Carnegie Reporter, Vol. 4, No. 4 | Philanthropy in China

This overview of the development of philanthropy in China—a relatively new
phenomenon—is part of Carnegie Corporation’s occasional series of articles examining issues relating to philanthropy in the U.S. and internationally.

In a survey of the history of modern China, the names Deng Xiaoping and Li Ka-shing may not immediately seem linked. But think again. Deng, China’s de facto leader for over a decade, unleashed the Chinese economy with a series of reforms begun in 1978 that opened it to global markets and turned a drab, centrally controlled, impoverished country into a dynamic, economic powerhouse. And Li, who benefited from those reforms to become Asia’s richest self-made man, may well do something similar with Chinese philanthropy.

In 2006, Li, who is chairman of Hutchison Whampoa Ltd. and Cheung Kong Holdings in Hong Kong, announced that he would donate a third of his fortune, now estimated as $32 billion by Forbes magazine, to his philanthropic foundations, which support Chinese universities and various other projects around the world. He likened his foundation to his “third son.” Then, last fall, he told the Wall Street Journal that he wanted to set an example of public giving, mimicking the American model, in hopes of prompting other Chinese entrepreneurs to follow suit.

Talk show host Yang Lan (above)
Business leader Li Ka-shing (left)

China certainly has the necessary conditions. Now the world’s fourth-largest economy, it boasts a GDP approaching $2.7 trillion, about one-fifth the size of the U.S. economy. It’s growing at the red-hot rate of around 10 percent a year and creating unprecedented personal wealth. China, including Hong Kong (which is administered separately), has more than 100 billionaires, according to Forbes, which pegs the total net worth of the 400 richest people in China and the 40 richest in Hong Kong at $467 billion. In 2006, the number of Chinese worth more than $1 million grew by nearly 8 percent to 345,000 people—more than the totals of India, Russia and Brazil combined—according to the 11th annual wealth report published last June by Merrill Lynch and Capgemini, a global consulting firm. China, the report says, is also home to about one-third of the Asia-Pacific region’s “super-rich”—those with $30 million or more in assets.

Can philanthropy—which John Peralta, managing director of Global Philanthropic, a Hong Kong consulting firm, calls “the ultimate expression of wealth”—be far behind?

Various news organizations, including the Journal, Reuters, and the Hurun Report, have reported several mega-gifts and pledges: a talk-show host named Yang Lan placed some $72 million into a foundation devoted to education, environmental causes and cultural exchanges; a hotelier-and-trading company chief named Yu Pengnian contributed an estimated $270 million to health care—including a pledge to provide free operations for 100,000 to 150,000 cataract sufferers in depressed areas over a five-year period—and higher education; a dairy mogul named Niu Gensheng put stock worth $600 million into a foundation that will focus on agriculture, education and health and so far has given away $85 million of it; a property developer named Zhu Mengyi has given $140 million; a real-estate developer named Huang Rulun has several times been named the most generous individual in mainland China, giving more than $350 million for health care and fighting poverty. And last December, the Swiss banking giant UBS said that donations from the top 50 publicly disclosed philanthropists in China had risen eightfold in three years to $11 billion in 2007.

But by tradition, rich Chinese keep their wealth within the family and make their donations privately, exhibiting benevolence without self-aggrandizement in the Confucian tradition. The money is meted out by the oldest generation and generally goes to sating immediate and, frequently, local needs—paying for hospitals, relief efforts, basic education and the like—and rarely to more strategic, long-range goals. It is charity as opposed to philanthropy, in American parlance. It is a pittance in the context of both overall wealth in China and government spending on social programs. And since the Communist revolution—until Deng came to power—philanthropy has been unnecessary in the Chinese ken, because the state took care of everything.

So when Li told the Wall Street Journal that “In the U.S., philanthropic support from entrepreneurs is tightly integrated into the fabric of society, whether it’s health care, medical research or education. Now, slowly, China will know this,” he took up a heroic challenge. To make that happen, both the entrepreneurs and the fabric of society will have to change.
Students of philanthropy around the world have found that a country’s legal environment is critical to the health of the philanthropic sector—and in China that milieu is decidedly mixed. As in Russia, Chinese authorities have always distrusted private philanthropy, viewing philanthropists as a threat to their power and as potential agents of conflict and instability. “In all important government, economic, and cultural institutions in China,” the U.S. State Department advises, “party committees work to see that party and state policy guidance is followed and that non-party members do not create autonomous organizations that could challenge party rule.”

Next page: Lately, as private enterprise has grown without causing too much disorder, the Chinese government has slowly begun to loosen its rein, granting approval to an increasing number of charities and nongovernmental organizations, although many have government roots and continuing connections.

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