Thursday, August 26, 2021
Radical redistribution plans
China: “Don’t want to kill the rich”
With aggressive reforms, China is currently grappling with its large corporations. Because the Communist Party is striving for a nationwide redistribution of wealth in the country. However, the government is practicing diplomacy and is talking about a project for society as a whole.
China’s Communist Party defends the proposed top-down redistribution. The fight against inequality and for “shared prosperity” is not about “killing the rich to help the poor,” said Han Wenxiu of the central financial and economic affairs commission in Beijing. The country must also be careful not to “fall into the welfare trap,” he added. Rather, those who get rich first should help those who have so far lagged behind. But hard work must also be encouraged. “We cannot support idlers,” said Han.
After a meeting chaired by President Xi Jinping earlier this month, the government said it would protect legal income. However, “excessively high” incomes should be curtailed. High-income groups and companies should also be encouraged to contribute more to society. Tax policy should actively encourage charitable giving, Han said. In this way, a better “distribution structure” can be achieved. Donations are “not an obligation,” he added.
The policy change comes at a time when big corporations like China’s giant tech corporations are increasingly scrutinized and cracked down on by the authorities. Investors believe that fundamental change is underway in China as the government aggressively reforms. These were aimed at lowering the cost of living – at the expense of companies.
This has led to significant price losses on the stock markets. Hong Kong-listed shares in Amazon rival Alibaba have halved since peaking in October. The price of Internet giant Tencent recently fell to a 14-month low. Recent measures to correct and regulate Internet platforms have targeted irregularities and illegal behavior, Han said. They were “absolutely not” directed against private companies or foreign companies.
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