Common prosperity: What next for China?

Dr Yu Jie

Good afternoon, ladies and gentlemen. Welcome to Chatham House. I’m Dr Yu Jie, a Senior Research Fellow on China with Asia-Pacific Programme for Chatham House. Today, we’re not dealing with war in Ukraine, and as we all quite often find our events in Chatham House these days and talking so much about war in Ukraine. But instead, we’re talking about another big set of topic, which is on China.

Now, in the recent years, and specifically in the last summer that the Chinese President, Xi Jinping, introduced his latest initiative, the so-called “common prosperity,” which is aiming at closing the income gaps between the rich and poor within the country and also closing that economic gaps between the coastal provinces with the inland provinces.

Now, it seems to be, as when entering 2022, that initiative, common prosperity, has disappeared and quietly disappeared from the China’s policy discussion and so on and so forth. But instead, many of the policymakers began to talk about how to save the Chinese economy. So, with all of this and what we are try to wondering here is, when it come to comm – discussion on common prosperity and when it come to Xi Jinping’s flat initiative, what we’re going to do. So, it’s not just about common prosperity itself, but also concern the timing of this year that is the critical period that Xi Jinping while entering his third term, came to power after the 20th Party Congress.

So, with all these big questions high in mind, to join us today we have a very much stirring panellists that join us today. We, firstly, have Professor Bruce Dickson, who is the Professor of Political Science and International Affairs with the George Washington University, and we also have the familiar faces of Professor Kerry Brown and – who is the Director for Lau China Institute, joining us today, as well. And last, but not least, we also have Professor Xie Kailing from – who is the Professor for International Development from University of Birmingham, to join us today, as well.

Now, all of you in here, when we’re talking about common prosperity, it seems to be something like – that is completely new to us. Now – but obviously, from the email exchanges I had with all of you, that seems to be – it’s not something which has happened overnight, but instead, it is something that has been a build-up process from the previous administration between Hu Jintao and Wen Jiabao, then extended into Xi Jinping. So, I would like to invite Professor Dickson try to help us to understand and where exactly these whole ideas of common prosperity come about. So, Professor Dickson, the floor is yours.

Professor Bruce Dickson

Okay, thanks very much, Cherry. Want to begin by thanking Chatham House for inviting me to the programme today. This is my first Chatham House event, so I hope I pass the audition. I’m going to – in my short remarks, I’m going to focus on the common prosperity program, where it came from, and I want to make three key points.

The first is that the new common prosperity program builds on past priorities. During the 1990s, with the great economic boom, there was also growing inequality in the country and so, when Hu Jintao was General Secretary to President during the 2000s, there is more of a priority on balancing growth with equity to deal with that issue of economic inequality. And this emphasis on equity suggests that ideology still plays a role in some of the policymaking in China, recognising that there’s a commitment to equitable distribution of wealth, even though the party’s own policies are what are creating this economic disparity. It’s also recognition that high levels of economic inequality are often accompanied by political unrest and the CCP, under Xi, is determined to avoid unrest, usually by repressing it, but in this case, by trying to pre-empt it.

Now, the common prosperity program itself is a bit of an empty shell. It’s only gradually being fleshed out, in terms of priorities, targets, actual numbers and details that can actually be implemented and accomplished. The key part of it is to grow the middleclass, to have what the party refers to as more of an “olive shaped distribution of wealth,” instead of the steep pyramid that China has today with their accumulation of great wealth at the very top, among the relatively few number of people, and a much larger number of people who are either poor or in the middleclass. But the common prosperity is not just about income. It’s also about greater access to college education, other types of social welfare programmes. These also began in the 2000s, under Hu Jintao and are being continued now, but under this new slogan.

The second point is that this new emphasis on achieving common prosperity was also accompanied by the crackdown on tech companies that also happened last year. Now, this is odd because these tech companies were some of China’s most innovative and successful companies, some of the best well-known companies. They provide the cutting-edge technology and services, the innovation that is trying to shape the economy today, not just exporting and infrastructure, but innovation. But these companies were also poorly regulated and prone to monopoly abuses and, also, very unpopular labour practices, particularly the so-called 996 culture, where people were expected to work from 9am to 9pm six days a week. It’s one thing if you’re the owner of that company and you’ve got a stake in the outcome, but for most people, that was – working 72 hours a week was just onerous.

So, much of the – both the common prosperity program and this crackdown in tech companies, was likely very popular with much of society, ‘cause it addressed some of their concerns and their aspirations. And as part of this crackdown, last year, many of those big companies announced large donations to achieving the common prosperity program, even though at this point, there wasn’t much to contribute to, ‘cause we’re now at specific programmes that are being rolled out.

The third point is that with the economic slowdown because of COVID, there’s been a pullback on the common prosperity – the emphasis on common prosperity, but it hasn’t been abandoned. Most importantly, it’s now being tested, experimented in Zhejiang province. Zhejiang is one of China’s most prosperous provinces and, also, the place where Xi Jinping had been Governor and Party Secretary before a short time in Shanghai, then elevated to Beijing. And this is a familiar practice of experimenting with new programmes, new reforms, in a local pilot projects and then, they get rolled out more – on a nationwide basis.

The year 2035 is likely to be the target for meeting these common prosperity goals, once they get determined and once they get identified. So, it’s still a bit of a work in progress. One big challenge for the party in this new programme is where they get the resources to pay for all of this.

One solution is to introduce a property tax, which has been talked about repeatedly, but so far, has not been put into practice for two key reasons, because it’s going to be very unpopular. It’s going to target the middleclass and for much of the middleclass, their wealth is based upon their real estate holdings, so it’d be very unpopular with them, and they’re supposed to be the beneficiaries of common prosperity. And the second reason it’s unpopular so far is that many party government officials secretly own lots of property.

In order to be able to tax property, there’s got to be some degree of transparency about who owns and who – therefore, who owes the taxes, and this would reveal how much wealth is controlled by party and government officials, which would be embarrassing for them and embarrassing for the party as a whole. So, we’ve not heard the last of common prosperity, but it may be on the backburner for a while, as the party deals with the economic slowdown, the ongoing COVID pandemic and, also, the political transition that is currently underway in China. And with that, I’ll pass onto my colleagues.

Dr Yu Jie

Thank you, Bruce. I mean, I’d just like to pick one point, which you mentioned in here, that, obviously, common prosperity, it is not just about the close in income gap, but is also about to make sure that the welfare is equally distributed and across different part of the country. Now, do you actually have seen any specific measures that has been introduced by the Chinese Government to ensure that the resource access will be more equitably distributed, so far?

Professor Bruce Dickson

You know, that’s often a big challenge, where Beijing will announce a big programme and then leave it up to local governments to implement it, without giving them the resources to actually do it. And it’s not clear yet if Beijing is going to be contributing in distributing resources to local governments to deal with these new programmes. And so, you know, finding – without going further into debt by, you know, issuing bonds, which has been done repeatedly in the past, without introducing a property tax, without raising taxes, it’s hard to know how this will actually be done. At this point, they haven’t really identified the types of specific programmes, how you would redistribute income, in particular, always a very tricky process. And at a time when the economy is slowing down, they don’t really want to implement anything, ‘cause you want to do it at a time of growth and right now, they’re struggling with restarting the economy to get it growing again after this – the crackdown – the lockdown that took place during the first half of this year.

Dr Yu Jie

Thank you. I mean, it seems to be always quite interesting that, on the one hand, the central government is counting on the provincial government to generating wealth, but then, on the other hand, also, refuse to give enough resources and to let them arrange the economy. So, we might have seen a dukedom economy again, like would have experienced back to 90s and 80s.

Now, I would like to turn Professor Brown and his new book, “Xi: The Study of his Power,” and, obviously, is – you have your own sort – your own posters ready. I would like to ask you, you know, this – obviously, the common prosperity, as Bruce said, is a continuation process, but I mean, what really takes him to arrive to land in that position and wrote a very long essay and the Qiushi magazine, August the last year, by suggesting, fine, this is the time for the party to address the common prosperity issue, and then, also followed by the crackdown of tech companies? So, where is the idea come from? I mean, obviously, you have studied this man very closely, so, I would like to have you now to illuminate us.

Professor Kerry Brown

Yeah, thank you, Yu Jie, and it’s good to see Bruce and Kailing here, and I’m grateful to be part of this event. I mean, it’s not a new thing to think that equity and inequality are problems in China. I mean, Hu Jintao, with scientific development 15 years ago, was, kind of, an attempt to address these big inequalities. And Hu – as Bruce said, when Xi Jinping was the Party Secretary of Zhejiang Province from 2002 to 2007, in his, kind of – I think it’s Zhijiang Xinyu, these, sort of, sayings, new sayings from Zhejiang, a compilation of his speeches, or articles, then, he referred explicitly to not quantity of growth, but quality of growth.

Bruce mentions the, sort of, “empty shell” slogans and I think, in a sense, this has always been an aspiration, but what can you do about it? You know, the debate about “growing the pie,” around [inaudible – 14:05], you know, that, kind of, famous debate, and Wanjiang in – between these two when they were, you know, in Chongqing and Guangdong, respectively, you know, kind of – these are all illusions to this important debate, and it’s not just in China. I mean, everywhere these issues of how do you balance, you know, kind of, entrepreneurialism and far – strong growth with equity and equality? These are, you know, common problems.

I mean, to be, sort of, parochial about it, I guess for Xi Jinping, at the end of the day, he’s a Politician, believe it or not. I mean, he – and, you know, Politicians, you know, what do they do? I’m always, sort of, really wondering what do they do? Apart from, you know, drive us all crazy and irritate the hell out of everyone, you know, what do they actually do? And I mean, I think a Politician in the Chinese system has to do some things.

Bruce mentioned the middleclass, and I suppose, you know, if you were trying to think of this period up ‘til the likely congress in October or November, well, I mean, there’s certain congress, but either in October or November, sometime around then, when everyone expects, I guess, Xi Jinping to have another term. You know, this is a campaigning period, I guess, but it’s a campaign without the election and a campaign without a, kind of, campaign, if you see what I mean. It’s a sort of, ghost campaign, in a way.

Now, to appeal to your base in China I suppose is to appeal to this middleclass, who’ve, obviously, had some symbolic bashings in lately with the very brutal COVID lockdowns in Xi’an and then Shanghai. But I suppose if you think how the optics of that might play, to a Chinese Politician allowing the, kind of, pampered, you know, kind of, arrogant Shanghainese to suffer while the rest of the country are spectators, is not necessarily a completely bad thing. I mean, you know, privileged groups in urban places, like Shanghai, are probably regarded as being, you know, little like the elites that we find beaten up in our own politics. And I think this middleclass, you know, it’s obviously extremely diverse and variegated and I’m presuming that the Xi leadership has quite a lot of information about which subgroups and sub, sort of, sections of this middleclass they really want to speak to.

I guess the final thing I’ll say is that one of the, kind of, dynamics, I guess, you know, I’ve been, kind of, thinking about for the last two years, is the way that domestic politics in China is so intimately linked to the outside world, but not in absolutely obvious ways. One would have assumed, until recently, that China got benefit from a stable, predictable, external environment and that it was able to then concentrate on its economic and social and political development. But I think things are now much more complicated, because the commitment has been made to – with dual circulation, another, kind of, empty shell idea, sort of, go it alone much more and try and, sort of, be more autonomous.

In a strange way, therefore, the calamitous divisions that we see in America, in Europe, in the UK now, and I mean, today the Europea – any person outside of Britain looking at our politics today must’ve thought that they were walking into a sitcom, kind of, tragedy from the 1960s. I mean, it’s just incredible what’s happening. I mean, that, kind of, generates, I think, things in China which are probably counterintuitive. The more dis – in disarray we are, I think the stronger Xi Jinping, as a Politician, becomes, because in – not directly, but indirectly, he can, kind of, say, “Well, if you want to take a chance and not have the politics that we have,” which is, at least, very authoritarian, autocratic, but predictable, “look at where you’re going to end up.”

So, I suspect that the more this goes on in America, Europe and, you know, kind of, the UK, the more likely it is that Xi’s period in power will be a much longer one, maybe, oh, even more than five years. And that’s not about common prosperity, that’s not about, you know, kind of, anything except the extraordinary turnaround in the fortunes of authoritarian and autocratic systems, which we could once be fairly dismissive and, kind of, critical of and say they needed to change. I think they’ve turned the tables on us. They say, “We, kind of, need to change, yeah, but boy, you guys need to change even more.” Thanks.

Dr Yu Jie

Thank you, Kerry. I’d like to follow-up immediate question. Again, obviously, you said, “He’s run the campaign with actually campaigning in it. So, I wonder who is actually Xi’s core constituency he’s trying to appeal to? And obviously, he said, you know, “Party is for the people, party is for the masses,” and obviously, that’s the political rhetoric. But to what extent do you consider that his common prosperity initiative and, also, this rather unpopular lockdown in Shanghai being introduced, actually damage firstly, the party legitimacy and secondly, his popularity as well?

Professor Kerry Brown

You know, I’m sure Bruce and Kailing have good views on this, too. I mean, there’s a circle of different kind of constituencies around him, from the elite that sit around him in the Politburo, to the Central Committee, to, you know, all these other important groups and then out and out for that. I mean, it’s a either/or system. I mean, I guess if enough people in those different circles really get wound up, you will have calamity and revolution, but until then, it’s extremely difficult to remove a leader in China. I mean, look at Britain and we have a democratic system, we have proved that we cannot remove a very, very unpopular leader. So, that Xi Jinping will politely step aside by the end of the year, I think this is just a fantasy.

But I mean, it’s also a sign of his restrictions. He can’t really go, even if he wanted to. It’s a very dependent system on him. I mean, people talk about political prisoners in China. Sure, there is a political prisoner in China, it’s Xi Jinping. He is stuck where he is; he can’t go.

Dr Yu Jie

Well, let’s wait and see. I mean, one day in politics is too long, I mean, considering we just had two Min – several Ministers gone today, as for the British Government. Now, enough on British politics.

Now, let me turn to Kailing. Kailing, I know you has studied the gender issues in China, and you have studied different aspects of the Chinese society for quite some years. So, can I ask you, you know, regarding this – the whole strings of policies being introduced by Xi Jinping, and how damage it is, really is for the Chinese middleclass, and firstly? And secondly, given the idea of common prosperity, it’s also enticing to allow having young couples to have more children. So, to what extent do you actually consider his policy has worked, or has not worked?

Dr Kailing Xie

Well, thank you very much, first of all, Cherry, for your kind introduction and then, I – personally, I think what has been said by Professor Dickson and Brown have already give me a lot food for thought. And for me, I think – because, as you said, my research is mainly on gender issues in China on middleclass and more recently, because of the lockdown in Shanghai, well, actually, since the Wuhan lockdown, and that has really attract my attention to look into this, kind of, propaganda work from the state, which I personally find – increasingly find very interesting and fascinating, in terms of powerful. And is exactly because how – what I think Professor Brown just mentioned, the – I think the discourse, the stories, the idea of common prosperity and what has been said and what has been generated alongside of COVID lockdown, the Euro COVID policies, is – comes hand-in-hand, in both ways, to maintain the status quo and to present this, kind of, neatly presented order. And that in contrast to the so-called Western democratic chaos that is very often presented to the Chinese public, which I think is – can help us to really think through what might come next.

So, I think for – from my – for my part, I mainly have two main point. Like you said, the power of propaganda, which is, basically, based on my recent research on the – after the Wuhan lockdown, I don’t know how many of you actually remember, at the beginning of 2020, at the initial stage of the pandemic, well, at the time was not the pandemic yet, but when the virus started to spread in Wuhan, there was – scholars and observers of China has noticed why – noticed there was this, kind of, Chernobyl moment. Because a lot of the Chinese public were outraged by the initial coverup of the local government and that lead to the widespread of the virus and the high death rate in the city.

But quickly, so, that happened from the end of, well, December 2019 and lasted to the early 2020, February. But quickly, when this, kind of, online outrage happened, spread across the country, especially on debates – discussion online, the state quickly launched a wave of online campaign. I would say the propagandas motion really started to hit hard to trying to distract the discussion at the time. And very quickly, you see, since March, there were books, TV series, documentaries and – as well as film, has been produced to change narrative of a COVID-19 within China, which very much present, obviously, well, the old story of the party as the only saviour of Chinese people. But more importantly, they have cleverly mixed this, kind of, middleclass individual desire within their narratives to attract the public attention, saying, “Ah, actually, we are living a new – living new times and everybody individual achievement, recognition, contribution, to COVID-19, controlling the pandemic, has been recognised.”

So, that’s what my research – the recent research about COVID-19 hero making from the state has shown. This, like, the emphasising on individual desires, individual achievement, incorporate them within the party narratives, which I, personally, I would argue has been very, very – extremely successful. Because if you look through the last two years propaganda discourses in China in relation to COVID-19, it is very much linked to what Professor Brown has mentioned, like, well, Xi Jinping re – and his regime has really used this whole event to consolidate the narrative of China’s political system. Is really working and in – working well, in contrast to the chaos we see in the United States, in Western Europe, etc., etc., yeah.

But what is interesting for me to see is that since the CO – well, there is a, kind of like, shift of online – well, public mood, as well as online discussion since the Shanghai lockdown, ‘cause I think the public, after two years – obviously, if you continuously pursue this zero COVID, the economy going to – well, unavoidable, it would have impact on the economy. And people starting to, kind of, reflect on what’s actually going on, even though every day you hear CCTV news in China state media, in China, telling you, “Oh, the outside China, everything’s chaos, everything is prosperous within the country and we are doing it very well.” But still, as times goes on, people starting to see cracks and different information slipping – slip through and then, you see this, kind of, changing, very subtle, but grandiose, surely changing of mood and public discussion since the Shanghai lockdown. And that’s where I see that – this, kind of – this – the story has been created to tackle the initial outbreaks since the Wuhan lockdown has somehow not really working as perfectly as they wanted. And that’s something on which I find interesting.

And another thing from this is that, obviously, Professor Brown has mentioned that Shanghai, as a cosmopolitan city, that China’s economic hub, and then, a lot of – well, probably the brightest and most affluent people residing in the city, but the city is also composed by different migrant workers, yeah. So, during the lockdown we’re also seeing, yes, for example, some of my friends studied and worked in the city still, and they were saying, for them, the impact probably mainly be their mental health, the pub – the family tensions, because you have to live – face your family member 24 hours, seven. And then, but at the same time, for different kind of demographic group, for example, the migrant workers, they live in this, kind of, cramped rented apartment and if they don’t – if the whole city is in lockdown, they don’t go out to work, they don’t receive pay, yeah. So, a lot of people within the city has been cut off payment – salaries for the last two or three months and then, these people have been – well, the report has showed that there are people starting to leave the city, as migrant workers, so could return back to their hometown. And obviously, this is a complicated process, because leaving the city is also as difficult as you probably trying to enter China.

So, I think what is important for us to look is that, yes, the Shanghai lockdown has changed the overall mood, public mood, as well as online discussion, but the people, different cohort, the population’s experience within it, also differs. Like my – the affluent, more middleclass, resident might think – complains about it, but their actual income does not really negatively affected by this, whereas others really, really struggle and people starting to borrow money. Even my personal – well, my own relatives starting to say, “Well, actually, I have not been receiving my income for the last three months. I really need to some – have some cash.” And if you think about during lockdown, the government promised to dis – to deliver food to the doorstep, so the residents stay at home. But depends on your postcode, as we all know. The del – well, the delivery of services and public goods and just the basic food and water really differs, depends on where you live. So, there are a lot of part of the city receive very, very poor supply of food. So, people really starting to complain, and these areas are mainly congregated by migrant workers. So, that’s something which I find it is interesting, if we think about the future, after moving beyond COVID, moving beyond, let’s say, imagine the zero COVID policies, how this might impact on the, well, I don’t know, the experience of migrant workers from the Shanghai lockdown, how much the city can continue to attract, or to maintain their attraction, I think that’s a question which we might want to discuss.

Another interesting point, which is also my research interest, is about the fertility tensions of COVID-19. We all know that long before COVID, China has been experiencing the so-called pop – demographic crisis, which we have a ageing population, and dropping birth rate and, obviously, come with COVID-19 with the economy dampened by the pandemic. And even though the state has changed its strictly controlled one child policy, since last year, every married couple now is – they are allowed to have more – three children, but still we do not see these policy changes generated their desired outcomes.

Not to mention that even in other affluent parts of the countries, like, if we think about the population policy in China in the long-term, it’s not only about controlling the population quantity, but it’s also about promoting or improving the population quality. That being said, means that, well, subtly, the state want more well educated children to be born. Well, these children are supposed to be borne by the more affluent, middleclass urbanites, yeah. However, with the economy dampened by the pandemic, come together with many other factors, has been ongoing with social transformation, people’s attitude about marriage and childbirth, I really don’t see the desired rise in birth rate will come as a result. So, I think that really would put a question mark on the so-called wealth sustainability, depends on how you define it, and for China’s long-term economic growth, if they want to both sustain the labour supply, as well as upgrading it. Not to mention the long-lasting unequal distribution of education resources between its urban and rural populations. So – and that’s all from me. Thank you very much.

Dr Yu Jie

Excellent. I’m afraid it’s not good news here from – according to what you have described. Now, just a follow-up question. So, while we’re talking about these narratives the Chinese Government try to present to the middleclass, that its own political system works very well and it produce a stability and so on and so forth, and obviously, that narrative did not really work out, with the lockdown in Shanghai and also on several other cities. Now, Kailing, do you consider, actually, the population has now lowered expectation from the Chinese Government and lowered expectation to President Xi, who has been able to deliver on the so-called common prosperity initiative?

Dr Kailing Xie

Well, thank you very much, Cherry. I don’t really know whether they have lowered their expectation, because it’s hard to know what to expect, anyway, from the first place. So, I will say that similar to the Chinese states, the party state, I think the Chinese population, Chinese public, has been extremely adaptable. So, you, kind of, just – you – if you live in this kind of system, the population are very much in tune to adapt, to be flexible just in order to make their life liveable. So, I don’t know and it’s hard for me to tell whether they have lowered, or increased, their expectation just because the party now is promoting this idea of common prosperity, because I doubt how many people actually listened in the first place.

Dr Yu Jie

Alright. Okay, so, that obviously lead to other big question here regarding social contract. So, the social contract between the Communist Party and the population in the past has always been, right, the party delivered the living standard and the quest – the population do not questioning political freedom and there’s other individual freedoms, so on and so forth.

Now, this is a question, I suppose, for Kerry and also for Bruce, and do you expect, after the 20th Party Congress, we may have a course correction, that is to say the social contract between party and the people would perhaps shift to one way or another? Anyone? Bruce, perhaps, to start with you?

Professor Bruce Dickson

Sure. I think from the party’s standpoint, the social contract, as it is, has been working very well, so they don’t have much of an incentive to change it. Outside of China, we often think that this – there is this great frustration, this desire for democracy and if it wasn’t for those evil party leaders, everything would be great, and that’s not how most people in China see it. They look at their government as doing a relatively good job at delivering the types of opportunities, of, you know, expanded wealth for – it’s unequal, but still, the vast majority of people have been benefiting over the last couple of decades.

Whether they’re still optimistic about the future is the big question and right now, we really don’t know exactly what public opinion in China’s like, because it’s almost impossible to do research in China now. If you’re a outside scholar, it’s very difficult to get access to China, very difficult to do the, kind of, public opinion surveys that we used to be able to do to gauge whether people were being more or less frustrated, more or less satisfied. Social media’s now one of our key sources of information, but as we know, in most countries, that’s not a very reliable barometer of public opinion. You get the extreme viewpoints, but not really what the common people are thinking.

So, the social contract that was – has been informally in existence was also premised on a growing economy and that is now the big question, and it’s been slowing down for over ten years now. It used to be it would never fall below 8%. They’d pump up the growth to make sure it achieved 8% every year. Now it’s around 5%, maybe lower this year. So, when you have economies slowing and you have a political system that is still very limited, in terms of access and participation within it, you may get more frustration within society because their expectations of a better future are no longer being met. They’re not as optimistic about their future, and that may be where this common prosperity program will come into play, to at least give people the hope for a better life, not immediately, but at least the party’s looking out for them. That’ll be the propaganda behind it, at least.

Dr Yu Jie

Kerry?

Professor Kerry Brown

Yeah, no, I agree with Bruce. I mean, the, sort of, abstract idea of a social contract and, you know, the Chinese people, sort of, being desperate to breathe what we’re – the kind of medicine we’re on, I’m very sceptical. I mean, I think it’s just wishful thinking for, you know, people in Europe and America that once you get rid of the Communist Party, then everything is going to be great. I mean, I suppose the natural thing that a Politician would do in a situation where growth is constrained and maybe even a recession is on the horizon, is to pump up nationalism, I mean, you know, to make this a, kind of, time of crisis.

I mean, this is – you know, the party has this language easily to hand. I mean, even in the good times it was talking about a complex situation in the world around, the fact that we can’t make risks, you know, we’ve got to keep a steady ship, because everything else is not looking good. Ukraine and Russia just creates even more uncertainty. So, I think we should expect Chinese politics to be more and more hard to listen to in the outside world, because, you know, the contradiction, I suppose, is that nationalism works great in China and, of course, awful outside it, but it is just language. I mean, I think we have to constantly keep in mind that what is said in China and what actions happen are very, very different.

And I think Bruce is very right, the problem at the moment is we don’t have access to China. I mean, it is impossible, really, to know what’s happening there. You know, even the most superficial visits are not possible because of big restrictions and so, it is worrying that we might listen to these words and stop understanding that the actions are not the same, because you just can’t see those actions very easily.

Dr Yu Jie

Hmmm, great. Now, let’s stand some questions from audience. So, first of all, good questions in here. Could I invite Xianzhi Zhang to ask his question, Xianzhi?

Xianzhi Zhang

[Pause] Yes, can you hear me?

Dr Yu Jie

Yeah, we can hear you. Yeah, please.

Xianzhi Zhang

Yes, so, my question specifically relates to the common prosperity program and, essentially, that if the party is oriented towards economic growth at the moment, would that preclude the possibility of an invasion of Taiwan, essentially saying that a war would not be in China’s national economic interest? So, is it mutually exclusive?

Dr Yu Jie

Anyone want to give a try? I mean, I have my own answers, but I’m not going to speak today.

Professor Kerry Brown

Really under – the question of the – a war, a war against who? Well, what kind of war?

Dr Yu Jie

Invasion against – invasion towards Taiwan, so, what extent that invasion towards Taiwan seems to be a stronger rhetoric, rather than a…

Professor Kerry Brown

Invading…

Dr Yu Jie

…rather than the entities?

Professor Kerry Brown

…Taiwan, to unpack growth, I would have thought that was…

Dr Yu Jie

In line with the common prosperity, yeah.

Professor Kerry Brown

Right.

Dr Yu Jie

That’s the main thing.

Professor Kerry Brown

I would’ve thought that was rather high risk. I would’ve thought that was a, sort of, tad high risk. I mean, I think there’s collateral that comes from that, like destroying the supply lines and the alliances and the reputation of China and, you know, in addition to having terrifying consequences for the 23 million inhabitants of Taiwan. I – again, this is exactly the issue of words and action. You know that the Chinese Government says, and probably has to say, strong things about Taiwan, but let’s remember the consequences of were it to do anything, diplomatically, economically, unless really, really forced into a corner. And that’s not easy to dismiss, but I think we have to, you know, be aware that, you know, if China were to undertake an – any kind of aggressive military actions, amphibious landings, leasings, it would be a global catastrophe of the first order and Russia and Ukraine would look like a, you know, a relatively, kind of, small thing and that’s obviously an appalling situation. So, let’s just hope we don’t get to that point.

Dr Yu Jie

Well, it will be colossal, let’s put in this way. Bruce, any further comments?

Professor Bruce Dickson

A lot of people have been trying to draw a parallel between the Taiwan issue and what’s happening in Ukraine and trying to figure out what China’s leaders are learning from the experience. And I think there’s a couple of things they might be learning. One is that everyone thought Russia was just going to roll through Ukraine. It would – it’d be over within a couple of days and it’s still going on months later.

So, it’s very difficult with the sustained defence by – if Taiwan’s military reacted similarly, a Chinese invasion would not necessarily go over successfully, smoothly or quickly. And the fact that the – at least the Western allies have been very unified in imposing sanctions and implementing them. Probably came as a big surprise to China, because under – when President Trump was leading the United States, he was trying to undermine our alliances and now it turns out that they can be strengthened very quickly and that would work against an incentive for China to invade Taiwan.

So, I think there’s no doubt that Chinese leaders expect that, at some point, unification will happen. Whether this is the time, I think we all hope, yeah, this is not the time.

Dr Yu Jie

Well, then, perhaps that really works well to another webinar to discuss all those issues together.

Now, let’s return to the focus on population growth and also population decline, is what Kailing mentioned earlier. Now, could I invite Duff Mitchell to ask his question?

Duff Mitchell

Hi. Yes, thank you very much. My question is, can China maintain a high growth and equitable economy in a period of persistent and sustained population decline, which I understand the Shanghai Academy of Social Sciences predicts could even result in the population of China shrinking to half its current size by the end of the century? Thank you.

Dr Kailing Xie

[Pause] Sorry, if I may just summarise your questions, you mean on – you mean the decline of the population, can that be – sorry, I can’t – I did not hear the part of the question.

Duff Mitchell

Yes, so, just looking at the relationship between trying to maintain a high growth and equitable economy in an environment of demographic decline in what possibly could be described, even, as demographic collapse over this coming century. Where most countries and experiences of growth, accompanied with population growth, but now China will be entering a period of trying to pursue these economic policies in an environment of what I understand could be really acute population decline, regardless of their policies of how many children families can have, etc. That this demographic trend of 1.1% or so annual decline may be a persistent factor for the rest of this century, resulting in perhaps shrinking the country’s size to a half of what it is today.

Dr Kailing Xie

Yeah, thank you very much. I think it’s hard to predict what will happen, but one thing I can say for sure is that with what comes with this, kind of, three child policy is the idea that the Chinese economy is also trying to upgrade and say, well, we should, kind of, move away from the labour heavy, manufactury, sort of, focused industry, to more this, kind of, innovative technological innovation side. That being said, demands the population to really increase the educational level, yeah. That is another layer adding onto the population decline that we just don’t – simply don’t have enough newborn.

Not to mention that within China, because of the education distribution so unequally across the country, there was this, also, internal stratification between the rural and urban birth. And I think recently, they have done some new policies trying to equalise that, saying allows migrant workers to bring their families and allow the children to attend schools. And then, trying to somehow increase the education level of the population, especially the rural migrant workers. However, I think that is still far, far away from what they are trying to achieve in the long-term, because this, kind of, rural-urban division and inequality is entrenched in multiple aspects.

So, on one hand, you trying to boost population growth, but is not any kind of population growth. You want high quality birth. High quality birth requires this, kind of, affluent, well-resourced family, to invest in their children’s education in order to boost this, kind of, economic upgrade, to be more innovative and etc., etc. And that is what is desired from the state. But on the other stand – side, we have to see that what’s going on. Alongside of the economic development in China in the last four decades, is this, kind of, social transformation of the population’s behaviour, in terms of their attitude towards marriage, intimacies, as well as fertility intentions.

Yeah, as I already mentioned earlier, the fertility intentions, especially in my books, I have argued, among the middleclass, well-educated families, the fertility intention has definitely had a huge, sort of, legacy marked by the one child policy. Like, taking myself as example, if you – I was – I’m the only child in my family. I grow up receiving huge amount of resources from my parents and that has lead me to have this different kind of outcome compared to my previous generation, my grandmothers, for example, and how that might impact on my willingness to have more childrens.

So, for me, this, kind of, changing of policy to encourage families, especially – well, only in China, still, you still only allow heterosexual family to have children. That’s still the only legitimate way to have children. That’s also the preference. The public preference is shaped by the policy, yeah. So, it is really hard to see that the policy will immediately change the population’s attitude. So, I don’t see, in terms of number, how we will see this, kind of, increase.

On the other hand, we all know it’s not only – it’s un – it’s almost universal, it’s not only in China, the better you educate your women, the fewer children you will get, yeah. And then, so what kind of children will be – well, will be – will, sort of – in – within China? If the middleclass choose to have less children and then, maybe this policy will allow more rural family to have more children, but does that meet the criteria of this, kind of, economic upgrading? I don’t know. I very much doubt so.

On top of that, we see this, kind of, world when we – when the economy is dampened by slow growth, and people were talking about, even the rural family. They also talk about sending their – giving their children better education and we all know raising up a child, so-called good quality children in China, is extremely expensive, yeah. So, this, kind of, be – preferences of how to raise children and behaviour has changed dramatically compared to my parents’ generation and their parents’ generation. So, it’s extremely expensive, therefore, we have to look at the policy, on one hand, as well as the population’s preference and behaviour on the other hand. I don’t think they actually match. So, I think there will be a hu – real difficulties for the government to actually persuade, or entice, the population to behave in a way to match up what they desires there, yeah.

Dr Yu Jie

Thank you, Kailing. Just to follow on that, while we’re talking about raising child and, obviously, for the Chinese parents, they have to purchasing properties for their children, as well, I mean, that’s just one of the duties of care, for the parental care. Now, essentially, we’re talking about Xi Jinping constantly having this line, by saying, “The property is really for living, it’s not for betting.” So, I have this question from Dina Mufti and she would like me to asking her question on behalf, is, “What are the real consequences of China’s real estate crisis and how it would be managed?” So, I’m keen to get answers from both Bruce and Kerry and Kailing. So, Bruce, can I start with you, I mean, obviously, to have views on what is happening with the real estate sector? By the way, this is not share stock advises. It’s not investment advises at all.

Professor Bruce Dickson

Yeah, if you’re asking for a Professor for financial advice, you’ve asked the wrong person. For many people in China, real estate investment is really the only opportunity for where to put their money. And you have – there’s a real estate bubble, we think, in the country, just given the fact of how many people buy multiple units, with the intention of selling them quickly, but never actually living in them, or even renting them out. So, there’s this notion that there may be the bubble about to burst, which would really just crush the economy. But that expectation has been there for quite a while and hasn’t happened. So, there’s been – the party has made sure that that doesn’t happen.

But, you know, living in cities is extremely expensive, because real estate is so expensive, and as you just mentioned, one of the expectations that parents will buy their kids, especially would buy their son, properties so that he will look more eligible as a marriage partner. So, there’s huge expectations for what it means to be successful and to be middleclass. The cities are growing because more and more people have migrated from the countryside into the cities and are now living there permanently, needing housing. People from other cities migrating to the coast for work and so on. So, there’s a huge demand for housing space. Demand is for real estate investment, as opposed to just sinking it into your bank account.

But all this is creating tensions within the real estate market that if one of the major real estate companies were to go under, it could have ripple effects all through the economy, which would be devastating. Then you’d really have the middleclass turn against the party, because that was their expectation for the future. There – in the past, there have been protests when people were losing money on real estate, that they would protest against the government, ‘cause, you know, the deal was if I buy real estate, it’s going to just grow in value, and I’ll make money off it. How dare you make me lose money by having a decline? So, it’s a tricky aspect, both in terms of the economics of the real estate market, but more importantly, for public expectations about what it means to be middleclass and what it means to be successful.

Dr Yu Jie

Kerry.

Professor Kerry Brown

Yeah, I mean, I think because of the gravity of this dependence on, I think it’s been called “the world’s greatest,” sort of, “economic asset,” you know, Chinese property, I think their government has lots of policy instruments that it can throw at this if things get bad, precisely for the reasons just outlined, that this really hits the base, as it were. You know, this property-owning service sector, urban living, middleclass, who I think have always been at the heart of Xi’s politics. I mean, Xi Jinping, you mentioned a constituency earlier, well, this is the constituency. These are the people who are going to have to consume and be the, you know, the, kind of, drivers of China’s new economic model going forward. And so, their dependence on their – the property as their greatest economic asset, as something they can really invest in, it’s emotional and political and cultural, also, now. So, this will not – I mean, if this goes, the whole political project is thrown up in the air and I’m sure the Chinese Government can throw all sorts of things at this before that calamitous moment might happen.

Dr Yu Jie

Kerry, I know you have to leave a bit early, but this is a question is actually for you. So, could I invite Anita to take the floor and ask your question?

Anita

How does the panel see that the number of Chinese students studying overseas will influence policymaking in the future in relation to sustainable development and human rights, in particular?

Professor Kerry Brown

So, this is an accidental situation. No-one planned this, I don’t think. It wasn’t the Chinese Government that planned it and it wasn’t America, or British, or Australia, or the other main destinations for Chinese students. You know, they didn’t plan this. It’s happened organically, and I think its implications will be profound, but complicated. So, I don’t think any naïve idea of a group of many millions, now, of Chinese educated abroad, going back to China, is going to mean that liberalism is going to sprout up from China once these people get more senior positions in business and particularly in politics. I think that, in fact, many of them may have very sceptical views, but informed views, of the West and be very, very critical and know what they’re talking about. I think they’re going to probably have a much more hybrid view, and we’ve seen lots of evidence that many, you know, on social media and elsewhere, actually become more nationalistic, not less nationalistic, as they experience life abroad.

I think it will have a profound influence, you know, because it just is an incredible phenomena that the elite, largely, of a society, so many have gone abroad and experienced life abroad. I mean, that’s got to have an impact, and I think we’re going to start seeing that relatively soon. This is a huge experiment, in a way, and it’s not one, as I say, the Chinese Government, really had planned. No-one planned this, but I think it’s going to have a very, very profound influence. And what I’ve learnt in 30 years of looking at Chinese politics and, you know, kind of, geopolitics, is we never really, kind of, look at – we’re bad at predicting what happens in China. I mean, you know, no-one really foresaw in 78 the changes that were about to happen quite soon, and I think this is one of those things that had quietly resided in our consciousness to Chinese students and their importance that we now need to probably focus on a bit more.

Thank you very much. I’m afraid I have to go to something else, but I’ve really appreciated seeing the other colleagues here today. Thank you.

Dr Yu Jie

Delighted to have you with us. Now, this question, a last, very last question, is for Bruce and for Kailing. So, again, she’s asked me to ask on behalf of her. So, “Is the Chinese Government transforming all profitable corporations into social enterprises?” I mean, the straightforward answer is perhaps not all enterprises, but obviously, the government would expect some sense of leeway that enterprises will making contribution. So, for both Bruce and for Kailing, do you actually see any policy initiatives being introduced so far to encouraging enterprises to have more responsible behaviour?

Dr Kailing Xie

From my side, maybe Bruce can say more, I haven’t seen any of those, yeah.

Professor Bruce Dickson

The one area I have seen is renewed effort to build Communist Party organisations within private firms. Now, they’ve done this – been doing this since the 1990s and for the most part, it hasn’t been a vehicle for having the party control what happens in those companies. It’s more a matter of a way to channel information coming from the top, speeches and new policies. Often, they’re involved in, you know, regular marketing and human relations issues about hiring, just basic mechanics of running a firm. But when you’ve got a party organisation within a private firm, you do have some notion that it could turn – it could be a mechanism for the party to try and control them.

There has been an effort to make the private firms not be just – the terms of success being growth, but also, are they supporting the party in different ways? Are they vocal, are they visible, in that way? Which is a change from what it had been in the past, was expectation that private entrepreneurs would not be involved in politics at all, but now they’re expected to be cheerleaders.

The notion of what a private firm is has gotten so murky in China, because often, the party or the government, local government, national government, anywhere in between, owns shares of different things. State-owned enterprises own shares of private companies. Private companies own shares of state-own – you know, it’s just such a murky area of what it really means to be a private firm that actually tracing some of these things gets very difficult, just because what the ownership actually is, is often very unclear.

Dr Yu Jie

So, obviously, they all have to follow the party, then, to a large extent. Now, I know very last minute, 50 sec – 30 second question. I mean, this has really come from me. So, to what extent common prosperity initiative will appear in a very conspicuous position for this year’s, Xi Jinping’s 20th Party Congress Report? I mean, let’s start with Kailing and then, Bruce, for your final word.

Dr Kailing Xie

Well, and Cherry, I have to apologise, I actually have something I really would like to share in response to Anita’s question about the…

Dr Yu Jie

Okay, sure, sure.

Dr Kailing Xie

…Chinese students.

Dr Yu Jie

Yeah, very quickly, very quickly.

Dr Kailing Xie

Related to what happened in recent – well, actually last month, we host the #MeToo – China #MeToo Exhibition in Birmingham and I think that really got me thinking about this, kind of, homogen – how do you say, Chinese students coming to study abroad, most of them from elite family. And then, their experiences here really will shape their attitude about democracy, about personal liberties and will, in the long run, will, hopefully, will bring back different ideas back to China.

But one thing I really find important to highlight is that during the exhibition, there were huge debates among Chinese students who volunteered in the exhibition, as well as those attended it, to argue who can represent China. So, those who attended the exhibition said, “This exhibition must be hosted by some foreign forces who are anti-China.” Whereas it – the exhibition was purely hosted by Chinese student volunteer from mainland China themselves.

So, I think the whole discussion really highlight the importance of us, from outside China, as host countries in the UK, to see the Chinese international students, Chinese student, as – not as a homogeneous group. There is internal debate, discussion, going on, and I think how do we respond, in terms of policy, in terms of how we treat them, how we respond to – in terms of, well, especially racial discrimination. Some of these student experience really would impact their attitudes about democracy, about Western society and what they want to do, in terms of their future career choices and behaviours. So, I think that’s a very important things to highlight, ‘cause one of the…

Dr Yu Jie

Sure. Thank you, Kailing.

Dr Kailing Xie

Yes, for sure, yeah.

Dr Yu Jie

I’m now going to invite Bruce to have his final word.

Professor Bruce Dickson

Okay, thanks. It’s likely that common prosperity will be the, kind of, the signature programme, assuming that Xi gets reappointed for a third term as General Secretary, as everybody expects. That this will become his signature programme for the next five or ten years, just as the – promoting the China Dream was his signature slogan while – when he first became General Secretary back in 2012.

Dr Yu Jie

So, something to watch out for. Right, thank you so much for all of you and thank you, mostly, for our two brilliant speakers, as well as Kerry, and, also, thanks for our audience to tune in for your last hour. And I look forward to see you very soon for other Chatham House event, and have a very lovely afternoon. Bye, bye.

Professor Bruce Dickson

Thank you.

Dr Kailing Xie

Thank you, goodbye.

Dr Yu Jie

Bye, bye.