May 12, 2008, is a day that will forever be embedded in the collective memory of the Chinese people. On the fateful day, an eight-magnitude earthquake hit Sichuan province leaving at least 87,500 people dead. The massive and enormously devastating earthquake also left 21 million buildings damaged and led to economic losses estimated at $86 billion.
The mammoth disaster opened a new chapter in China’s philanthropy, with philanthropic giving surging 30-fold in a single year, from $440 million in 2007 to $16.1 billion in 2008.
Clearly, the earthquake proved to be a cultural turning point that changed the way the Chinese think about charitable giving. Before the event, everybody simply assumed that the state was responsible for dealing with all problems including disasters.
Well, the current year has also seen a surge in charitable donations by the super-wealthy--but for a very different reason (Hint: Not Covid-19).
China’s Big Tech billionaires have lately been loosening the purse strings at a remarkable rate in a philanthropic boom that has coincided with Beijing’s ongoing crackdown on the space.
Last month, Lei Jun, chairman of the world’s second-largest smartphone maker, Xiaomi, made waves after he donated company shares worth $2.2 billion to the Xiaomi Foundation and the Lei Jun Foundation, both of which he co-founded. According to filings to the Hong Kong Stock Exchange, Lei donated 616 million Class B shares worth HK$17.4 billion ($2.2 billion) to the Xiaomi Foundation and the Lei Jun Foundation.
Lei is not the only tech chieftain that has suddenly started feeling generous.
Over the past eight months, no less than five of China’s richest tech billionaires have pledged at least $13 billion of their personal or corporate fortunes to charitable foundations and initiatives, way above donations in previous years.
In April, Pony Ma, the founder of Tencent, pledged $7.7 billion of company money to education, clean energy and village revitalization initiatives.
In May, Wang Xing, founder of food delivery platform Meituan, announced a $2.3 billion donation toward education and scientific research while , Zhang Yiming, founder of ByteDance--the parent company of TikTok--gave $77 million of his own money to set up an education fund in his hometown in Fujian province.
It does not take a genius to connect the dots and see a link between the philanthropic boom by tech moguls and Beijing’s ongoing crackdown on the tech sector.
China's bubbling tech sector has been hit with a massive regulatory storm ever since Alibaba Group Holdings (NYSE:BABA) founder Jack Ma criticized his country's government last year for what he called excessive regulations. Beijing hit back by cancelling the much-anticipated IPO of Ma's Ant Group--the world’s largest fintech--before putting the company through a "rectification" process and announcing it would henceforth "prevent the disorderly expansion of capital." Regulators then turned their sights on Chinese ride-hailing giant Didi Global Inc. (NYSE:DIDI) for alleged data security violations before China's antitrust administrator ordered Tencent Music Entertainment (NYSE:TME)) to give its exclusive music licensing rights for online music.
It’s probably not a coincidence that Wang Xing has given away the billions just as his company was being probed by antitrust authorities with Meituan’s peer, Alibaba, slapped with a record-breaking $2.8 billion penalty just weeks prior.
According to Winston Wenyan Ma, author of The Digital War: How China's Tech Power Shapes the Future of AI, Blockchain, and Cyberspace, behind the wave of government crackdown are concerns by the state that certain industries are “benefiting a small group at the expense of broader prosperity.’’
Beijing’s latest five-year economic plan unequivocally states the government will focus on public welfare and reducing social inequality.
Aligning with the ruling party
Tencent was careful to emphasize its willingness to contribute to public welfare in its memo after pledging the massive donation :
“...fund initiatives in areas including science, education, rural revitalization, carbon neutrality…and public welfare. [We are] committed to…tackling [these] issues [which are] priorities under China’s new development pattern. [We] should continue to respond to the ever-changing needs of the public and of the era, so as to develop and prosper together with society as a whole.”
It would be naive to expect the charitable contributions to fully placate authorities or help China’s Big Tech to escape Beijing’s regulatory whip. However, experts say billionaires can still use them to signal that their priorities are aligned with the ruling party’s. Naina Batra, CEO of AVPN, says China’s philanthropic sector spearheaded by the super rich is increasingly being used to reduce income inequality given the country’s inefficient secondary distribution due to the massive scale and complexity of the economy.