Market Review and Trends
Common Prosperity: A Trap for Chinese Big Caps?
By Dr Wealth  •  September 17, 2021
Recently, we’ve been bombarded by headlines about Xi Jinping’s latest “common prosperity” campaign: Source Source For the uninitiated, here’s a quick definition of “common prosperity” and why investors are being spooked by its potential impact. What is “common prosperity” or 共同富裕 (gong tong fu yu)? According to UBS, China’s President Xi Jinping’s aim with the “common prosperity” campaign is to have affluence “shared by everyone, both in material and cultural terms”. In a nutshell, the move for “common prosperity” would entail the following key directions:
  • Narrowing wealth inequality
  • Closing the income gap between the rich and the poor, and raising household incomes
  • Improving China’s social welfare system
What does “common prosperity” mean for Chinese equities? Based on the comments I’ve observed on various social media, it seems that most are worried about the negative impact of the “common prosperity” movement. And there’s little wonder why....
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By Dr Wealth
Dr Wealth provides trusted financial education to individuals. We teach researched and actionable investment methods so that our graduates are successful in their investment journey and achieve market-beating returns.
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