China’s Big Tech billionaires increase philanthropic giving as Beijing cracks down

August 7, 2021, 12:30 AM UTC

Last month, Lei Jun, chairman of Xiaomi, the world’s second-largest smartphone maker, gave away $2.2 billion in company shares to the Xiaomi Foundation and the Lei Jun Foundation, both of which he cofounded.

Lei isn’t the only Chinese billionaire feeling generous these days.

In the past eight months, five of China’s richest and most high-profile tech billionaires have pledged at least $13 billion of their personal or corporate fortunes to charitable foundations and initiatives, a sum that far exceeds previous years’ totals. In 2019, for instance, only one tech entrepreneur cracked Hurun China’s top 10 list of biggest donors: Tencent cofounder Chen Yidan, who gave $500 million to education-related causes. This year, Colin Huang, founder of online grocery platform Pinduoduo, topped the Hurun China Philanthropy List 2021 with donations totaling $1.9 billion.

The boom in giving coincides with Beijing’s crackdown on the outsize influence of China’s Big Tech giants, suggesting that the entrepreneurs behind the businesses are donating billions to win favor from a government that seems to be scrutinizing their every move.

“It’s hard to believe there is not a direct connection between…the recent generosity and the ongoing government crackdown,” says Dexter Roberts, senior fellow at the Atlantic Council’s Asia Security Initiative and author of The Myth of Chinese Capitalism. “They all now must be aware they could be next in Beijing’s crosshairs; and that by demonstrating this largesse, they might insulate themselves at least a little from any future state action.”

A very charitable year

Beijing’s crackdown on Big Tech firms kicked off last November with its antitrust probe into Alibaba Group. Since then, the state has extended its reach to dig into companies’ cybersecurity and data practices and outlined reforms for the country’s private education sector, putting the $100 billion industry at risk.

As the regulatory campaign has progressed, China’s Internet billionaires have found it easier to dig into their pockets.  

In March, Pinduoduo’s Huang added to his donations, giving $100 million through his Starry Night Foundation to Zhejiang University to support biomedical science, food, and agriculture research.

In April, Internet mogul Pony Ma, the founder of Tencent—best known for its social messaging apps WeChat and QQ—pledged $7.7 billion of company money to clean energy, education, 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, just as his company was being probed by antitrust authorities. The same regulators had just slapped Meituan’s peer, Alibaba, with a record-breaking $2.8 billion penalty weeks prior. (The investigation into Meituan is ongoing, but the Wall Street Journal reported on Friday that China’s antitrust regulator plans to levy a $1 billion fine on the company in the coming weeks.)

That same month, Zhang Yiming, founder of ByteDance—the parent company of viral video app TikTok—gave $77 million of his own money to set up an education fund in his hometown of Longyan in China’s Fujian province. The fund, called the Fangmei Educational Development Fund, is named after Zhang’s grandmothers.

Experts say that while charitable contributions won’t necessarily placate authorities or enable tech firms to escape China’s regulatory whip, billionaires can use them as a grand public gesture to signal that their priorities are aligned with the ruling party’s. “The sudden bout of gift-giving is certainly no guarantee that they won’t be targeted, [but] it certainly won’t hurt them in the eyes of the Party and its top leader, Xi Jinping,” says Roberts.

Behind the government crackdown is state concern about industries that are “benefiting a small group at the expense of broader prosperity,” says Winston Wenyan Ma, author of The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain, and Cyberspace. “Those businesses will face tighter regulation, [but] it’s natural to see China’s tech billionaires making large donations for China’s vision of balanced and common prosperity, [since] China’s mobile Internet growth was mostly driven by ‘diaosi’ or low-income Internet users.”

Beijing’s five-year economic plan, released in March, unequivocally stated the government’s focus on public welfare and reducing social inequality.

The memo accompanying Tencent’s $7.7 billion donation made clear its alignment with Beijing. Tencent will “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.”

Philanthropy with Chinese characteristics

China’s modern philanthropic sector has grown significantly in the past 15 years: 2008 was a turning point for charitable giving in China; donations grew 30-fold to $16.1 billion in a single year, spurred by the Beijing Olympics and the Sichuan earthquake, according to a 2018 study by Asian Venture Philanthropy Network (AVPN) and the Rockefeller Foundation. A decade later domestic giving totaled $23.4 billion.

When the COVID-19 pandemic hit in early 2020, China’s tech firms were at the forefront of relief efforts. The philanthropic foundations led by Alibaba’s then-leaders Jack Ma and Joe Tsai, for instance, donated $476 million in monetary support and supplies such as protective equipment, testing kits, and ventilators to over 150 countries. China’s tech giants also stepped up after the devastating floods in Henan last month; Alibaba gave $38.6 million in aid; while its peers ByteDance, Didi, Meituan, Pinduoduo, and Tencent gave $15 million apiece.

In the West, governments use secondary distribution such as taxation, subsidies, and welfare benefits to reduce income inequality, says Naina Batra, CEO of AVPN. But China’s secondary distribution is not as efficient owing to the scale and complexity of the economy, she says, so the philanthropic sector, largely aided by China’s wealthiest people, is expected to play a sort of “third distribution” role.

While government pressure partly accounts for the recent wave of billionaire gift-giving, analysts say there are other motives at play that are similar to the philanthropic activity of the ultrarich in the West.

Chinese tech billionaires are watching how their Western counterparts are “leav[ing] lasting legacies,” says Rui Ma, host of podcast Tech Buzz China. “They want to [achieve] the same things—to leave a broader mark on society beyond just the business they founded and the wealth they’ve accumulated.”

In coming years, Ma expects entrepreneurs to set up charitable foundations similar to the Bill & Melinda Gates Foundation to facilitate “their second acts in solving different problems than they did for the first part of their life.”

“Many of the government’s priority initiatives, such as climate change, could definitely use more problem-solving abilities from…the private sector,” Ma says. “This will also help improve [entrepreneurs’] stature in the eyes of the public.”

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