context: Since the 2024 Third Plenum, Beijing’s reform narrative has centred on building a high-standard socialist market economy. This piece, by a former State Council deputy secretary-general, adds a third track for sharing gains and ties it to the consumption push: wide income gaps limit household spending, so redistribution becomes a growth tool. More telling is where it locates the obstacles. Local investment promotion, tax breaks for high earners and export subsidies all feature, linking common prosperity to the unified market and anti-involution drives in the making.
The PRC’s main growth constraint has shifted from supply to demand, making more equal income distribution an economic imperative, argues Jiang Xiaojuan 江小涓 University of Chinese Academy of Social Sciences professor and former State Council deputy secretary-general.
Jiang groups reform into three overlapping strands
- development-type reform, which dismantled planning to release productive forces
- governance-type reform since 2013, which builds market rules alongside growth
- inclusive reform, now needed to guarantee shared rights, opportunities and outcomes
The next key step is inclusive reform, which requires
- narrowing income gaps
- cutting the Gini coefficient below 0.4 and the urban–rural income ratio below 2.0
- ending local tax breaks for investors, owners of research results and large-firm executives
- bringing residents without local household registration fully into urban public services and subsidised housing
- broadening social security as AI displaces routine white-collar work, possibly done through
- a levy on labour-replacing robots
- channelling state capital returns into assets held by all citizens
- universal basic income and/or universal basic capita
- moving from policy-driven to rule-based opening, including cutting export subsidies
- a persistent trade surplus may strain trade ties
Jiang offers no sequencing or cost estimates, and frames several proposals, including the robot levy, as directions for further study.
Managing trade-offs is the hardest part, warns Jiang. Innovation concentrates income among a few founders while absorbing few workers. Local governments need room to chase growth, yet many undermine the unified market through rebates, land concessions and entry barriers. Local tax breaks for high earners pull ‘in the opposite direction’ from common prosperity, she notes.