Large cities drivers for common prosperity

As of the end of last year, 22 cities on the Chinese mainland had seen their gross domestic product exceed 1 trillion yuan ($154.7 billion). And in this 1-trillion-yuan club, seven cities’ average annual per capita income surpassed 60,000 yuan ($9,282) last year, including Shanghai, Beijing and Shenzhen.

Except for Beijing, most of these cities are concentrated in the Pearl River Delta and the Yangtze River Delta, where technology, capital, population and other production factors have accumulated. The development gap between the two city clusters and the rest of the country remains wide despite a series of measures the government has taken to bridge it over the past decades.

Although GDP is no longer the sole criterion to evaluate the performances of local governments and governors, as more significance is now attached to high-quality development featuring coordination among the economy, society and ecology, the aforementioned development gap indicates GDP is still one of the most important indicators for the quality of development, as without a solid economic foundation it is impossible for the local governments to coordinate the different aspects of development.

So to fill the development gap between the two delta regions and the less-developed regions, local governments have to cultivate growth engines and their own comparative competitive advantages so that there is diversified competition among cities of different levels.

As long as the country still regards common prosperity as an objective and defining attribute of socialism with Chinese characteristics, the central authorities should give full play to the taxation system and the government transfer payment mechanism as effective tools to reduce the development and income gaps.

The cake should be made bigger to ensure all social groups see incremental interests. But how to divide the cake more fairly should by no means be ignored. A key index of the modernization of governing system and capacity is that whether the government can keep a balance between promoting growth and realizing social fairness and justice, which constitute the major challenge to many developed economies.

The realization of a moderately well-off society in all respects marks the beginning of a new Long March during which socialism with Chinese characteristics will confront new challenges that many developed countries have not yet effectively addressed. It will be a big test of the country’s political wisdom.