Chinese e-commerce giant Alibaba said it will invest 100 billion yuan ($15.5 billion) by 2025 in support of the “common prosperity” initiative, making it the largest company to commit to the initiative.
“Common prosperity” is an initiative driven by China’s President Xi Jinping, which seeks to close the widening wealth gap that stands as a threat to the country’s economic ascent and the legitimacy of Communist Party rule. Xi Jumping, set to begin a third term in 2022, recently concluded a campaign to eliminate absolute poverty, pledging to make “solid progress” towards common prosperity by 2035 and “basically achieve” the goal by 2050. According to him, common prosperity is not just an economic objective but a core element of the party’s governing foundation.
Common prosperity does not mean killing the rich to help the poor, a senior party official clarified. And to achieve this initiative, Chinese leaders plan to use taxation and other income redistribution levers to expand the proportion of middle-income citizens, boost incomes of the poor, rationally adjust excessive incomes, and ban illegal incomes.
Since the campaign, China has been encouraging companies to share their wealth as part of the effort to ease inequality in the world’s second-largest economy. Other companies that have shown similar support include Geely Automobile, and Tencent Holdings, which also pledged 100 billion yuan.
Alibaba’s funds will be channelled into areas such as subsidies for small and medium-sized enterprises and improving insurance protection for gig economy workers such as couriers and ride-hailing drivers, according to government-backed Zhejiang News website. The report, which was confirmed by Alibaba, also said that the company will set up a 20 billion yuan “common prosperity development fund.
In the past months, Alibaba, along with other Chinese e-commerce and tech giants have been the target of a wide-ranging regulatory crackdown on issues ranging from monopolistic behaviour to consumer rights. After being under investigation by the Chinese government since December last year for “suspected monopolistic conduct”, Alibaba, in April, was fined $2.8 billion over anti-monopoly violations. The sector has also been criticized for treating its delivery workers and ride-hailing drivers poorly, most of whom, reportedly, are not covered by basic social and medical insurance.
Alibaba’s food delivery platform Ele.me, and supermarket operator Freshippo, were among the enterprises called to a meeting last month with government regulators on improving safety and labour rights for delivery workers. There, the e-commerce giant together with other companies, indicated that they would improve their safety management and labour rights protection in strict accordance with the relevant laws and regulations.