Alibaba (BABA) - Get Alibaba Group Holding Ltd. Sponsored ADR Report pledged Thursday to invest more than 100 billion yuan ($15.5 billion) in the Chinese government’s “common prosperity” campaign to foster equitable economic development.
Alibaba said it will devote the money to 10 investments in technology and support for small companies.
Alibaba shares briefly rose on the news but fell back. They recently traded at $172.40, off 0.5%. They have dropped 42% over the past year.
Companies and individual businessmen are pledging billions of dollars to the government’s program.
The government has cracked down on its tech sector, sending shares of numerous big Chinese companies reeling. Chinese officials have accused companies of deploying monopolistic policies and favoring the rich over the poor.
E-commerce titan Pinduoduo (PDD) - Get Pinduoduo, Inc. Sponsored ADR Class A Report promised its next $1.5 billion of profit will go to improve farmers’ welfare. And Tencent TCEHY said it would double its spending on social-responsibility programs to about $15 billion.
Some investors say the rout in China’s stocks has gone too far. They see the government as unlikely to slay the goose that has laid the golden eggs -- the goose being the major technology companies.
What would China’s economy be without its megatech companies? Less successful, certainly. Clearly, the government doesn’t like being criticized by its country's top corporate executives, but throwing out the baby with the bathwater makes no sense.