Chinese e-commerce giant Alibaba has pledged to invest 100 billion yuan towards President Xi Jinping’s ‘common prosperity’ vision, joining a growing legion of tech giants in embracing the Chinese leader’s goal to address the worrying wealth gap among its citizens.
Tencent Holdings had previously announced its intentions to dedicate some $15 billion towards social responsibility initiatives with Pinduoduo also earmarking $1.5 billion in future profits towards bolstering the country’s agriculture sector.
The latest development also arrives on the heels of several Chinese billionaires – of which there are 81 on Bloomberg’s 500 wealthiest people list – loosening their purse strings in response to the Chinese government’s clarion call for the country’s richest to redouble their philanthropic contributions to society as a ‘moral obligation.’
What is ‘common prosperity’?
Marking the commencement of his second term at the country’s helm, President Xi Jinping, in 2017, made reference to the ‘common prosperity’ goal – a vision to transform China into a more egalitarian society.
The idea is not exactly new and was first introduced by Mao Zedong in the 1950s. Under the leadership of Deng Xiaoping, China grew increasingly liberalised, paving the way for an economic revolution based on growth and market reforms that has seen its economy morph into the second-largest in the world.
But, while the country has made immense progress in addressing poverty, more than half of its population, reportedly, still earn annual incomes of 12,000 yuan ($1.858) or less. In the meantime, Chinese entrepreneurs have accumulated huge fortunes and, as per a Bloomberg report, the richest 20 per cent in the nation now earn over 10 times that of the poorest 20 per cent, reflecting a widening wealth gap larger than those observed in other developed economies including the US, Germany and France.
How is ‘common prosperity’ taking shape?
In recent months, China has taken sweeping measures to address the wealth divide, announcing a complete overhaul of the $100 billion for-profit education sector – including banning tutoring services from turning a profit -, new reforms aimed to keep healthcare and medical costs in check and pressuring ride-hailing and delivery firms to improve wages and conditions for their workers.
In a bid to transform the fabric of its society, it also intends to implement a strict ban on the number of hours minors can play computer/video games and has cautioned against a culture of excessive drinking among corporates.
High-earners are also to come under increased scrutiny as the government clamps down on tax evasion. There is also a growing effort to quell a culture of ‘celebrity’ and ‘stardom,’ which the government has deemed “Western.”
Additionally, there are also reports of new residential property tax in the pipeline aimed at keeping real-estate prices in check by stamping out speculation. Pilot programmes in Shanghai and Chongqing have been underway since 2011.
It is, as yet, unclear whether the Chinese government has a specific deadline in mind to effect these changes but the launch of a pilot program in Zhejiang – one of the wealthiest provinces in China, home to Alibaba and Zhejiang Geely Holding Co – suggests that change will be measured, with one eye on preventing an economy that has thrived on the back of a burgeoning private sector from becoming derailed.
