Alibaba Jumps Into China’s “Common Prosperity” Bandwagon With $15.5 Billion

Updated on

Chinese technology and e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) will invest $15.5 billion by 2025 in support of Chinese President Xi Jinping’s “common prosperity” initiative, according to local media.

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2021 hedge fund letters, conferences and more


As reported by CNN, the funds from Alibaba will go to areas such as subsidies for small and medium-sized businesses, and improvements in labor insurance for temporary workers –drivers and couriers.

The Chinese government has been encouraging companies to share their wealth to reduce economic inequality in the country.

Similar announcements have been made by Tencent Holdings Ltd (HKG:0700) –which also pledged $15.5 billion– and Geely Automobile Holdings Ltd (HKG:0175).

Beijing has pledged to strengthen oversight of its big tech companies, which are among the richest in the world, citing concerns that they have built market power that stifles competition, misuses data, and violates consumer rights.

Alibaba is also preparing the “Prosperity Advancement Working Committee,” to be led by Chairman and CEO Daniel Zhang.

“Alibaba is a beneficiary of the strong social and economic progress in China over the past 22 years. We firmly believe that if society is doing well and the economy is doing well, then Alibaba will do well,” Zhang said in a statement on Friday.

Turning Things Around

“We are eager to do our part to support the realization of common prosperity through high-quality development,” he added.

Xi Jinping has turned the paradigm of “common prosperity” into a goal for the Chinese Communist Party, as state media has been increasingly underlining how important it is to redistribute wealth for the benefit of the country.

The term has been an essential moto of China’s economic approach, ever since the days of Chairman Mao Zedong. The Communist then-leader also waved the flag of “common prosperity” with the purpose of mobilizing peasants and seize power and topple the rural elites.

Earlier this year, Alibaba itself was hit with a record $2.8 billion fine over monopoly accusations. Since then, the e-commerce giant has been facing questions about regulatory scrutiny, although executives have emphasized that the issue has been resolved.

As reported by Bloomberg, China’s Antitrust Regulator is also increasing the pressure on other giants like Meituan (HKG:3690) and DiDi Global Inc – ADR (NYSE:DIDI), ordering them and Alibaba to rectify their “disorderly expansion” by the end of the year.