Alibaba Pledges $15.5 Billion as Chinese Companies Extol Beijing’s Common Prosperity Push
Tencent and others also rush to support government’s initiative
Alibaba Group Holding Ltd. BABA 3.77% vowed to spend the equivalent of $15.5 billion fostering social equality, becoming the latest in a series of big Chinese companies to take up Beijing’s drive for what it calls “common prosperity.”
Businesses and individual entrepreneurs are in some cases pledging billions of dollars to good causes, and companies have quickly adopted the newly popular slogan, as they seek to stay on the right side of President Xi Jinping’s government amid a series of corporate crackdowns.
Alibaba said Thursday it would spend 100 billion yuan, the equivalent of $15.48 billion, by 2025 in support of Beijing’s common prosperity campaign, confirming a report in the Zhejiang News, an outlet run by the provincial branch of the Communist Party.
The report listed a series of uses for the money, including funding for technological innovation, supporting economic growth and agricultural modernization in less developed regions, and bridging the digital divide between urban and rural areas. Alibaba will also support young entrepreneurs and gig-economy workers, and help disadvantaged sectors of society, the Zhejiang News said.
A fifth of the money would help develop Alibaba’s home province of Zhejiang, the local news media outlet said. The ruling Communist Party’s top leadership designated the eastern province as a showcase locality for common prosperity in May.
Alibaba’s pledge is substantial, even for a company of its heft. The e-commerce giant had a market value of about $461 billion as of Wednesday, according to FactSet. Analysts polled by the data provider expect it to generate about $143 billion in revenue in the financial year ending March 2022.
Common prosperity isn’t a new term, but has taken on greater significance recently. It was used by Mr. Xi at a major meeting on financial and economic affairs last month, reflecting his government’s heightened focus on social equality.
That focus helps explain recent clampdowns on powerful technology companies such as Alibaba and Tencent Holdings Ltd. , the gaming and social-media giant, as well as on other businesses seen as contributing to social divides.
A day after Mr. Xi’s comments, Tencent said it would spend the equivalent of $7.7 billion promoting common prosperity this year, by investing in matters such as medical care, education and revitalizing rural areas. It had pledged an investment of equivalent size in April. Tencent was valued at $596 billion as of Wednesday’s market close, according to FactSet.
Businesses in a range of sectors also have jumped on the bandwagon. Companies that have mentioned common prosperity in recent earnings reports include state-owned banking giant Industrial & Commercial Bank of China Ltd. , property developer Logan Group Co., and Ping An Insurance (Group) Co. of China.
“It makes sense for every company in China to align themselves” with the common prosperity push, said Elizabeth Kwik, Asian equities investment manager for Aberdeen Standard Investments.
However, she added: “But it doesn’t mean the government is placing society over earnings or shareholders—they just want companies to play a part and help achieve fair distribution of income.”