By Jin Keyu
The year 2021 marked the start of a new paradigm for the Chinese economy. China is shifting from a model championing GDP growth to one emphasizing efficiency, consumer welfare and protection, climate change mitigation, and environmental protection. While Chinese companies’ growth will be less unbridled and more regulated and monitored, the goal of building a global manufacturing powerhouse has evolved into the pursuit of self-reliance in technology.
China’s leaders believe the country is on the verge of transforming into a truly “modern socialist economy”.
Regardless of what epithet they apply to their respective political systems, and despite bilateral tensions, China and the West are facing some similar challenges. Both are confronting increasing income disparities, the boundless growth of Big Tech, and a deepening divide between elites and the grassroots. But unlike the rest of the world, China has decided to tackle these issues head on.
Over the course of 2021, the Chinese government took 20-30 major steps to regulate and discipline an array of leading corporations, ranging from consumer-facing platforms to education companies. The grounds for these interventions were antitrust, data security, and social equality, and sometimes all three.
Even as these moves generated much overwrought commentary in the international media, they merely scratched the surface of the deeper transformation that is underway. Regulatory and enforcement measures are both necessary and welcome in a country where companies’ growth prospects and contributions to GDP have long overridden consumer welfare and protection.
The changes introduced in 2021 represent a “coming of age” for the Chinese economy, signaling that people matter more than aggregate numbers. Under the new rubric of “common prosperity”, the government’s official goal for the coming decade is to create the conditions for the growth of a large, prosperous middle-income group, generate better opportunities for everyone, and elicit more “empathetic” behavior from Chinese companies. The unrestrained Western-style capitalism that has resulted in a “middle-income group squeeze” needs to be avoided in favor of a more “olive shaped” income structure.
The turning point for the economy
Forty years ago, late leader Deng Xiaoping lifted the ideological taboo on individual profit seeking to allow some people to get rich first, and then let the rising tide lift all boats. Today’s Chinese leadership believes that it is time to let the tide come in.
The COVID-19 pandemic has laid bare the inequality between haves and have nots. Big tech companies have grown even bigger and more powerful during the pandemic. With most people homebound and cozily stuck together, from elites to the common people, attention has shifted to domestic issues and the need for national self-reliance and independence.
Contrary to conventional wisdom in the West, China’s push for greater regulatory oversight is not motivated by a desire simply to crack down indiscriminately on the private sector, to cut billionaires down to size, or to limit Chinese companies’ international access. There were 407 public listings for Chinese companies in 2021, and more than 83 percent of them were private corporations, not State-owned enterprises.
Common prosperity is linked to the broader goal of social harmony. One of the greatest ironies in contemporary Chinese society is the hyper-competition in education, which has left parents anxious and children miserable. Families had been spending inordinate amounts of time and money on extracurricular activities, filling children’s schedules with things they don’t necessarily need for the modern economy.
This phenomenon has been likened to a crowded theater in which a few people decide to stand up to get a better view, forcing everyone else to do the same. In the end, no one is better off.
Now that most Chinese people have fully embraced the digital life, there is a growing concern about the misuse of personal data. In a few high-profile cases, such abuses have cost people not only their personal wealth but also their lives. Worse, the Chinese tech giants have shown scant concern for employees’ welfare, leading to a loss of motivation among overworked young people who had hoped to build a family and are now “lying flat” (no longer going above and beyond at their jobs).
China’s authorities have recognized the social tensions and vulnerabilities that come with unchecked market-driven growth. While the market failures and inequities of the new digital age are not unique to China, the Chinese approach to tackling these problems is characteristically different from that of most other countries. -The Daily Mail-China Daily News Exchange Item
