Another week dominated by “common prosperity” and a few related issues. This is the policy announced last month by the leader, Mr Xi, to create a more equal society by spreading wealth around, with a key means being philanthropy. That is, companies and the rich are being encouraged to get in front of this whole campaign by making donations and allocations to philanthropic organizations and projects which will reduce the pressure on them. But how much to give? What is the number and how is it calculated? No one knows.
Meituan announced that not only would they make substantial donations, but also that the ideas of common prosperity and philanthropy where already “intrinsic to our business.” Alibaba announced that it had allocated RMB 100 billion to the cause over the next five years, the equivalent of $15.5 billion, or two-thirds of its net income for 2020, matching an earlier announcement by Tencent for exactly the same amount. But the opacity of the deal is its most prominent feature.
Also, as part of the common prosperity push, the government announced increased lending for SMEs and individual-operated businesses. Meanwhile, there was a sudden crackdown on the entertainment industry, from the financing side all the way to celebrity culture. The message? Follow the plot from the Center. You may make lots of money from your latest movie and you may have millions of fans, but the top priority is still to stay in line.
Interesting times, all in all. Enjoy the weekend.