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Xi promises ‘third distribution’ of wealth in billionaire crackdown.

President Xi promised to tackle a widening wealth gap REX FEATURES

President Xi warned China’s burgeoning ranks of billionaires that they are expected to do more to “repay society” as he set out new rules for the rich.

Under a scheme called “the third distribution”, Xi said that the newly wealthy must contribute more to achieve “common prosperity” nationally by 2035.

“We should reasonably adjust excessive incomes and encourage high-income people and companies to pay back more to the society,” a high-level meeting presided by Xi concluded, according to Xinhua, the official news agency.

More equal distribution of wealth is becoming a key political issue in China since Xi declared the government had eradicated “absolute poverty” earlier this year and had built a “moderately well-off” society.

First put forward in 1953 by Mao Zedong, the communist revolutionary, the goal of “common prosperity” was put aside in the 1980s when Deng Xiaoping, a reformist, launched economic reforms and said, “some people can become rich first”.

Now, Xi believes it is time for a refined version of “common prosperity” to return, which the party says won’t be about “averages” but about creating a more equitable society in which everyone has the opportunity to advance and accumulate wealth.

“Common prosperity is the essential requirement of socialism,” Xi said at the meeting on Tuesday. “It is an important hallmark of China’s modernization.”

Xi’s words come as China grapples with a widening wealth gap after decades of high economic growth, which brought tremendous riches to many people. However, the richest 1 percent of Chinese people now hold 31 percent of the country’s wealth, up from 21 percent two decades ago, according to a recent Credit Suisse report. The pandemic, which hit small businesses and poor workers hardest, has exacerbated the gap. By another measure, China’s richest 1 percent holds more wealth than the bottom half.

To address the wealth gap, the leadership said that it would “rectify the order of income distribution”, including “cleaning up unreasonable incomes and firmly eliminating illicit incomes”. In addition to possible tax reforms, Beijing is asking the rich to do more in charity.

Beijing has signaled that the scheme will be voluntary for now, but it has various levers through which it can apply pressure.

“The third redistribution is like the ‘gentle hand’ that promotes social equity and justice,” read an article in the Study Times, a publication by the Central Party School of the Communist Party that focuses on theories and policies.

“Based on voluntary actions, it is a distribution of social resources and social wealth through philanthropic means such as fundraising, voluntary donations, and financial assistance,” the article said. “It is a beneficial supplement . . . conducive to narrowing the social gap to achieve a more reasonable income distribution.”

A separate article said that the third distribution would be guided by social values, such as kindness, public service, and charity.

Tencent, the giant technology company, has been one of the first to respond to the call by Beijing. Yesterday the company announced a “common prosperity” project with a fund of 50 billion yuan (£5.6 billion) to revive villages, help low-income workers make more money, improve public health and promote “even development” of education.

China’s Top Five Richest by Forbes

1 Zhong Shanshan Net worth: $68.9 billion Source: beverages

2 Ma Huateng Net worth: $65.8 billion Source: internet media

3 Colin Zheng Huang Net worth: $55.3 billion Source: e-commerce

4 Jack Ma Net worth: $48.4 billion Source: e-commerce

5 Wang Wei Net worth: $39 billion Source: package delivery