Wealth Redistribution With Chinese Characteristics

TENCENT’S NEW 50 BILLION YUAN ($7.7 billion) ‘common prosperity’ fund — the name is no accident — provides a high-profile template for corporate China’s compliance with President Xi Jinping’s stricture that high-income groups and enterprises return more to society. In his first public appearance since the annual Beidaihe leaders retreat, always a symbolic event, Xi told a meeting of the Central Committee for Financial and Economic Affairs earlier this wee that ‘common prosperity’ is the essential requirement of socialism.

In April, Tencent, which owns the leading social media platform, WeChat, announced a similar-sized fund to support ‘sustainable societal innovation’. Taken together, they suggest that ‘common prosperity’ is more than a slogan and that Xi sees addressing resentment over inequality, which is extreme in China, as the next Party campaign to ensure its monopoly grip on power. 

New taxes on wealth and the superwealthy are likely, eventually. Meanwhile, firms and wealthy individuals will be making similar ‘donations’ to Tencent’s to head off the continuing regulatory assault on business, or worse, asset confiscation, and to put themselves in good political standing.

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