1 Beijing reframes the ‘common prosperity’ for the 15th Five-Year Plan
March 20 to March 23
PRC state media Xinhua published a four-part commentary series on the theme of “studying and implementing General Secretary Xi Jinping’s important remarks on advancing common prosperity for all during the Two Sessions.” The four articles, focusing on employment, income, social security, and healthcare, systematically outline how Beijing plans to achieve the goal of “common prosperity” under the 15th Five-Year Plan.
The titles and key points of the four commentaries are:
1. “Making High-Quality Full Employment a Priority Goal of Economic and Social Development”
- The first commentary focuses on employment as the foundation of people’s livelihoods. It notes that labor income accounts for about 70 percent of household income, making it the primary source (源頭活水) of common prosperity.
- The state is elevating “high-quality full employment” to a top priority in economic and social development.
- The state aims to address structural employment issues affecting groups such as youth and migrant workers, while actively guiding “new forms of employment” emerging from the digital economy.
- By eliminating employment discrimination and improving labor mobility, the state seeks to ensure that every worker has a fair opportunity for upward mobility through effort.
2. “Improving the Income Distribution System and Increasing Urban and Rural Incomes”
- The second commentary centers on reforming and optimizing the income distribution system.
- It proposes a coordinated framework of primary distribution, redistribution, and tertiary distribution.
- The state will implement a combined policy approach of “expanding the middle, raising the low, regulating the high, and eliminating illegal income.”
- Through institutional mechanisms, the state’s goal is to narrow income gaps between urban and rural areas as well as across regions, making wealth distribution more equitable and just.
3. “Further Enhancing Basic Public Services and Social Security”
- The third commentary emphasizes that basic public services and social security are key levers for promoting social equity and serve as the “safety net” for common prosperity.
- The state aims to break down regional barriers and promote equalization of basic public services, ensuring resources are not overly concentrated in top-tier cities.
- Leading cadres are urged to adopt a proper performance mindset and, with persistent effort, address urgent public concerns in areas such as education, elderly care, and housing.
- A stable social security system is intended to provide society with a sense of security and predictable expectations for the future.
4. “Promoting Decisive Progress in Building a Healthy China”
- The fourth commentary focuses on the “Healthy China” initiative. It stresses that without universal health, there can be no “comprehensive moderately prosperous society” (全面小康) or common prosperity.
- The 15th Five-Year Plan period has been designated as the decisive stage for the “Healthy China” initiative, establishing a specific target to increase average life expectancy to 79.25 years.
- The commentary advocates developing new productive forces, using AI and smart healthcare technologies to optimize resource allocation and extend high-quality medical services to grassroots levels.
- A strong and well-developed healthcare system is seen as the fundamental guarantee to prevent people from falling into poverty due to illness (因病致貧).
Our take
Xinhua’s four commentaries on “common prosperity” represent an attempt by the CCP to stabilize social expectations and rebuild regime legitimacy amid a complex global economic environment and mounting domestic challenges, including the collapse of land-based fiscal revenues, soaring hidden local government debt, and widening social security deficits driven by population aging.
These articles form a propaganda matrix that utilizes economic jargon to repackage the four most vulnerable areas of public livelihood — employment, income distribution, social security, and healthcare — under the political veneer of “high-quality development,” effectively masking systemic distributional contradictions.
1. The Xinhua commentaries follow the CCP’s typical “commentary series” template, functioning less as policy brochures and more as a coded political signaling system. The core logic of the commentaries is laid out in the four-step structure of legitimacy sourcing to achievement listing to goal setting to path dependency. For instance, each article begins with remarks by Xi Jinping during the 2026 “Two Sessions,” a mandatory act to establish “absolute correctness” within the political hierarchy. After that, curated data points, such as life expectancy reaching 79.25 years or income growth at 5.5 percent, are rolled out to construct a narrative of “continuous progress.” The next step sees the presentation of long-term goals like achieving modernization and common prosperity, reframing current economic pain as a “necessary stage.” Finally, path dependency is expressed through emphasis on “new quality productive forces” and “AI+,” reflecting a form of technological determinism that sidesteps deeper fiscal and distributional reforms.
Rhetorically, the commentaries rely heavily on rhythmic slogans such as “prioritizing high-quality full employment” and “improving the income distribution system.” This repetitive style reinforces the so-called “illusory truth effect” (錯覺真相效應), creating a psychological impression of the regime in control even when the realities of unemployment and slow income growth are less optimistic. The core message is clear: despite external challenges, the social safety net is strengthening under Party leadership, and future prosperity is portrayed as institutionally inevitable.
i) The first commentary frames employment as the foundation of common prosperity. This reflects the CCP’s concerns over the declining share of labor income in primary distribution. However, the concept of “high-quality full employment” is in tension with actual 2026 data:
- Youth unemployment (ages 16–24) fell to 16.1 percent in February 2026, officially described as “eight consecutive months of decline.”
- The youth unemployment figure excludes students after a 2023 statistical revision and remains higher than comparable rates in the U.S. (9.5 percent) and EU (15.1 percent).
- More concerning, unemployment among ages 25–29 rose to 7.2 percent, and among ages 30–59 to 4.2 percent, indicating a spread into the core workforce.
The push against “involution” (overcompetition) aims to boost corporate profits and wages through administrative intervention. However, such top-down measures risk further suppressing market vitality. With the ongoing downturn in real estate, construction and related sectors have sharply reduced their capacity to absorb labor. The promotion of “new employment forms” essentially channels displaced workers into low-security gig sectors (e.g., delivery, livestreaming). While statistically counted as employment, this undermines the quality dimension of “common prosperity.”
ii) The second commentary focuses on reshaping income distribution into an “olive-shaped” (middle-heavy; middle-income group) structure. However, it avoids a key question of whether the PRC government has the means to transfer wealth back to households with a high fiscal deficit (actual national deficit rate reaching around 7.2 percent).
The commentary notes that rural income growth outpaced urban by 1.8 percentage points. But much of this growth relies on government transfers rather than productivity gains. Indeed, central transfers have become the primary support for local governments, which face severe fiscal stress after losing land revenue.
The goal of doubling the middle-income group to 800 million people contrasts with reality. For one, expected wage growth in 2026 is only 3.19 percent, lower than in previous years. Also, civil servants and employees at state-owned enterprises are facing pay cuts or reduced bonuses. This downward alignment contradicts Beijing’s narrative of expanding the middle class.
The emphasis on “tertiary distribution” (charity) reflects another contradiction. In a system with weak rule of law and heavy government intervention, tertiary distribution often becomes quasi-taxation on private enterprises, undermining business confidence rather than reducing inequality.
iii) The third commentary highlights social security improvements, such as a 20 yuan monthly increase in the minimum basic pension. However, the commentary neglects to mention several points. For rural elderly relying on basic pensions, 20 yuan equals roughly the price of one kilogram of pork. With food prices rising 1.7 percent in February 2026, the real purchasing power gain is nearly zero. Meanwhile, the average pension level (246 yuan/month) remains far below the rural subsistence threshold (~600 yuan).
More critically, the sustainability of Beijing’s social security improvements is questionable. Publicly available research suggests China’s pension system could enter a current account deficit around 2028.
The goal of equalizing public services (公共服務均等化) also conflicts with administrative fragmentation (行政邊界). The PRC’s 2026 budget execution report criticizes local governments for continuing to use illegal tax incentives to attract investment, reflecting a cutthroat competition among regions to seize limited fiscal revenue sources. Under such competition, the rights of the migrant population (such as migrant workers) to education for their children and medical care remain tethered to the hukou (household registration) system. Consequently, the “allocation of resources based on the resident population” — as advocated in the commentary — remains largely a policy aspiration rather than an achievable goal.
iv) The fourth commentary promotes “Healthy China” and highlights AI-driven medical transformation, including medical revolution driven by AI, smart oxygen chambers, and biomanufacturing.
Utilizing AI as a panacea for the shortage of grassroots healthcare is a classic example of the CCP’s “technical leapfrogging” (技術躍遷) mindset. In 2026, China’s grassroots hospitals are facing not just technical hurdles, but a “crisis of survival” as land-based financing dries up (due to the property market downturn) and local government allocations to grassroots medical institutions shrink. Also, while the “sanming healthcare reform” (三明醫改, or cost control through aggressive government caps on drug prices and physician compensation) promoted in the commentary could lower the individual burden in the short term, without supporting fiscal investment, it leads to a long-term decline in the quality of grassroots care and a “brain drain” of talented doctors.
The commentary notes that the proportion of out-of-pocket health expenditure has dropped to 27.5 percent. While this figure appears impressive, it masks the fact that so-called “catastrophic household expenditure” due to major or chronic illnesses remains widespread. In 2025, although the number of people enrolled in China’s basic medical insurance exceeded 1.33 billion, reimbursement rates vary drastically across different regions and hospital tiers. For low-to-middle-income groups, access to healthcare remains extremely fragile.
2. A comparison of the four Xinhua commentaries with earlier policy documents shows that Beijing has redefined and realigned the concept of “common prosperity” toward regime security. For example, the prominence of common prosperity as a guiding principle was diluted in the recommendations for the 15th Five-Year Plan and replaced by priorities such as “creating a world-class business environment” and “political security.” Most notably, “social governance” was removed from the section on people’s livelihood and shifted to the “national security” section. In doing so, the CCP is signaling that livelihood issues are not purely matters of social welfare, but are “sources of risk” affecting regime stability.
Signs of Beijing’s policy shift in the four commentaries include:
- The first commentary states that “employment is the foundation of people’s livelihood, and even more importantly, the ‘ballast stone’ of social stability.” Also, “high-quality and full employment must be made a priority goal of economic and social development, and large-scale unemployment risks must be prevented and defused.” This suggests that the CCP believes that the “ship” of Chinese society is at risk of capsizing when employment becomes unstable.
- The second commentary states that “efforts must be strengthened to precisely identify low-income groups … while also regulating the order of income distribution, cracking down on illegal income, and maintaining economic and social order.” Here, income distribution is not merely about “sharing wealth,” but about maintaining “order.” Incorporating distribution into a framework of regulation and control effectively transforms it into an issue of governance and security.
- The third commentary states that “improving the social security system is not only a livelihood project, but also a strategic project related to the Party’s governing foundation and the long-term stability of the nation.” This explicitly elevates social security to the level of “governing foundation” and “national security (long-term stability),” rather than simply improving living standards.
- The fourth commentary states that “the 15th Five-Year Plan period is a critical stage for achieving decisive progress in building a Healthy China … The people’s health must be placed in a strategic priority position.” This indicates that Beijing aims to prevent local governments from aggressively expanding welfare programs in pursuit of superficial “common prosperity” metrics, which could otherwise trigger fiscal collapse or social instability (both are framed as “security issues”).
3. These four Xinhua commentaries construct an appealing vision of the “Chinese Dream”: jobs for everyone, rising incomes, accessible healthcare, and security in old age. However, China’s shaky fiscal conditions in 2026 suggest prospects starkly differ from what is advertised by the official narrative.
The year 2026 marks the final sprint phase of local government hidden debt restructuring. The central government’s approval to raise the debt ceiling by 6 trillion yuan and to allocate 800 billion yuan annually for special bond swaps essentially converts local governments’ unpayable “high-interest private debt” into “low-interest public debt.” It is estimated that this will save 600 billion yuan in interest expenses over five years. These savings, however, are not directed toward funding livelihood improvements, but rather toward filling fiscal gaps left by the collapse of the real estate sector.
The year 2026 is also the fifth year of China’s real estate market downturn searching for a bottom. Since land sales once accounted for 30 percent to 40 percent of local fiscal revenue, the exhaustion of this income source has directly weakened the capacity of local governments to provide public services. The so-called “high-quality real estate development” mentioned in the commentaries essentially refers to government attempts to take over unfinished projects and convert them into affordable housing. Yet this approach requires massive subsidies which current government debt levels severely restrict.
The current “common prosperity” policy is fundamentally defensive. It is not about redistributing wealth during times of fiscal surplus, but about reallocating existing resources and restructuring order after the disappearance of growth dividends. Through high-frequency propaganda, the Party seeks to mask its sense of powerlessness in the face of structural economic slowdown. A modest 20-yuan pension increase, revised unemployment metrics, and jargon-filled visions of AI-driven healthcare together create an image of prosperity. Yet beneath this facade lie heavily leveraged public finances and an increasingly anxious middle class.
During the 15th Five-Year Plan period, the PRC’s real challenge lies in how to sustain an economy that has already exhausted the next 30 years of land revenue and demographic dividends — all without undertaking substantive political reforms. What the official commentaries aim to convey is “confidence,” but what economic laws ultimately impose is “cost.” If the distribution system does not shift from a power-oriented model to one based on market mechanisms and rights, then “common prosperity” may ultimately become little more than rhetorical packaging for “common austerity.”
2 Xi visits Xiong’an New Area to ‘jumpstart’ a stalled political legacy project
On March 23, Xi Jinping visited the Xiong’an New Area in Hebei Province where he chaired a symposium on advancing the high-quality construction and development of Xiong’an. Accompanying Xi in Xiong’an were PRC premier Li Qiang, director of the General Office of the Central Committee Cai Qi, and vice premiers Ding Xuexiang and He Lifeng. Also present were Beijing municipal Party secretary Yin Li, Tianjin Party secretary Chen Min’er, PRC state councilor Wu Zhenglong, as well as officials from relevant central and state organs, military units, and various persons-in-charge from Beijing, Tianjin, Hebei, Xiong’an New Area, and related enterprises, per PRC state media reporting.
At the symposium, Zheng Shanjie (chairman of the National Development and Reform Commission), Ni Yuefeng (Hebei Provincial Party secretary), and Zhang Guohua (Party secretary of the Xiong’an New Area) delivered speeches in succession.
After listening to the officials, Xi delivered an important speech. He emphasized that Party Central’s decision to build Xiong’an New Area was “entirely correct.” Xi emphasized that Xiong’an should be developed into a new “innovation high ground” for the new era and a “model of high-quality development.”
During the visit, Xi Jinping also toured China Huaneng Group, one of the PRC’s five largest electricity generation state-owned enterprises. According to mainland media reports, more than 1,000 employees from Huaneng Group’s headquarters and related subsidiaries relocated to Xiong’an New Area in October 2025. Xi also visited the Xiong’an campus of Beijing No. 4 High School, which was built with assistance from Beijing and put into use in August 2023. The school currently has just over 380 students.
Our take
Since its establishment in 2017, the Xiong’an New Area has been caught in a sharp tension between political prestige and economic neglect. As a flagship project “personally planned, personally deployed, and personally promoted” by Xi Jinping, Xiong’an is not just another CCP urban planning endeavor, but a material symbol of Xi’s personal authority and historical legacy. Xiong’an, however, lacks spontaneous economic vitality and organic demand, partly due to its poor geographical location and limited enthusiasm from private enterprises.
Xi’s renewed focus on developing Xiong’an in March 2026 comes off as a political performance in which the top leader personally intervenes in and mobilizes resources to forcibly prop up an “unfinished legacy” (爛尾遺產).
1. Xi Jinping’s fixation on the Xiong’an New Area stems from the deep binding of the project to his political legitimacy. Because Xi’s legacy is at stake, his statement at the March 2026 symposium that Party Central’s decision to build Xiong’an is “entirely correct” comes off as a defensive statement that reveals underlying anxieties: Xiong’an cannot fail as its failure would signify the bankruptcy of the “Xi-style governance model.”
Each generation of CCP leaders have adopted their own special project and area to mark out their political legacy. For instance, Deng Xiaoping had Shenzhen and Jiang Zemin had Pudong. Xi Jinping is striving to demonstrate that he can transform, through sheer will of governance, the “blank slate” that is Xiong’an into a development project that surpasses earlier market-driven models. Amid China’s current economic slowdown and fiscal strain, failure in Xiong’an would draw further scrutiny of Xi’s governance model and amplify critical voices within the Party. Therefore, Xi’s high-profile visit to Xiong’an is a bid to prolong the “life” of his political legacy and ensure that bureaucrats dare not reduce their support of it even as their funds grow scarce.
Xi’s high-level entourage (including several members of the Politburo Standing Committee and Party bosses from key municipalities) in Xiong’an sends the signal that the development of Xiong’an is not merely a local issue, but a “Party-wide” matter. Politically, this forces the CCP bureaucracy to share responsibility for this massive sunk cost, as well as elevates Xiong’an from an economic project to a litmus test of political standing (政治站位).
2. To create an image of “vibrant growth,” Xi’s inspection focused on carefully selected “showcase examples,” namely, China Huaneng Group and the Xiong’an campus of Beijing No. 4 High School.
Huaneng Group relocated more than 1,000 employees from its headquarters to Xiong’an in October 2025. While this was hailed as a major achievement, the move was in fact a “forced relocation” driven by administrative orders. For central state-owned enterprises, moving away from Beijing’s political center and resource networks can reduce decision-making efficiency. The company’s current “prosperity” is also highly dependent on administrative allocations. Therefore, the move by enterprises like Huaneng to Xiong’an is driven more by the need to fulfill “political tasks” than by any genuine demand for market expansion.
Meanwhile, Beijing No. 4 High School has just over 380 students and relies on extremely high fiscal subsidies and administrative support to operate. The CCP authorities have attempted to attract talent by relocating elite schools to Xiong’an, yet in reality, highly skilled residents of Beijing often adopt a form of “soft resistance” to administrative requirements where they end up working in Xiong’an while continuing to live in Beijing. The government-funded “education enclave” in Xiong’an is unlikely to generate a natural and self-sustaining social ecosystem in the long run unless things drastically change on the ground.
3. Xi Jinping has incurred enormous economic costs, along with alarming levels of debt and resource misallocation, in striving to sustain his unfinished and inconclusive political project. Official data show that as of March 2026, cumulative investment in the Xiong’an New Area has exceeded 1 trillion yuan, with a claimed permanent population of 1.41 million.
Xiong’an’s construction relies heavily on fiscal transfers and debt refinancing. Budget adjustments in 2025 indicate that the local government’s debt ceiling has already reached 282.453 billion yuan. Much of the 1 trillion yuan investment has been spent on non-productive infrastructure — such as the grand but sparsely used Xiong’an railway station — and public landscaping projects. Against the backdrop of nationwide fiscal tightening in China, this kind of “no-return-considered” investment is draining both Hebei’s and the central government’s financial resources.
In contrast to the grand urban project, local residents face the risk of so-called “falling back into poverty.” Around 500,000 farmers have lost their homesteads and original economic networks due to relocation, receiving in exchange resettlement housing plagued by quality issues (such as leaks and ground subsidence) while also having to pay out of pocket for additional space. During his visit to Xiong’an, Xi emphasized the need to ensure that “people can live securely.” But in reality, resettlement areas lacking industrial support are gradually turning into high-rise “poverty enclaves” with significant social risks.
4. In his important speech in Xiong’an, Xi urged all government departments to strengthen their “sense of the overall situation” and to push financial institutions and research organizations to further relocate to the city. This indicates that despite multiple central government inspections and initiatives, Xiong’an still lacks endogenous momentum to attract businesses and talent.
One key factor for Xiong’an’s plight is geography. Located in the low-lying North China Plain, Xiong’an faces serious water scarcity and flood risks. During the major floods of 2023, the decision to sacrifice Zhuozhou to protect Xiong’an severely damaged the moral legitimacy of this so-called “city of the future.” This model of decision-making — ignoring geographical realities in favor of geomantic beliefs or the will of the top leader — has ensured that Xiong’an requires continuous government intervention to sustain itself.
For as long as Xi remains in power, Xiong’an will never be officially declared a “failed project,” because new plans (such as the promotional launch of the 15th Five-Year Plan in 2026) will continually be introduced to extend the narrative. However, this is ultimately a race against time and fiscal constraints. As China’s population continues to age rapidly (with Beijing facing a growing pension burden due to the outflow of younger residents), and as long-term economic growth slows, the effectiveness of this “inspection-driven support” will diminish over time.
5. Xi Jinping’s Xiong’an inspection is essentially a political performance that uses declarations of “complete correctness” to mask systemic failure. Instead of the envisioned “growth pole,” Xiong’an New Area is morphing into a massive “political burden” for the Xi leadership.
Xiong’an’s new high-rise buildings belie the dynamism of a bustling market economy, and the gathering of top leaders there belie the city’s struggles to retain genuine talent. The more Xi personally intervenes and promotes the project, the more it reflects the isolation and fragility of a development model that has defied economic laws. Ultimately, Xiongan — with its dubious practical value and trillion yuan-level deficits — appears destined to become one of the costliest and most helpless “unfinished legacies” of the CCP’s authoritarian governance model.
