‘Third distribution’ system to common prosperity

The authorities have emphasized the importance of achieving common prosperity through the “third distribution” system. But some have misinterpreted it to mean “robbing the rich to give the poor”.

The goal of economic development is to realize common prosperity, which can be achieved through the fair, if not equitable, distribution of wealth. Since the launch of reform and opening-up, China has adopted a wealth distribution system based on labor, while allowing multiple distribution channels to co-exist.

Taxation and social security are part of the “second distribution” system, and aimed at distributing national wealth in a fairer way.

However, there still exists a huge gap between urban and rural development, as well as among different income groups, which calls for deeper reform.

That is where the “third distribution” system comes in. It refers to creating opportunities for high-income groups and enterprises so they can give back to society, including through voluntary gifts and charitable donations. This is a good way of balancing efficiency with equality and reducing the income gap. More importantly, China has already built a moderately well-off society, which has made the cake large enough to be distributed a third time.

Of course, follow-up policies, especially in relation to taxes, will be critical to achieving the goal.

Voluntary charitable gifts and donations are an essential part of the privileged people’s social responsibility. The amount of donations and charitable gifts may vary at different development stages, yet that does not change the fact that in essence they are “voluntary”. In other words, those who believe the government intends to realize common prosperity by “seizing from the rich to pay the poor” are wrong.

Besides, the third distribution system will reduce people’s incomes and those who make more money legally still have the right to their wealth only that they will be encouraged, not compelled, to contribute more to the third distribution system.

A good model will be one in which the donors get honor and praise and the recipients get money and resources, thus forming a benign circle. So people should stop misguiding others about the third distribution system.