imagine if there were no such concise and clear guidance, how many doubts, vacillations and obstacles would be added to the development situation after the 1980s?

Third, Deng Xiaoping had a very clear understanding and opinion on the government's actions and timing from "getting rich first" to "getting rich together". In fact, his view is that we cannot wait for the inverted U-curve of "getting rich first and getting rich together" to take shape naturally, and it is crucial for leaders to make decisions and the government to play an active role.

In the historic "South Talk", Deng Xiaoping clearly emphasized that coastal areas that became rich first must go back and support the underdeveloped central and western regions, which is of vital importance to the overall situation. In addition, he specifically set the time point of this major move to around 2000 at the turn of the century (later, just before this time, in the summer of 1999, the CPC Central Committee held a special meeting to establish the "Western Development" strategy, which became the precursor of a series of regional development strategies and policy support).

When he was in Shenzhen during his southern tour, he agreed with the city's practice of allocating a portion of funds from the finance at a fixed proportion every year as a fund for developing "blood making" projects in poor areas. The last time Deng Xiaoping talked about national affairs in his lifetime, which can be found in public publications today, was his conversation with his brother Deng Ken on September 16, 1993, recorded in Deng Xiaoping's Chronicle.

Among them, he particularly stressed that "how to make 1.2 billion people rich and how to distribute wealth after they become rich are big problems. We talk about preventing polarization, but in fact polarization naturally occurs. We should use various means, methods and plans to solve these problems. ... A few people get so much wealth, but most people don't. If this goes on, something will go wrong one day. " His attitude could not be more clear: "This problem needs to be solved!"

I think the above three aspects are at least Deng Xiaoping's basic ideas and core views on "getting rich first and getting rich together" that we should understand and clarify. How could such clarity be accompanied by those misunderstandings and confusion that are quite lively at present? I have to say that this may have something to do with the emergence of income distribution contradictions and changes in social mentality after China entered the "middle-income society", and the emotional characteristics of people's demands in the Internet era and the "spiritual fast food" era.

But looking at reality, Although there are all sorts of unsatisfactory points and contradictions that cannot be ignored, please note: the construction of the social security system, the support of public finance to low-income groups and social vulnerable groups (such as the 36 million shantytowns reconstruction and security housing construction completed by repeatedly emphasizing the "military building writ") The transfer payment of the central and provincial governments to underdeveloped areas, and the recently very clear implementation of the requirements of gradually increasing the proportion of direct taxes (such as real estate taxes) in the Decision of the Third Plenary Session of the 18th CPC Central Committee... These are all things that Deng Xiaoping attaches the highest importance to "promoting common prosperity" and "solving problems".

The Fifth Plenary Session of the 18th CPC Central Committee, holding high the banner of "moving towards common prosperity", designed and proposed a series of tasks and goals for shared development and optimizing income distribution, including increasing the supply of public services and innovating the way to provide them, implementing targeted poverty alleviation projects, improving the quality of education, popularizing high schools, promoting employment and entrepreneurship, and reducing the order of income distribution, We will improve the social security system, promote the building of a healthy China, and fully open up the second child policy to improve the population development strategy.

Empty talk will harm the country and hard work will rejuvenate the country. Let's rationally discuss and gather consensus in the direction of "common prosperity", contribute more "positive energy" to build a "moderately prosperous society in all respects", and connect with the "Chinese Dream" of the great national rejuvenation of modernization!

(Originally contained in the China Reform Forum)

(The author of this article introduces: Director of the Institute of Financial Science, Ministry of Finance, researcher, doctoral supervisor.)

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Article keywords: First rich Later rich Deng Xiaoping common prosperity

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