China’s Tech Titans Funding Beijing’s Effort to Close Income Gap

During the three-day World Internet Conference held in Wuzhen, China, this week, the country’s biggest tech tycoons rushed to show their support for Beijing’s “common prosperity” initiative.

Their enthusiasm for the initiative comes amid a yearlong crackdown on the country’s tech industry, where several high-profile companies have faced investigations and fines. Formerly high-flying celebrity CEOs are now keeping a low profile.

Daniel Zhang, CEO at e-commerce giant Alibaba group, said his company’s donation of $15 billion to the initiative over the next five years represented its willingness to help China achieve its goal of prosperity for all.

Zhou Hongyi, billionaire entrepreneur and chairman and CEO of the country’s largest Internet security firm, Qihoo 360, said his company will donate an as yet undisclosed sum to the initiative and step up to help smaller firms thrive.

Stressing the need to develop these enterprises, Zhou said, “Our success depends on our country’s policies. … We must take the initiative to align our development with our national strategies and serve our country with science and technology.”

Lei Jun, CEO of consumer electronics manufacturer Xiaomi, said that technological development must be used to achieve social good and that tech companies should help build a good life for everyone.

Other tech giants, such as technology conglomerate Tencent, online agricultural marketplace Pinduoduo and food delivery platform Meituan, answered Beijing’s call before the Sept. 26-28 gathering, pledging financial support for social causes.

‘Common prosperity’ initiative

During his first eight years in office, Chinese President Xi Jinping occasionally mentioned the term “common prosperity.” Since February, when he declared China had eliminated poverty, “common prosperity” has become one of his favorite themes.

At a meeting of the Communist Party’s Central Committee for Financial and Economic Affairs on Aug. 17, Xi stressed that those who are already rich need to guide and help others achieve prosperity.

“Common prosperity means prosperity for all, not just a few people,” Xi said, according to a meeting note published by China’s state-run Xinhua News Agency. “We can allow some to get rich first, but we must then launch a scientific public policy to make sure every citizen can have their fair share.”

Central to achieving common prosperity is a concept known as the three distributions, first introduced by the Chinese economist Li Yining in the 1990s.

According to the explanation from China’s National Development and Reform Commission, the first distribution of wealth comes through market competition. The second is achieved through the state via taxes, subsidies and social welfare programs. The third distribution taps enterprises and individuals to redistribute their wealth through voluntary donations.

‘Third distribution’

“The target of this round of the common prosperity initiative is the wallet of wealthy domestic entrepreneurs,” said Lu Jun, founder of the influential nongovernmental organization Beijing Yirenping Center, in a phone interview with VOA Mandarin. His NGO focuses on eliminating discrimination and defending the rights of disadvantaged groups.

Wang Hsin-Hsien, a political science professor and chair of the East Asian Studies Institute at National Cheng-Chi University in Taiwan, told VOA Mandarin that businesses are essentially forced to make charity donations under the current system.

“China’s current common prosperity initiative is controlled by the party-state. That means large enterprises must make donations in order to show that they are choosing the right side. So I don’t think these donations will be voluntary,” he told VOA Mandarin via phone.

“This is not the charitable donation we see in Western countries, because eventually the money will be returned to the state for redistribution,” he added.

Meanwhile, analysts say this new wave of donation will not likely help boost China’s civil society.

NGOs under microscope

China has been tightening its grip on NGOs since 2016, demanding they provide specific funding sources and membership information or face being banned.

This year, China announced a new wave of crackdowns targeting NGOs. In May, the Ministry of Civil Affairs started to target “illegal NGOs with measures such as limiting their access to conference venues, publicity resources and manpower,” according to the state-owned news outlet China Daily.

“The moves were part of a sweeping campaign launched last month by the ministry and 21 other central agencies to clamp down on the unregistered NGOs, which have masqueraded as foundations, industrial associations and other nongovernmental groups to rake in money from the public,” China Daily said.

Lu told VOA Mandarin that the NGOs that can survive or get funding will be those that align their goals with the government’s agenda — unlike many NGOs outside China, whose views diverge from those of the government.

“I don’t think this is necessarily good news for NGOs, as I believe the money donated by private companies will go to the government-run or government-affiliated NGOs,” he said of the third distribution.

“Beijing won’t allow companies to donate to independent NGOs freely, let alone the ones they don’t like, such as NGOs working on human rights, labor rights and women’s rights.”  

 
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