Former factory worker Li Fengzhen, now in her 80s, has lived in the Hemu neighbourhood of Hangzhou in eastern China for more than 40 years. A few years ago the apartment buildings from the 1980s were dilapidated, with tangles of electricity cables outside, little green space and poor services for the ageing residents.
Hemu now boasts an array of brand new facilities offering medical and nursing care, exercise, dining and entertainment while the buildings have been refurbished. Li spends much of her time persuading neighbours to pay for lifts to be installed in their buildings, with those on the highest floors paying most.
“She’s one of our best persuaders,” says Rao Wenjiu, the local Communist Party secretary.
Hemu’s transformation is a landmark project for Zhejiang province, which two years ago became a demonstration zone for common prosperity, the policy at the centre of a new development model for China. Dismissed by western critics as a communist power grab at the expense of private enterprise, to its champions common prosperity is a route to sustainable, high-quality, economic growth that will help China to become more socially cohesive while avoiding the middle-income trap that faces many developing countries.
With a population of 65 million, Zhejiang is China’s third-richest province and its capital Hangzhou is a gleaming monument to economic success, home to some of China’s most innovative companies, including ecommerce giant Alibaba. Founded in 1999 by Jack Ma, a former English teacher, and a group of friends, Alibaba is now one of the world’s biggest retailers and ecommerce companies, and the second-biggest financial services group after Visa.
Ma, charming, charismatic and as much at ease in the world of entertainment as in business, became a role model for a generation of young Chinese entrepreneurs. But in October 2020, after he made a speech criticising China’s banks and financial services regulators, Ma suddenly disappeared from public view.
Ma has made occasional appearances since then, usually outside mainland China, but he has stepped back from Alibaba to focus on philanthropic activities. Last month Ma was briefly back in Hangzhou amid speculation that the appointment of former Zhejiang governor Li Qiang as China’s premier could herald a permanent return for the entrepreneur.
Ma’s fall from grace was less catastrophic than that suffered by some other Chinese business figures who have had their wings clipped since Xi Jinping came to power a decade ago. Some were caught up in his crackdown on corruption and on dodgy links between business and party officials that has seen numerous high-profile figures imprisoned.
Common prosperity aims to tackle inequalities in China, including income inequality between social groups, between urban and rural areas and between different parts of the country. It also promises to improve the quality of life by cleaning up the environment and enhancing the “spiritual life” of the people.
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As part of its plan for common prosperity, Zhejiang has set targets for increasing incomes for the low-paid to reduce inequality while cutting the cost of childcare and housing. It aims to contain housing prices by building more than 200,000 subsidised rental apartments and giving tenants better access to public services.
Hemu offers childcare at less than half the market price, in an effort to ease the pressure on couples in the “sandwich generation” caring for old parents and young children.
“When the elderly are taken care and the children are nurtured, the young have the energy to start their own businesses and achieve common prosperity,” says Rao.
In Europe, public-private partnerships often mean that the public takes the risk while private business takes the profit, but in China the state has the upper hand
— Communist Party secretary Rao Wenjiu
The childcare centre is run by a private company, and many of the services offered at Hemu are public-private partnerships. In Europe, public-private partnerships often mean that the public takes the risk while private business takes the profit, but in China the state has the upper hand.
The Communist Party leadership is keen to stress, however, that common prosperity is neither about common ownership nor equality of outcome, and that private business has an essential role to play.
Party officials talk about three forms of wealth distribution. Primary distribution is what happens in the market, where people are paid for their services; secondary distribution is state action through taxation; and tertiary distribution is philanthropic action by businesses.
China’s biggest companies have embraced philanthropy with a new vigour in the past few years, although sceptics question if their charitable contributions are entirely voluntary. There is no doubt that the authorities look more favourably on companies that are willing to go with the flow of common prosperity by supporting community projects.
“Many private enterprises and public welfare enterprises are willing to provide some services for the people. They are very kind,” says Rao.
“Many private enterprises and public welfare enterprises are willing to provide some services for the people. They are very kind,”
About 80m north of Hangzhou, the water town of Digang was founded more than 1,000 years ago with an economy based on the mulberry fishpond system, a cultivation method that is more than 2,500 years old. It involves digging ponds in low-lying land near the mulberry forests, building up the pond bases and planting mulberry trees on them.
The mulberry leaves feed the silkworms, which produce silk, and the silkworm droppings feed the fish and the pond mud to fertilise the mulberry trees. Last year Digang set up a co-operative workshop to create an agricultural tourism complex offering hospitality and product sales alongside education, research and creative activities.
Xu Minli, who grew up in the village, returned to Digang 20 years ago after a career in the chemical industry to set up a fishery farm, which now employs 600 people.
“I learned that chemical engineering is not a good thing for our lives and I was persuaded by the government to turn this into a farm. At the beginning the business goal was not very clear, but later on it became related to ecology,” she says.
“I haven’t made much money, just employing people. But once you understand the ecosystem, its entire biodiversity can be utilised, which will contribute to our future social development. So as long as we can take care of it, we don’t necessarily have to earn much money.”
Ni Wei, the farm’s general manager, says that as a private business it contributes to common prosperity by providing jobs for local people so they don’t have to leave the area. The company runs a number of educational projects in the community, including what he calls a “reverse inheritance” scheme where children teach older people digital skills.
“We are a private enterprise. This project was developed and designed by our company, and we collaborated with the local village to create a research-oriented family project,” he says.
Further east, the town of Zhili is home to thousands of factories making children’s clothes, employing hundreds of thousands of people, many of them migrant workers from other parts of China. The town’s Social Governance Centre has a sign outside saying “China Justice”, in Chinese and English, and a courtyard at the back houses a People’s Court and a labour arbitration tribunal.
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The centre was set up in 2019 to resolve and mediate conflicts before they got to court, but it is part of Zhejian’s common prosperity plan to “enhance people’s sense of happiness and satisfaction in life”. The local government provides the premises but most of the mediators working on different kinds of disputes are volunteers, among them local factory owner Wu Xeili.
Along with other female entrepreneurs, she runs the Sister Peace workshop, which mediates disputes that are usually between businesses and contractors over money and sometimes with workers over pay.
“This is an important economic town, where everyone does businesses,” she says. “We mainly run the clothing factories, and we understand the relations between owners, between owners and workers, between vendors and owners. We are all business people. We can communicate with both parties based on our own experience to handle this matter. We can explain to them how we would handle this matter and make a detailed analysis for both parties.
“We have been working here for eight years and have great credibility. The government also believes in us, and the people here believe in us more. Therefore, the people are more willing to help us handle disputes.”
There is no shortage of people here who can make lots of money. There are only 30 people who truly become big players. This is our recognition of our identity
— Local factory owner Wu Xeili
When Wu started the project, she ran it from her own factory premises and she still hosts mediation sessions there. She says her business comes first but suggests that playing a role in the community offers her a different kind of satisfaction.
“There is no shortage of people here who can make lots of money,” she says. “We have 14,000 children’s clothing factories and over 8,000 online sales platforms. There are only 30 people who truly become big players. This is our recognition of our identity. The government has given us this platform, and the people also recognise us.”
