Premier Chinese e-commerce group to invest in “common prosperity” initiative.
China’s Alibaba Group is set to invest RMB100 billion (around US$15.5 billion) by 2025 to support “common prosperity,” as part of Beijing’s initiative to encourage Chinese companies to share their wealth within the country.
Alibaba had promised to “support the growth of micro, small- and medium-sized enterprises”, “increase investments in technology to support the digitalization of underdeveloped areas” and “enhance healthcare capability in less developed areas.”
The term “common prosperity” has been a well-established concept within the Chinese Communist Party. It was first mentioned in 1955 by the founding father of the People’s Republic of China (PRC) Mao Zedong in his push to achieve a more egalitarian society and repeated in the 1980s by former leader of PRC Deng Xiaoping, who modernized the economy upon the Chinese Cultural Revolution.
In his recent speeches, Chinese President Xi Jingping has called “common prosperity” the “original quintessence” of socialism. He claimed that it can reduce social inequality and the wealth gap in China, currently the world’s second-largest economy. Beijing’s new five-year plan is pushing for more regulation of the economy to “clean up and standardize unreasonable income and rectify the order of income distribution.”
Bloomberg reported that 73 of China’s listed firms, both state-run and privately-owned, will be making contributions to “common prosperity.” For one, Hong Kong-listed tech conglomerate Tencent Holdings has also pledged RMB100 billion in August this year. The company said half of it would be used for “sustainable social value innovation” and the other half would be donated to social charity programs. The fund aims to boost the earnings of low-income groups, improve health care coverage, help rural economic development and support grassroots education.
In Beijing’s attempt to eradicate market dominance, companies such as Alibaba, faced an anti-monopoly probe in April this year. The company was subjected to an RMB18.23 billion (US$2.8 billion) fine following the investigation. This is part of a wider crackdown on Chinese tech companies as Beijing strives to become a global technological superpower.
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