Why do China’s billionaires suddenly feel so generous? | Business and Economy News


Shenzhen, China – China’s billionaires are becoming terribly generous lately. In recent months, Wang Xing, the president and founder of food distribution giant Meituan, has donated nearly $ 2.7 billion in shares to his personal charity that promotes scientific research and education. along with several other great gifts.

After Colin Huang, founder of e-commerce giant Pinduoduo, resigned as president of the company in March, he donated about $ 1.85 million to an education fund. And earlier this year, He Xiangjian, of the Midea home appliance empire, and Xu Jiayin, of the Evergrande real estate empire, spent about $ 975 million and $ 370 million on relief programs, respectively. of poverty, medical and cultural care.

The list of abundance continues unabated, with some billionaires like Zhang Yiming, founder of ByteDance, father of TikTok, who gives about $ 77 million to his hometown of Longyan in Fujian Province, and the great ex Guo Jingjing Olympic diving giving $ 10 million to Wuhan City.

But behind this wave of private gifts lies the hand of the Chinese government.

With more than 1,058 billionaires according to data from the 2021 Hurun global rich list released earlier this year, China now has more wealth than any other country on Earth, including the U.S. capitalist stronghold. This increase in wealth worries Beijing more and more that the gap between rich and poor can become a problem for the Communist Party government, whether in perception or reality or both.

Wang Xing, the president and founder of food distribution giant Meituan, has donated nearly $ 2.7 billion in shares this year to his personal charity that promotes scientific research and education. [File: Takaaki Iwabu/Bloomberg]

Charity starts at home

According to analysts, for the Chinese Communist Party (CCP) and the elites that strengthen the political system, rising wealth inequality is a threat to control of power.

“I think income disparity is a big concern for elites, but there will always be things that will nullify that, because in reality income disparity is not the problem; the problem is what produces the income disparity. ‘revenue,’ said Tom Cliff, a tenured professor at Australia’s National University who has studied business elites in China.

“I don’t think elites really care about people,” Cliff told Al Jazeera. “I think they care what can cause the massive income disparity for the whole structure that keeps them as elites.”

Chinese businessmen, particularly their tech titans, have been warned since Alibaba co-founder and former CEO Jack Ma led the country’s leadership late last year and the government unleashed a torrent of regulatory actions and directives aimed at containing their growing power.

Many of the activities these entrepreneurs had become accustomed to (accumulating great wealth, working as capitalists elsewhere, expressing their individuality, starting charitable foundations, and educational institutions on their behalf) are increasingly unlikely to be tolerated in China by President Xi Jinping in the coming years.

Olympic diver and world champion Guo Jingjing donated $ 10 million to Wuhan City this year [File: Tim Chong/Reuters]

Continuous messages from the state media since Xi visited a museum in late 2020 set by Qing Dynasty “virtuous” businessman and philanthropist Zhang Jian told China’s billionaires that they should go online.

China’s ultra-rich added an unprecedented $ 1.5 trillion to their wealth in 2020, at the height of the COVID-19 global pandemic. Although they suffered losses of $ 16 billion for their fortune in the first half of 2021, according to the Bloomberg Billionaires Index, as a result of regulatory repression, pressure has been increasing for them to find their philanthropic spirit.

The government’s latest five-year plan approved in March set more incentives for Chinese businessmen to loosen their purse chains and return them to society.

Advocating the “creation of public welfare,” he promotes charity as a tool for wealth distribution with the “third distribution” of the plan aimed at renewing China’s education system and “accelerating the cultivation of talent” in science, technology, agriculture and medicine.

This third distribution is currently underway.

The push and pull

Modern Western-style philanthropy first took root in China a little over a decade ago, according to Min Zhou, director of the Asia Pacific Center at the University of California, Los Angeles (UCLA), which follows the activities of Chinese world philanthropy.

This culminated in September 2010, when American billionaires Warren Buffett and Bill Gates arrived in China to encourage their ultra-rich wealthy infiltrators to participate in charitable activities. But their efforts also partially receded at the time, as some were afraid to attend events out of concern, which should make a pledge of public charity.

This also happened at a time when civil society and non-governmental organizations were beginning to flourish, a flowering that was limited once Xi ascended to the top of Chinese power in 2012 and pushed for laws to reduce activities outside direct supervision by the CCP and the government.

“There was a decrease in these grassroots efforts, but the government has still been very strong in promoting philanthropy,” Zhou told Al Jazeera.

“There has been a push from the government for entrepreneurs to return, but that push is more top-down, so it’s very different from what’s happening in the Chinese diaspora,” he said. “The government is trying to redirect the wealth of business people. They can’t force them, so they pressure them to do it. “

Cliff has seen this boost over the past decade as he studied local donation by influential private companies in an industrial area of ​​Shandong Province, which has foreshadowed recent efforts at the highest levels.

“I think the state effort for private companies to donate has been pretty clear,” he said. “When you are locally, you can see things in advance. The trajectories can be seen “.

In September 2010, Warren Buffett and Bill Gates arrived in China to encourage their bloated rich to become rich in charitable activities. [File: Nelson Ching/Bloomberg]

Detecting how the wind blows has taught private entrepreneurs and local entrepreneurs how much they need to balance the capital they accumulate to survive and thrive, he said.

“[Business leaders in China] think of various forms of capital (money, political capital and social capital) and think about it in a very comprehensive way, “he said.” They need a proportionality between these various forms of capital. Having one will never get you the you don’t even need what you want “.

“I think that’s the same at the elite level,” Cliff said.

Local donations have a strong history in China, according to Emily Baum, an associate professor of Chinese history at Irvine University in California, but it has also long been a source of tension between individuals and the state. whether this was imperial China. or the current People’s Republic.

Whether that donation created a greater influence beyond a locality or undermined the perceived authority of the state to provide social services or public works, has often proved problematic.

“It remains to be seen what the future of philanthropy will be like when we have these two forces sunk,” Baum said of state entrepreneurs versus national ones.

“I think entrepreneurs like Jack Ma who have wanted to follow the more Western philanthropic model, creating their own foundation and giving their name to philanthropic causes related to education, [is in conflict with] the CCP feels deeply uncomfortable with this because education is something they are overseeing, ”Baum told Al Jazeera.

There is some danger to what extent Xi and the CCP are willing to push, analysts say. A climate of fear could stifle business efforts and innovation for today’s business elite, leaving them looking for more ways out than their next business success.

“Owners of private companies, especially in the last three years, feel that these things are being taken advantage of, as if the state could snatch their assets,” Cliff said. “These people, who are at the local level, not in the spotlight, I think some feel resentful of the state’s push and because the state wants to be accredited for its social welfare activities.” .

The other danger is the message that this latest forced redistribution sends to the next generation of innovators and entrepreneurs: that rapid accumulations of wealth can no longer be tolerated and that people should not try to direct politics in the future, said Baum.

“I’m sure it sends a signal to the younger generations to be much more cautious about the types of activities they participate in and their ambition to make that kind of money or just be a public entrepreneur.”

Source link