Published: 00:58, August 24, 2021 | Updated: 10:14, August 24, 2021
HK plays a part in nation's 'common prosperity' drive under 14th Five-Year Plan
By Zhou Bajun

President Xi Jinping presided over the 10th meeting of the Central Committee for Financial and Economic Affairs of the Communist Party of China on Aug 17. One of the items on the agenda that day was to figure out concrete ways to pursue the common prosperity of the nation. Xi noted that common prosperity is an essential requirement of socialism and a major characteristic of the Chinese-style modernization that embodies the people-centric development philosophy. With that in mind, members of the public in Hong Kong cannot wait to learn all about the outline of the 14th Five-Year Plan (2021-25) this week when a central government delegation presents it to principal officials and lawmakers of the Hong Kong Special Administrative Region and answers their questions regarding the all-important 14th Five-Year Plan, of which achieving common prosperity is a major goal. Such exchanges will no doubt help the HKSAR play its role in the 14th Five-Year Plan period, especially in pursuing common prosperity of Hong Kong society.

Deng Xiaoping once concluded that poverty is not socialism. In 2020, the Chinese people achieved the first centennial goal of building up a moderately prosperous society before the 100th anniversary of the CPC, and proudly declared the historical eradication of abject poverty on the Chinese mainland.

As common prosperity is an essential requirement of socialism, shortly before the nation officially achieved the goal of building up a relatively prosperous society, the fifth plenary session of the 19th Central Committee of the CPC met in Beijing in October 2020, and rolled out a strategic plan for effectively working toward the common prosperity of the nation. At the  10th meeting of the Central Committee for Financial and Economic Affairs, the central authorities made it clear that, in order to pursue common prosperity, we must correctly handle the relationship between efficiency and fairness; construct a basic system arrangement for initial distribution (of wealth), redistribution and third distribution (re-redistribution); step up efforts to adjust taxation, social security and transfer payment with an eye on better precision; expand the ratio of the middle-income community; increase the average income of the low-income community; reasonably adjust the level of high incomes; ban illegal incomes; working toward an olive-shaped wealth distribution structure; advocate social fairness and justice; advance complete human development and let the whole nation march toward the goal of common prosperity together effectively. When the Chinese people were pursuing the first centennial goal of building up a moderately prosperous society, the main focus was completely eradicating abject poverty. As China progresses toward the second centennial goal of becoming a modern and powerful socialist country, the main focus will be on achieving common prosperity of the whole nation. The Chinese government is the only one in the world that has consistently formulated such well-thought-out and surely executed long-term development plans for so many decades. There has never been another one even close to pulling it off that we know of.

Hong Kong is a special administrative region of China. The central government has assigned a clearly defined role for the city to play in the execution of the 14th Five-Year Plan. In order to play the role well, the HKSAR must work harder in further integrating its own development into the overall development strategy of the country, which demands without question the best possible knowledge of the 14th Five-Year Plan to begin with.

Only by completely and correctly understanding the 14th Five-Year Plan will Hong Kong be able to formulate an intermediate-to-long term development program of its own that is well coordinated with the national development strategy. Hong Kong has been included in the nation’s intermediate- to long-term development program since the 11th Five-Year Plan (2006-10), but its role has been far more symbolic than practical so far, as shown in the absence of a specific plan of Hong Kong’s own that incorporated the guiding principles of the nation’s overall development strategy, hence nothing worth mentioning about execution. The outline of the 14th Five-Year Plan states, among other things, that the central government supports efforts to enhance Hong Kong’s status as a center of international finance, transportation and trade and strengthen its role as a global offshore yuan trade hub as well as an international center of asset management and risk management; supports Hong Kong in building up an international center of innovation and technology, a service center for international law and dispute settlement in the Asia-Pacific region; supports Hong Kong’s service industry in high-end and high-value-added development; and supports Hong Kong in becoming a center for culture and arts exchanges between China and the rest of the world. However, it has been nearly half a year since the National People’s Congress approved the outline of the 14th Five-Year Plan in March but Hong Kong is yet to take concrete action. Neither has any policy bureau of the SAR government is known to have begun working on such an action plan.

Also, Hong Kong must aim its own poverty alleviation efforts at achieving common prosperity from now on. The fourth-term SAR government set Hong Kong’s poverty line in 2013 but has not made it the poverty alleviation objective in related policies. The SAR government has taken many poverty alleviation measures over the years but the number of households living below the poverty line has been rising instead of falling. This phenomenon can be traced back to the resignation among many policymakers that poverty is a birth defect of capitalism, Hong Kong’s inadequate wealth distribution system and even less re-redistribution efforts.

Indeed, poverty is a birth defect of capitalism, but the widening wealth gap can be controlled by keeping the free market economy in check systematically. That is why modern capitalism has given rise to the theories of “welfare economics” and “welfare state” to contain the wealth gap. If Hong Kong maintains its faith in the existing capitalist system, there is no hope of eradicating intergenerational poverty or closing the wealth gap for that matter. Any system must be improved with the times to remain relevant. Against the far-reaching backdrop of the nation’s efforts to achieve common prosperity, the HKSAR government must reform the existing social system to catch up with the nation’s progress.

Hong Kong maintains a simple and low tax regime; while 98 percent of all businesses are small and medium-sized enterprises. This reality makes it extremely difficult for Hong Kong to narrow the wealth gap by dramatically increasing wealth redistribution. What it can and must do is enhance the third distribution of wealth, which goes to nurturing and developing the social charity sector. Normally, big businesses with a matching sense of social responsibility constitute the mainstay of the social charity sector. Recently, Shenzhen-based tech giant Tencent Holdings announced a “sustainable social value innovation plan” worth 50 billion yuan (US$7.7 billion), followed by another 50-billion-yuan startup fund for a “common prosperity special program”. It is hoped Hong Kong-based conglomerates will do the same one way or another.

The author is a senior research fellow of China Everbright Holdings.

The views do not necessarily reflect those of China Daily.