China eyes its rich in drive to reduce inequality

China’s top leaders plan to redistribute wealth, “adjust excessive incomes” and crack down on illicit gains in a bid to tackle inequality that could dent the fortunes of its richest, state media reported Wednesday.

The policy goal, announced in the readout from an economic planning meeting attended on Tuesday by President Xi Jinping, comes amid a sweeping push by Beijing to rein in the country’s largest private firms in industries ranging from tech to education.

It also follows a wider effort to alleviate poverty – a central pillar of Xi’s leadership – and as rumblings from the state crescendo on the type of capitalism China wants to have.

The meeting of the Central Committee for Financial and Economic Affairs agreed that China should “make basic institutional arrangements on income distribution,” raise incomes for people down the economic pyramid and “adjust excessive incomes and prohibit illicit income”, the official Xinhua news agency reported Wednesday.

Xinhua said this was intended to “promote social fairness and justice”.

The wealth gap in China is massive, with the top 10% of the population accounting for around 40% of national income in the last decade, according to a 2019 study in the American Economic Review.

China does not currently have nationwide direct property taxes, and does not levy an inheritance tax.

The number of billionaires in China nearly doubled to more than 1,000 in the past five years, according to the Hurun Report.

Meanwhile, the country’s super wealthy became a record US$1.5 trillion richer in 2020, including bottled water magnate Zhong Shanshan and Alibaba founder Jack Ma, even as ordinary people struggled to find jobs amid Covid lockdowns last year.

The country’s largest private firms have in recent months been hit with new regulations and antitrust probes aimed at curbing their outsized influence on nearly every aspect of life in China, wiping out billions of dollars in shares.

China’s tax authorities have also in recent years cracked down on rampant tax evasion in the country, with film star Fan Bingbing’s disappearance in a tax evasion probe in 2018 sparking national outrage on under-the-table payments received by the rich.