Internet giant Alibaba has announced that it will spend around 14 billion Swiss francs on fighting poverty in China. It is questionable whether this step was entirely voluntary.
Alibaba plans to donate CHF 14 billion to fight poverty in China. Other tech companies have also offered large sums of money.
Previously, the government had put pressure on the tech companies and asked them to participate in investments in the country’s infrastructure.
The online retail giant Alibaba wants to support a government campaign against poverty in China with sums of billions. The company announced on Friday that 100 billion yuan (equivalent to a good 14 billion Swiss francs) will be invested in ten job creation programs, the “support for vulnerable groups” and technological innovation. Of this amount, 20 billion yuan will flow into a fund that will curb income inequality in Alibaba’s home province of Zhejiang. “We firmly believe that if society is doing well and the economy is doing well, then Alibaba will do well too,” said CEO Daniel Zhang.
In response to the move, Alibaba was punished by investors: In trading on the Hong Kong stock exchange, the papers lost over four percent on Friday – investors worried about the possible consequences of the billions in investments for the Group’s business figures.
The gap between rich and poor is opening
Experts also see no guarantee in the group’s initiative that Alibaba is safe from further regulations by the state authorities. The ruling Communist Party is putting increasing pressure on Alibaba and other tech giants, such as the chat and game service Tencent, to support political and economic initiatives financially. For example, with the “Common Prosperity” campaign, President Xi Jinping set the goal of distributing the wealth gained through China’s economic growth more evenly and more widely. Currently, an elite that has more billionaires than the United States contrasts with a needy majority in the country of around 1.4 billion people.
For a long time, the leadership in Beijing tolerated that the gap between rich and poor in the People’s Republic widened during the economic boom of the past 30 years. But the Xi, who has been in office since 2012, is now calling for the party to return to its “original mission”, which envisages the eradication of poverty, wage increases and direct investments in strategic technology and other initiatives.
For some time now, China has been keeping companies from the technology sector, which has grown unchecked for years, on a tight leash. Alibaba itself received a record fine for allegedly exploiting its dominant position. Since the end of 2020, China has been tightening the reins of its tech giants in terms of fair competition, data security and other standards. The controls attribute observers to concerns of the management that the companies could otherwise become too big and independent.
China’s technology corporations are suddenly in a hurry to get their money out there. Lei Jun, founder of the smartphone manufacturer Xiaomi, transferred shares worth the equivalent of 1.95 billion Swiss francs to a charitable foundation. The internet retailer Pinduoduo announced that it intends to provide 1.4 billion for the development of the poorer rural regions of China. And the internet giant Tencent is also making the equivalent of seven billion francs in donations.
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(AFP / trx)