Three Distributions: Promoting Common Prosperity

  Interview with Liu Yuanchun, Vice President of Renmin University of China, Dong Yu, Executive Vice President of China Development Planning Institute of Tsinghua University

  On August 17, the 10th meeting of the Central Finance and Economics Committee was held. One of the topics was to study the issue of solidly promoting common prosperity.

The "three distributions", as an effective way to regulate income distribution and achieve common prosperity, became a highlight in this meeting.

In the future, the coordination of primary distribution, redistribution, and tertiary distribution will become my country’s new basic distribution system.

  Since the Fourth Plenary Session of the 19th Central Committee and the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China, the concept of "three distributions" has been put forward again and it has risen to the level of the national strategic system. What signals have been released?

Why should we make up for the three-time distribution on the basis of the initial distribution and redistribution?

What is the basis for establishing a perfect three-time distribution system in my country?

In what areas need to be strengthened?

The reporter interviewed Liu Yuanchun, vice president of Renmin University of China, and Dong Yu, executive vice president of China Development Planning Institute of Tsinghua University.

  1 If it is said that in a large developing country with a population of 1.4 billion, building a well-off society in an all-round way and eradicating absolute poverty will solve the question of "is there or not", then during the "14th Five-Year Plan" period, efforts need to be made to solve the question of "good or bad"

  Reporter: From reform and opening up "allowing some people and some regions to get rich first" to the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China, "the common prosperity of all people has made more obvious and substantial progress." How do you view the evolution of this development mentality?

  Dong Yu: Since the 18th National Congress of the Communist Party of China, the Central Finance and Economics Leading Group and the Central Finance and Economics Committee have been important decision-making platforms for the central government to lead economic work. They have studied top-level designs and long-term strategies related to economic and social development.

This time is no exception.

This meeting of the Central Finance and Economics Commission systematically answered questions about common prosperity, put forward the basic goals, basic paths, and focus of work for common prosperity, forming a complete system structure.

  Looking back on the development process since the reform and opening up, we have always moved forward step by step, down-to-earth, and each step is guided by goals, reflecting the combination of goal-oriented and problem-oriented.

  At the beginning of reform and opening up, our goal was to eliminate poverty as much as possible at a relatively low level. In terms of path selection, it was achieved by "recognizing that poverty is not socialism, and by means of getting rich first and getting rich later."

After the 18th National Congress of the Communist Party of China, under the guidance of the new people-centered development concept, the party and the government have done a lot of work in safeguarding and improving people's livelihood, and the achievements are obvious to all.

  Since the Fifth Plenary Session of the 18th Central Committee of the Communist Party of China put forward the new development concept, it has become a broad consensus to make development achievements better shared by all people.

After achieving the goal of building a well-off society in an all-round way, modernization has become a new development goal.

Continuously meeting the people's growing needs for a better life and promoting the common prosperity of all people have become the proper meaning of the question.

  Today, we have entered a new stage of development and have new development foundations and conditions. For example, the total economic volume has reached a certain scale, the economic structure is relatively good, innovation is playing an increasingly important role, etc., especially the breakthrough in per capita GDP. The US$10,000 mark is moving towards high-income countries.

If it is said that in a large developing country with a population of 1.4 billion, building a well-off society in an all-round way and eradicating absolute poverty will solve the question of "is there or not", then during the "14th Five-Year Plan" period, efforts need to be made to solve the question of "good or bad".

  Taking into account the current stage characteristics of our country and the existing urban-rural gap, regional gap, etc., the blueprint of the 2035 long-term goal drawn by the Fifth Plenary Session of the 19th Central Committee puts forward "the common prosperity of all people to achieve more obvious substantive progress." The section on improving the quality of life of the people emphasized "solidly promoting common prosperity". This is the first time that such an expression has been stated in the party's plenary document.

It can be said that whether it is subjective wishes or objective conditions, we already have the basis for advancing common prosperity in the new stage of development.

  2 Common prosperity is not to engage in egalitarianism, but to expand the size of middle-income groups and form an olive-type distribution structure

  Reporter: The tenth meeting of the Central Finance and Economics Committee emphasized that common prosperity is not the prosperity of a few people, nor is it uniform egalitarianism. It is necessary to promote common prosperity in stages.

How should we understand this?

  Dong Yu: Regarding common prosperity, we must understand it dialectically. We cannot simply understand it literally and one-sidedly. In particular, we must avoid two wrong tendencies: one is to treat it as the welfare of a few people, and the other is to treat it as a kind of welfare. Equalitarianism.

The Party Central Committee particularly emphasized that it is to avoid misunderstanding caused by misunderstanding.

  On the one hand, we still have to promote common prosperity in stages. This will take a certain amount of time. "Get rich first and get rich later" will still exist. We want to expand the work income group and allow more people to enter the ranks of high income.

Common prosperity cannot be achieved overnight. At different stages, there will always be some people whose income may be relatively higher. This is normal.

Even if we achieve common prosperity, it just means that our overall average level is higher than it is now, reaching a level of wealth.

  On the other hand, we need to put the bottom in the pocket so that more people, especially those with relatively low income levels, can also be at a much higher level than they are now.

A well-off society is not a uniform egalitarianism, and the principle of common prosperity is also the same, but the per capita income level of common prosperity will be much higher than that of a well-off society.

Even on the day when common prosperity is achieved, it is impossible for everyone to be at the same level. There will still be some people with relatively high incomes and some with relatively low incomes.

What we want is an olive-shaped distribution structure, and the overall average level is very important.

  Reporter: We know that the olive-type distribution structure is large in the middle and small in the two ends. This meeting proposed to expand the proportion of middle-income groups.

What is the significance of expanding the middle-income group, and what are the practical measures?

  Dong Yu: At present, my country's middle-income population is 400 million, and it is expected to reach 800 million by 2035.

Such a huge market is not only an opportunity for China, but also an opportunity for the world.

For a country, middle-income groups dominate the entire income structure, that is to say, an olive-shaped distribution structure is actually formed. Due to the small gap between groups and the convergence of interests, there is less work to adjust and support, and social conflicts. Smaller, conducive to social stability.

  In 2016, the 13th meeting of the Central Finance and Economics Leading Group specifically studied the expansion of middle-income groups.

Our decision-making has a context to follow.

At the meeting on August 17th, in response to related work, it was proposed that "grasp the key points and implement precise policies to promote more low-income people into the ranks of middle-income".

What does it mean to grasp the point?

What's the point?

The focus is on key groups, and different groups of people have different focuses.

  For example, for scientific researchers, more efforts should be made to encourage them; for entrepreneurs, more efforts should be made to protect property rights, promote standardized operations, and create a good business environment; for migrant workers, one should encourage them on the one hand. Increasing income by improving their skill levels, on the other hand, it is necessary to solve the problems of their settlement in the city, housing, and children's education.

  3 The three-time distribution is based on our moral and customary system. Some high-income groups help low-income groups through donations and charity. It cannot be separated from the two systems of incentives and guarantees.

  Reporter: The meeting emphasized the establishment of basic institutional arrangements for the coordination of primary distribution, redistribution, and three-time distribution to encourage high-income groups and enterprises to return more to the society.

How to understand and grasp this?

  Liu Yuanchun: Primary distribution refers to the distribution in the market economy system according to the role of various factors in production, such as residents' income and capital investment income.

The primary distribution mainly embodies the principle of efficiency first, that is, the distribution is carried out based on the efficiency function of the factors in production.

Among them, the labor-management relationship is an important factor in determining the level of primary distribution.

  Redistribution refers to the use of taxation and fiscal expenditure by the government to redistribute between different income entities after production.

Redistribution mainly achieves mutual coordination of income distribution through social security, public services and some subsidy systems.

Compared with the initial distribution, it is mainly reflected in the non-production stage.

  The third distribution is different from the first two. It is mainly used by high-income groups to distribute social resources and social wealth through charitable public welfare methods such as raising, donations and funding on a voluntary basis. It is a beneficial supplement to the initial distribution and redistribution. It is conducive to narrowing the social gap and realizing a more reasonable income distribution.

As the social development enters different stages, the proportion of the three distributions will change. In some developed countries, the institutional system of charity and public welfare is relatively complete and the development is relatively good. A supplement to the distribution.

  Reporter: What are the advantages and shortcomings of the three, and what are the differences in focus?

  Liu Yuanchun: The primary distribution has an important feature. It must be established on the basis of the production system and the basic economic system, and determined by the function of the production system, that is, a distribution pattern that combines distribution according to work and a combination of multiple factors.

  This kind of distribution system mainly occurs in the production field. The production field must first reflect production efficiency, which is critical for "big cake".

We have found that the negotiating ability of factors in distribution will have different meanings and effects under different institutional systems.

Therefore, as long as we mention correcting the unfair income distribution, everyone will think of adjusting the system of primary distribution. For example, the proportion of residents' labor is relatively low, and corporate profits and government revenue are relatively high.

This is because labor, as a factor of production, is relatively weak in the initial distribution, and the power of capital and the government are relatively strong.

  This requires us to strengthen the bargaining power of labor elements in the distribution process in the production process, to legislate on minimum wage standards, labor security, labor benefits, etc., to emphasize the legitimate rights and interests of laborers, and to correct the unequal relationship between labor and capital.

Therefore, many fundamental reforms are involved in the initial distribution.

However, it should be noted that if efficiency is not prioritized, reforms are likely to have a negative impact on the enthusiasm of other factor owners.

Therefore, in the stage of high-quality development, whether the focus of our income distribution is the primary distribution or the redistribution needs to be weighed.

  Redistribution mainly relies on the government to implement, that is, the government adjusts the level of distribution among different classes and groups through taxation and fiscal expenditure.

Income distribution can be realized among different economic entities and social entities through a series of welfare systems, social security systems, and differentiated subsidy policies.

In other words, the primary distribution is mainly done by the market under the framework of the basic system and the legal system, and the redistribution is mainly the government using the "visible hand" to distribute, so as to achieve people's livelihood goals, social goals, and political goals.

  The three-time distribution is based on our moral and habitual system. Some high-income groups use charity and public welfare to help low-income groups.

Three distributions are inseparable from two major systems.

The first is the incentive system, including social morality and public opinion, taxation system, especially property tax, inheritance tax and donation tax relief policies.

The second is the guarantee system, which requires an effective trust legal system. At the same time, there must be some non-profit legal persons, especially charitable organizations, to undertake activities such as the collection, transfer, and distribution of charitable donations.

  4 The three-time distribution is a good way to promote common prosperity, and it is also the direction of civilization for human development.

  Reporter: Why do we need to make up for the three-time distribution on the basis of the initial distribution and redistribution?

What are the underlying considerations?

  Liu Yuanchun: In income distribution, moderate control of the income of high-income groups, or to enable some of their income to be used for income growth of the middle and low-income groups, is the most direct and effective choice.

  Through this approach, social harmony can be promoted, and a large number of high-income people can act in accordance with moral and ethical systems such as social welfare, social ethics, and social harmony, thus forming a virtuous circle.

At the same time, it conforms to the principle of voluntariness, fairness and justice, and will not harm the enthusiasm of some high-income groups and capital gainers in the process of forced redistribution.

For common prosperity, this is a good way and the direction of civilization for human development.

  In terms of three distributions, although various charity and donation activities in my country are currently on the rise, they do not match our overall economic scale. The main reason is that some basic incentive systems and guarantee systems have not been well-completed.

We know that a large number of rich people in Europe and the United States will actively participate in charity. For example, Bill Gates, Buffett and others choose to donate part of their property to charity funds to engage in charity activities, and redistribute them through charity activities.

This is of course related to the entire European and American religious, legal, and moral systems, but this is only a superficial view.

In fact, the reason they did this was mainly because of the tax reduction and exemption policy. The high inheritance tax in Europe and the United States can reach 50%. Many people with huge wealth will actively choose to donate in order to avoid the property tax.

  In addition, according to the policies of some western countries, if you donate your income on your own initiative, you can be exempted from some income tax and other expenditures. This enables some high-income people to achieve their social responsibility goals, moral and ethical pursuits, and to maintain their own property. Power of control.

For example, many entrepreneurs set up charitable funds through donations, and then engage in corresponding charitable activities through charitable funds, so as to play the role of three distributions.

  As far as the social incentive system is concerned, in addition to the informal moral system and ethical system, there is another very important government tax system, which is a key.

It inspires the wealthy to engage in social welfare undertakings.

  Everyone has noticed that the concept of three distributions has been proposed again, and it has risen to the level of the national strategic system. This means that the next step is to focus on philanthropy, and the country must improve the corresponding incentive system, guarantee system and legislative mechanism.

This incentive system must include a series of tax policies involved in donations.

At present, many of our corporate donations are exempt from corporate income tax. Basically, as many donations are exempted.

Of course, the state will also have some more detailed and specific regulatory measures, such as reviewing the source of funds, to see whether it meets the charity standards and charity law.

  Reporter: Based on the actual situation at this stage, what is the basis for my country to establish and improve the three-time distribution system?

In what areas need to be strengthened?

  Liu Yuanchun: A wide range of social charity activities have been carried out in China for a long time. A large number of high-income people have begun to actively participate in public welfare, such as donations to school education, donations to health, and some donations to disaster-stricken areas. The growth rate and scale It's already big and has a good foundation.

At the same time, more importantly, my country has established a corresponding legal system, which provides good support for the tax incentive system and the three-time distribution.

  However, there are some issues worthy of attention: First, our tax incentives may be insufficient. In addition to progressive income tax, there are also a large number of property tax and inheritance tax collection arrangements in the West. At the same time, there are corresponding provisions for tax deductions and exemptions after participating in charitable activities, and the incentive system is even better. For full.

  Second, in some trust arrangements, our intermediary organizations are not well developed. How to make the donations of the high-income groups and the wealthy class more smoothly and lower cost is worth studying.

We need to improve the trust legal system, and non-profit organizations and foundation organizations also need to strengthen their work innovation.

  The third is to further promote the culture of public welfare and charity, create a strong atmosphere of humanistic care in the whole society, and strengthen the inheritance and development of the fine tradition of practicing social responsibility from the moral level.

  Our reporter Guan Xiaopu

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