the e-commerce giant Alibaba Group said on Friday it would spend $15.5 billion to support the president’s campaign Xi Jinping to spread China’s prosperity more evenly, increasing the promises of tech companies that are under pressure to pay for the Communist Party’s policy initiatives.
With the news, Alibaba shares fell 3.57% in Hong Kong. In New York, the shares retreated 1%.
Alibaba said it will invest in 10 projects to create jobs, “take care of vulnerable groups” and technological innovation. Its 100 billion yuan ($15.5 billion) pledge includes 20 billion yuan ($12.5 billion) for a fund to “cut income inequality” in the company’s home province of Zhejiang, south of Shanghai.
Alibaba and other Chinese technology giants, including games and social media service Tencent Holdings Ltd, announced plans to invest in social welfare, technology development and other priorities of the ruling party in response to pressure to align with Beijing’s political and economic plans.
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Xi’s “common prosperity” campaign calls for spreading the benefits of China’s economic growth more widely and bridging one of the world’s biggest gaps between an elite with more billionaires than the United States and a poor majority in the population of 1.4 billion.
“We firmly believe that if society is doing well and the economy is doing well, then Alibaba will perform well,” CEO Daniel Zhang said in a statement.
Beijing has been unleashing anti-monopoly, data security and other crackdowns on internet industries since late 2020 in an effort to tighten control over companies the ruling party fears are large and independent.
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The ruling party has tolerated a widening gap between China’s rich and poor as the economy prospered over the past three decades. Xi, who took power in 2012, called for a renewal of the party’s “original mission,” which includes eradicating poverty, increasing income and directing investments into strategic technology and other initiatives.
Tencent pledged 50 billion yuan ($7.7 billion) last month for “common prosperity” initiatives in health, education and rural development. This doubled the company’s spending on corporate social responsibility.
Another e-commerce company, Pinduoduo Inc. last month pledged to spend $1.5 billion on agriculture and other rural development projects.
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Alibaba posted a profit of 45.1 billion yuan ($7 billion) for the quarter ended June.
the founder Jack Ma, who stepped down as president in 2019, has long been one of China’s most prominent charitable donors. His foundation sent medical supplies to Africa during the coronavirus pandemic and contributed to education, health and environmental causes.
Alibaba posted a profit of 45.1 billion yuan ($7 billion) for the quarter ended June — Photo: Chinatopix via AP