Why do Chinese billionaires suddenly feel so generous? | Business and Economic News

Why do Chinese billionaires suddenly feel so generous? | Business and Economic News


Shenzhen, China– Chinese billionaires have recently become very generous. In recent months, Wang Xing, chairman and founder of food delivery giant Meituan, has donated approximately US$2.7 billion in stocks to his personal charity, as well as several other large gifts.

After e-commerce giant Pinduoduo’s founder Huang Kelin resigned as chairman of the company in March, he donated approximately US$1.85 billion to the education fund. Earlier this year, He Xiangjian of Midea’s home appliance empire and Xu Jiayin of Evergrande’s real estate empire allocated approximately US$975 million and US$370 million for poverty alleviation, medical and cultural projects, respectively.

The generous list is endless. Billionaires like Zhang Yiming, the founder of Douyin’s parent company Bytedance, donated about 77 million U.S. dollars to education in his hometown of Longyan, Fujian. Former Olympic diving star Guo Jingjing donated 10 million U.S. dollars for education. Wuhan.

But behind this wave of private gift giving involves the hands of the Chinese government.

According to the Hurun Global Rich List for 2021 released earlier this year, with more than 1,058 billionaires, China now has more super-rich people than any other country on the planet-including the capitalist bastion of the United States. The surge in wealth has made Beijing increasingly worried that the gap between the rich and the poor may become a problem of Communist rule, whether in concept, in reality, or a combination of both.

Wang Xing, chairman and founder of food delivery giant Meituan, donated approximately US$2.7 billion in stocks to his personal charity this year to promote scientific research and education [File: Takaaki Iwabu/Bloomberg]

Charity starts at home

Analysts say that for the Chinese Communist Party (CCP) and the elites who support the political system, rising wealth inequality is seen as a threat to their control of power.

“I think income disparity is a big problem for the elite, but there will always be something beyond that, because the final income disparity itself is not a problem, really; the problem is what the income disparity produces,” Senior Lecturer Tom, Australian National University Cliff said that he studied China’s business elite.

“I think the elites don’t actually care about people,” Cliff told Al Jazeera. “I think they care about what the huge income gap will bring to the entire structure that allows them to maintain their elite status.”

Since Alibaba co-founder and former CEO Jack Ma clashed with national leadership at the end of last year and the government launched a large number of regulatory actions and directives aimed at curbing its growing power, Chinese entrepreneurs, especially its technology giants, Has been receiving attention.

The many activities that these entrepreneurs have become accustomed to – accumulating huge amounts of wealth, operating like capitalists elsewhere, expressing their personalities, establishing charitable foundations and educational institutions in their name – will be in the next few years in China under President Xi Jinping. The more and more impossible it will be tolerated.

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

Since Xi Jinping visited the museum established by the “satisfied” Qing entrepreneur and philanthropist Zhang Jian at the end of 2020, the state media has continuously sent signals to Chinese billionaires that they should abide by the rules.

In 2020, at the height of the global COVID-19 pandemic, the wealth of China’s super-rich has increased by an unprecedented $1.5 trillion. According to the Bloomberg Billionaires Index, although they suffered a loss of $16 billion in wealth in the first half of 2021, after the regulatory crackdown, they are under increasing pressure to seek charity.

In the latest five-year plan approved by the government in March, Chinese entrepreneurs are encouraged to relax their wallets and give back to the society.

Advocate “creating public welfare”, using charity as a tool for wealth distribution, and promote it in the “third distribution” plan of China’s education system reform and “accelerating the training of scientific and technological, agricultural, and medical talents”.

The third issuance is currently in a stage of rapid development.

Push and pull

Zhou Min, director of the Asia-Pacific Center of the University of California, Los Angeles (UCLA), which focuses on China’s global philanthropy activities, said that modern Western-style philanthropy first took root in China more than a decade ago.

This culminated in September 2010, when American billionaires Warren Buffett and Bill Gates came to China to encourage their ever-expanding super-rich team to engage in charitable activities. However, according to reports, their efforts were partially counterproductive at the time, because some people were afraid that they would need to make public charity pledges and dare not participate in these activities.

This is also a period when civil society and non-governmental organizations have begun to flourish. As Xi Jinping reached the peak of China’s power in 2012 and pushed for laws to restrict activities beyond the direct supervision of the CCP and the government, this prosperity became more restricted.

“These grassroots efforts have declined, but the government is still very strong in promoting charity,” Zhou told Al Jazeera.

“The government has been pushing entrepreneurs to give back to society, but this push is top-down, so it is completely different from the situation of overseas Chinese,” she said. “The government is trying to redirect the wealth of entrepreneurs. They can’t force them, so they put pressure on them.”

Cliff has seen a push on the ground when studying local donations from influential private companies in an industrial zone in Shandong Province over the past ten years—a herald of the latest efforts at the highest level.

He said: “I think the state’s approach to promoting donations by private enterprises is very clear.” “When you are at the local level, you can see things in advance. You can see the trajectory.”

In September 2010, Warren Buffett and Bill Gates came to China to encourage their growing super-rich team to engage in charitable activities [File: Nelson Ching/Bloomberg]

He said that perceiving the direction of the wind has taught private business owners and entrepreneurs at the local level that they must balance their accumulated capital to survive and develop.

“[Business leaders in China] Considering various forms of capital—money, political capital, and social capital—they will consider this in a very comprehensive way,” he said. “They need to maintain a balance between these different forms of capital. Only one will never let you get what you need or what you want. “

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

Emily Baum, associate professor of Chinese history at the University of California, Irvine, said that local-level donations have a long history in China, but for a long time, it has also been a source of tension between individuals and the country, whether it is The imperialist China or the current People’s Republic of China.

If this kind of donation has a greater impact outside the local area, or undermines the state’s authority to provide social services or public works, then it often proves to be problematic.

“When these two forces collide, it remains to be seen what the future of philanthropy will look like,” Baum said of national and nationally renowned entrepreneurs.

“I think entrepreneurs like Jack Ma want to follow a more Western philanthropic model, establish their own foundation, and connect their name to education-related philanthropy. [is in conflict with] The CCP is deeply disturbed by this because education is something they are monitoring,” Baum told Al Jazeera.

Analysts say that there are some dangers in how far Xi Jinping and the CCP are willing to push. The atmosphere of fear may stifle the entrepreneurial efforts and innovations of current business elites, making them look for more outlets instead of the next commercial success.

“Private business owners, especially in the last three years, feel that these things are imminent, just like the state can snatch their assets,” Cliff said. “These people are unobtrusive at the local level. I think some of them are dissatisfied with the state’s promotion and the state’s desire to gain honor for their social welfare activities.”

Another danger is that this latest forced redistribution sends a message to the next generation of innovators and entrepreneurs: the rapid accumulation of wealth may no longer be tolerated, and individuals should not try to guide policy in the future, Baum said.

“I’m sure this sends a signal to the younger generation to be more cautious about the types of activities they participate in and their ambitions to earn such funds or become public-facing entrepreneurs.”

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