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


Shenzhen, China – Chinese billionaires have become terribly generous lately. In recent months, Wang Xing, president and founder of food delivery giant Meituan, has donated around $ 2.7 billion in shares to his personal charity for the promotion of scientific research and development. education, as well as several other important gifts.

After Colin Huang, founder of e-commerce giant Pinduoduo, stepped down as chairman of the company in March, he donated around $ 1.85 billion 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 around $ 975 million and $ 370 million respectively on poverty reduction, healthcare. medical and cultural programs.

The list of largesse goes on and on, with billionaires like Zhang Yiming, founder of ByteDance, parent of TikTok, donating around $ 77 million for education to his hometown of Longyan in Fujian Province, and with former great Olympic diving Guo Jingjing donating $ 10 million to the city. from Wuhan.

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

With more than 1,058 billionaires, according to Hurun Global Rich List 2021 data released earlier this year, China now has more ultra-rich than any other country on Earth, including the capitalist stronghold of the United States. This increase in wealth increasingly worries Beijing that the gap between rich and poor could become a problem for the Communist Party government, either in perception or in reality or both.

Wang Xing, president and founder of food delivery giant Meituan, donated around $ 2.7 billion in shares to his personal charity for the promotion of scientific research and education this year. [File: Takaaki Iwabu/Bloomberg]

Charity starts at home

For the Chinese Communist Party (CCP) and the elites that support the political system, growing wealth inequality is seen as a threat to their grip on power, analysts say.

“I think income disparity is a big concern for elites, but there will always be things that will win out because at the end of the day, income disparity itself is not really the problem; the problem is what produces the income disparity, ”said Tom Cliff, senior lecturer at Australian National University who has studied business elites in China.

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

Chinese entrepreneurs, especially its tech titans, have come under fire since Alibaba co-founder and former CEO Jack Ma clashed with the country’s leadership late last year and the government shut down. unleashed a torrent of regulatory action and guidelines aimed at containing their growing power.

Many of the activities to which these entrepreneurs had become accustomed – accumulating vast wealth, functioning as capitalists elsewhere, expressing their individuality, creating charitable foundations and educational institutions on their behalf – are less and less likely to be tolerated in President Xi Jinping’s China in the years to come.

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

Continuous messages from state media since Xi visited a museum in late 2020 set up by “virtuous” Qing dynasty entrepreneur and philanthropist Zhang Jian have signaled Chinese billionaires that they should line up.

The ultra-rich Chinese added an unprecedented $ 1.5 trillion to their wealth in 2020 at the height of the global COVID-19 pandemic. Although they suffered losses of $ 16 billion on their fortunes in the first half of 2021, according to the Bloomberg Billionaires Index, following the regulatory crackdown, pressure has increased to regain their philanthropic spirit.

The government’s latest five-year plan approved last March has further encouraged Chinese entrepreneurs to loosen their purse strings and give back to society.

Advocating the “creation of public welfare”, he promotes charity as a tool of wealth distribution with the “third distribution” in the plan to reorganize the Chinese education system and “accelerate the cultivation of talents” in the sciences, technology, agriculture and medicine.

This third distribution is currently in high gear.

Push and pull

Modern Western-style philanthropy took root in China just over a decade ago, according to Min Zhou, director of the Asia-Pacific Center at the University of California at Los Angeles (UCLA), who tracks China’s activities in global philanthropy.

This culminated in September 2010, when American billionaires Warren Buffett and Bill Gates came to China to encourage its growing ranks of the ultra-rich to engage in charitable activities. But their efforts were also said to have partially backfired at the time, as some were afraid to attend events for fear of needing to publicly engage in charity.

It was also around a time when civil society and non-governmental organizations were starting to flourish, a flowering that became more limited once Xi rose to the top of Chinese power in 2012 and pushed forward laws to restrict them. activities outside the direct control of the CCP and the government.

“There has been a decline in these grassroots efforts, but the government has always been very firm in promoting philanthropy,” Zhou told Al Jazeera.

“The government has pushed entrepreneurs to give back, but this push is more top-down, so very different from what is happening in the Chinese diaspora,” she said. “The government is trying to redirect the wealth of entrepreneurs. They can’t force them, so they pressure them to do it.

Cliff has seen this surge on the ground over the past decade by studying local donations from influential private companies in an industrial zone in Shandong province – donations that foreshadowed later efforts at the highest level.

“I think the pressure from the state for private companies to donate has been pretty clear,” he said. “When you’re at the local level, you can see things ahead. You can see the trajectories.

In September 2010, Warren Buffett and Bill Gates came to China to encourage its growing ranks of the ultra-rich to engage in charitable activities. [File: Nelson Ching/Bloomberg]

Sensing which direction the wind is blowing has taught private business owners and entrepreneurs at the local level how much they must balance the capital they accumulate in order to survive and thrive, he said.

“[Business leaders in China] think about various forms of capital – money, political capital and social capital – and they think about it in a very holistic way, ”he said. “They need proportionality between these different forms of capital. Having just one will never get you what you need or want.

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

Local donations have a strong history in China, according to Emily Baum, associate professor of Chinese history at the University of California, Irvine, but they have also long been a source of tension between individuals and the state, which ‘this is Imperial China. or the current People’s Republic.

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

“It remains to be seen what the future of philanthropy will look like when these two forces collide,” Baum said of the state versus leading entrepreneurs nationwide.

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

There is some danger in how far Xi and the CCP are willing to push, analysts said. A climate of fear could stifle entrepreneurial efforts and innovation for today’s business elite, leaving them more searching for solutions than their next business success.

“Private business owners, especially in the past three years, feel that these things are looming, as if the state could take over their assets,” Cliff said. “These people, who are at the local level, not in the limelight, I think some of them resent the push by the state and the state wanting to take credit for it. of their social protection 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 individuals should not try to run politics at home. future, Baum said.

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


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