China Sets Aside Push to Spread Wealth in Pivotal Year for Xi – The New York Times

BEIJING — For much of last year, China’s top leader, Xi Jinping, waged a fierce campaign to rein in private capital and narrow social inequalities. Regulators cracked down on tech giants and wealthy celebrities. Beijing demanded that tycoons give back to society. And the Communist Party promised that a new era of “common prosperity” was on the horizon.

Now, the Communist Party is putting its campaign on the back burner. In doing so, Beijing is tacitly acknowledging that Mr. Xi’s push to redistribute wealth has unnerved the private sector — a pillar of growth and job creation — at a time when China’s economic outlook is increasingly clouded.

To Beijing, ensuring the economy is stable and growing is paramount this year, an all too important one for Mr. Xi. As he prepares to claim a third five-year term later in the year, he has sought to portray China as more prosperous, powerful and stable under his rule. Officials have scrambled in recent months to try to reverse a slowdown in growth, made worse by surging global oil prices, uncertainty over the war in Ukraine and lockdowns in China to contain an unrelenting surge of coronavirus cases.

“Common prosperity is still here, but the growth situation is quite challenging,” said Huang Yiping, deputy dean of the influential National School of Development at Peking University, in an interview. “The top priority is really to stabilize growth.”

The delay is more of a tactical retreat than a wholesale abandonment of Mr. Xi’s plans, which the party continues to describe as a long-term goal. Mr. Xi’s “common prosperity” campaign is a pledge to shrink the country’s wide wealth gap and build up a middle class that can drive domestic consumption and reduce the country’s reliance on debt-fueled growth. It also serves political aims: to shore up public support for Mr. Xi’s leadership and champion the Chinese political system of centralized control as superior to the West.

Regulators had targeted what they called the “disorderly expansion of capital.” They cracked down on a variety of businesses seen as widening the gap between the haves and have-nots, including after-school tutoring, internet financial products and online shopping. The moves abruptly wiped more than $1 trillion off the value of Chinese companies and forced many firms to lay off workers or even file for bankruptcy. The campaign also spooked investors and entrepreneurs by asserting the party’s power over society and raising questions about the role of private businesses in the country’s future.

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Source: https://www.nytimes.com/2022/04/12/business/china-economy-covid.html