Chinese President Xi Jinping’s announcement that China must ensure that wealth is more evenly distributed across the country – a policy known as “common prosperity” – has been, in large part, received negatively internationally.
Mr Xi’s intention to “regulate excessively high incomes” and “encourage high-income people and enterprises to return more to society” might sound par for the course in many countries, but the common prosperity policy has, according to some publications, sent “luxury stocks tumbling” and provoked “uncommon angst among China’s elite”. It has been portrayed as part of a “regulatory onslaught” that risks “slower economic growth and more volatile financial markets”. The word “crackdown” has enjoyed many outings.
Never mind that these new regulations include one that parents elsewhere may envy: Chinese children are now banned from playing online video games for more than three hours per week. It is clear that some are framing common prosperity as another instance of Mr Xi exercising his authority. That is something those who are hawkish on China will always portray negatively.
So it was refreshing to hear the chief executive of Southeast Asia’s largest bank, Singapore-based DBS, take a different view last weekend. “We’ve created massive pools of inequality,” said Piyush Gupta at an event hosted by the non-profit United Women Singapore on Saturday. “The focus on common prosperity, how you take care of the bottom of the pyramid, that’s not a bad thing. It’s the right time for that,” he said.
“Whether it’s the European green fund, Mr Xi’s common prosperity agenda or our own focus on the social safety net for the bottom 20 per cent, these are good things to do” for long-term sustainable growth.
At one level, these ought to be statements of the obvious. Huge social inequalities are not sustainable. They aren't perceived as fair, and they weaken the bonds of cohesion and community – as one right wing government, Boris Johnson’s Conservative administration in the UK, has conceded with its “levelling-up” agenda. They lead to a smaller revenue base, as the rich are always better advised at how to avoid paying tax. And they are a long-term threat to any party which seeks to maintain power, whether it be the Chinese Communist Party or others of whatever stripe.
But it seems particularly appropriate that it should be the head of a Singaporean institution to come to the defence of the common prosperity policy, which worshippers of the free market dislike for supposedly interfering too much with the “magic” of wealth creation. For modern Singapore has never been the free market paradise that some suppose.
It is justly known for the miracle of growth that led the city-state to go “from Third World to First”, as the second volume of long-time leader Lee Kuan Yew’s memoirs put it. “For three heady months in the 1960s, a new factory opened every day,” writes Jeevan Vasagar in his new book Lion City: Singapore and the Invention of Modern Asia.
None of this happened by chance. Yes, the government made sure to create an environment that would be highly attractive to outside investors. But it also stepped in to start plenty of businesses itself – including, in 1968, DBS Bank.
If the country Mr Lee led from 1959-90 (he remained a minister until 2011) was “an engineered society… wealthy, secure and disciplined”, as Mr Vasagar puts it, it was partly because the government micro-managed everything and actively took every opportunity to build a harmonious and prosperous state, to the extent that in the 1960s “Singapore’s man in Hong Kong described part of his mission as hanging around the airport to intercept US company representatives heading to Japan or Taiwan, and persuading them to make ‘a little side trip’ to Singapore”.
There was, and still is, almost no aspect of life into which the Singapore authorities are afraid to impose themselves, right down to where its citizens live. Around 80 per cent of the population reside in public housing – itself a feature of an amazingly activist state – but you can’t live just wherever you want. All blocks of apartments have ethnic quotas; so if there are too many Chinese, Malay, Indian, or “other” households in the tower of your choice, you’ll have to look elsewhere. This is to ensure members of the different races have regular contact with each other and don’t sort themselves into enclaves.
What western country would dare to take such a strong stand on what is, after all, a very important personal choice? Singapore’s distant admirers sometimes see the material success, and forget – or never knew – that the ruling People’s Action Party was a member of Socialist International right up to 1976. Regulation and intervention are second nature to Singapore’s leaders. Yet the state “manages” to boast among the highest GDPs per capita in the world.
This is all highly relevant to Mr Xi’s raft of new policies, as Singapore’s example has been closely examined by China since the late 1970s. Quite whether what happened in a tiny island state can be replicated in a country of 1.4 billion people is another question. But there is no doubt that Beijing would be happy with similar stability, growth, cohesion, educational record and political continuity to that which Singapore has enjoyed.
So “common prosperity” should only be feared by plutocrats who have gotten away with not making a fair contribution to society. There may be reasons why some would not want to live in either authoritarian China or semi-authoritarian Singapore. That the governments of both are taking measures to tackle social inequality is not, however, one of them.