Promoting Common Prosperity by Improving the System of Income Distribution

Bringing prosperity to all is an essential requirement of socialism with Chinese characteristics, as well as an important feature of Chinese modernization. 

Since the 18th National Congress of the CPC in 2012, the CPC Central Committee with Xi Jinping at its core has closely monitored new changes in our stage of development, and given greater weight to gradually achieving the goal of prosperity for all. To this end, our Party has promoted coordinated development across regions, and adopted effective measures to improve people’s wellbeing, win the battle against extreme poverty, and build a moderately prosperous society in all respects. These efforts have created conditions conducive to bringing about common prosperity. We have thus advanced into a historical stage in which we will take solid steps toward common prosperity. 

To achieve the goal of common prosperity under China’s socialist system, we should fully utilize income distribution as a leverage to motivate all parties. By galvanizing all sectors and effectively allocating production factors, we will promote high-quality development and make the pie bigger in a concerted effort. In the meantime, we will ensure that people equally share the fruits of reform and development by establishing a sound institutional arrangement for dealing the relationship between growth and distribution, preventing polarization, and improving the way the pie is divided up. 

The income distribution system centered on labor-based distribution while allowing other forms of distribution to coexist is an essential part of basic socialist economic system. It demonstrates the strengths of socialist system and is aligned to the development of productive forces in the primary stage of socialism. We will build an institutional framework for primary, secondary, and tertiary distribution which have different functions in promoting common prosperity and are well coordinated and mutually complementary. 

We will leverage the fundamental role of the primary distribution by increasing personal incomes as a proportion of the national income and raising the proportion of the primary distribution of income that goes directly to wages and salaries. We will ensure more pay for more work and encourage people to achieve prosperity through hard work. 

We will promote equality of opportunity, increase the incomes of low-income earners, and expand the size of the middle-income group. We will improve the policy system for distribution based on factors of production, explore multiple avenues to enable the low- and middle-income groups to earn more from production factors, and increase the property income of urban and rural residents through more channels. 

We will enhance the roles of taxation, social security, and transfer payments in regulating income distribution. We will improve the personal income tax system and keep income distribution and the means of accumulating wealth well regulated. We will protect lawful income, adjust excessive income, and prohibit illicit income. 

We will introduce and strengthen tertiary distribution, providing guidance and support for enterprises, social organizations, and individuals who have the desire and ability to actively participate in charitable and public-interest initiatives.