Civil Society 1

21st Century China:
Does Civil Society Play a Role in

Promoting Reform in China?
Jenna Nicholas
Center for Democracy, Development and
the Rule of Law Thesis
Spring 2012
Advisors:
Frances Fukuyama and Thomas Fingar

Contents Page
Chapter 1:
Introduction
p. 3
Chapter 2:
The Case for Reform in Social Sector

Organizations
p. 9
The Case for Transparency and

Accountability in Social Sector
Organizations
p.29
Chapter 3:
Chapter 4:
The Business Environment
p. 47
Chapter 5:
Government and Civil Society
p. 57
Chapter 6:
Conclusion
p. 73
Appendix:
p. 79
Bibliography:
p. 91
Chapter 1: Introduction
Chapter 1: Introduction
Hypothesis
My hypothesis is that civil society has played an increasingly important role in
China over the past ten years in putting pressure on social sector organizations, business
and government to become more transparent and accountable. Modernization and
capitalism with Chinese characteristics have highlighted the need for reform in all sectors
of society. This, in turn, is producing a profound shift within China, leading to an
increasing demand for social justice and accountability, especially at the local level. It is
likely to be fraught with obstacles but in the end, I contend, China will have no choice
but to respond to the circumstances of the times.
Background
Chinas economic miracle and meteoric rise in GDP over the past ten years, under
the leadership of Hu Jintao and Wen Jiabao, is well documented. This period will go
down in Chinese history as an age of great industrialization and urbanization. It has lifted
hundreds of millions of people from poverty, improving living standards of a vast new
urban middle class, creating more billionaires than anywhere in the world except the U.S.
and turned China into the largest manufacturing center in the world.
A top down
authoritarian regime has managed this great transition and, although China suffered
during the economic recession affecting the whole world in 2009, and growth has slowed
down, its economy is still strong. The Chinese Government is acutely aware, however, of
the need to boost its domestic economy and develop the poorer inland areas. Vast sums of
money have been allocated to this, but in many ways the results are so far uncertain and
there is much call for reform.
China may be number one in foreign exchange reserves but, in per-capita income
terms, it is still a developing country lagging behind the majority of the world. Whilst the
Chinese Communist Party (CCP) can perhaps no longer be described as a Party of
utopian ideology, but more a Party of material interests with a pragmatic agenda, it is
acutely aware of the increasing demands of civil society for justice and accountability as
well as for higher levels prosperity for all. It holds on tenaciously to its power and does

not accept disobedience, but it is also resilient and resourceful. Furthermore, through the
new elite class, travel, trade and the Internet, China is now deeply and irreversibly
connected to the rest of the world. The need for transparency and anti-corruption
measures are playing increasingly important roles in Chinas civil society as it relates to
business, social sector organizations and governance.
Gold describes Chinas plight: China is vibrant, undisciplined, and rollicking,
yet simultaneously arbitrary, polluted, and oppressiveits leaders and citizens are
grappling with a relentless onslaught of unprecedented challenges, while also trying to
construct and consolidate institutions to manage the new order.1
For the purpose of this paper I define the scope of the sectors dealt with and
definitions used below:
Definition of Civil Society as it Applies to China Today
There are many different interpretations of what civil society means in the
Chinese context. Before the reform period began in the late 1970s, civil society,
translated as shimin shehui, was understood to mean capitalist society and therefore
carried a derogatory connotation. Since the reforms, a new translation, gongmin shehui,
has been adopted to emphasize the political meaning of civic engagement in public
affairs. It is now understood to refer to the realm or sector that belongs neither to the state
nor the market.2 The definition of the United Nations Development Program seems to be
the most appropriate for the purposes of this paper: civil society is the space between
family, the market, and the state; it consists of non-profit organizations and special
interest groups, either formal or informal, working to improve the lives of their
constituents.3
Gold, Thomas, China, Countries at the Crossroads, (New York, Freedom House, 2007)
Yu Keping, Civil Society in China: Concepts, Classifications, and Institutional Environment, China
Academic Journal Electronic Publishing House, 2006, issue 1
3
UNDP, 2002
Accountability and Transparency

The definition of accountability that will be used in this paper is the obligation of
an individual or organization to account for its activities, accept responsibility for them,
and to disclose the results in a transparent manner. The definition of transparency that
will be used is action, method or procedures that lack hidden agendas and conditions,
accompanied by the availability of full information required for collaboration,
cooperation and collective decision making.
Scope of the Social Sector
Social sector organizations are those that are delivering social services. This could
be through non-profit organizations, GONGOs (government operated NGOs), nongovernmental organizations (those registered NGOs with government supervision),
private foundations or public foundations.
Also included are grassroots civil-society
informal and unregistered groups, or organizations registered as a business but

undertaking social work. There is also a brief consideration of the emerging sector of
social entrepreneurship and impact investing4. The role of transparency within this sector
is covered in a dedicated chapter to this topic together with information gleaned from
organizations and people visited in Beijing between April and August 2011.
Scope of Businesses
Chinas positioning as the workshop of the world and as a major economic
power has placed it under intense scrutiny, both in its dealing with business norms and
procedures on the international stage as well its corporate social responsibility in
enterprises within China. Calls for accountability and transparency, justice and fair
working conditions are becoming louder both from Chinas civil society as well as
international human rights and legal advocates. The chapter on business discusses the
ramification of these changes.
See Appendix 9 for a brief overview of impact investing and social entrepreneurship in China.
Scope of Government
For the purpose of this paper I do not go into the intricacies of Chinese
government structure, but refer to the CCP (Chinese Communist Party) and their top
down approach to governance from the center to the provinces, to the townships and to
the villages. I contend that all measures taken by the government are intended to maintain
control from the top. However, as China is opening up to the world, the CCP is having to
remain alert to changing conditions and public opinion despite the fact that there are not
clear bottom-up channels for reform. The Internet is proving to be a major factor in
generating citizen concerns, which cannot be ignored by the CCP, despite attempts to
monitor and in many instances ban its use. So, far from being static and rigid, as is often
assumed from a Western perspective, the CCP is constantly experimenting and using the
best minds from China and the world to suggest innovative ideas to advance the declared
aim of creating a harmonious society. The CCP knows that failure to demonstrate the
will to be more sensitive to the changing times could lead to civil unrest and instability.
Chapter 2: The Case for Reform in

Social Sector Organizations
Chapter 2: The Case for Reform in Social Sector Organizations - A Historical

Perspective
Overview of Chapter
In this chapter, I hope to outline from a historical perspective how civil society in
China has coped with development and reform over the last thirty years, during which
time the focus of the Chinese government has been primarily on increasing GDP (gross
domestic product), sometimes at the expense of civil society. I will explore attempts
made by official government sponsored organizations as well as a growing number of
grassroots organizations that attempt to address pressing societal problems. Finally I
suggest that in response to civil unrest and the wide gap between the rich and poor in
China, that the government is becoming more responsive to civil society demands
for domestic reform aimed at facilitating, improving and funding social sector services as
well as loosening restrictions and supporting grassroots initiatives.
Civic Values in Chinese Society
Chinas unique historical experience of thousands of years of rule by emperors;
the role of communism and the rule of Mao Zedong; the Cultural Revolution and the
opening up that has taken place over the past thirty years, are all important factors to
consider when looking at the development of the social sector in China. Some argue that
Confucian ideology has played a really important role in shaping civic values in Chinese
history. Qiusha Ma suggests that, Before the Communist Party came to power, China
had many, many private associations and institutions, such as private schools and
hospitals5. Jessie Jiang suggests that, studies have referred to a millennia-long tradition
of philanthropy in China, rooted in Confucius ethical concepts of benevolence (ren) and
kindness (shan), which forms the basis of Chinese perception on volunteerism6. Li
Xiaoxiao argues that the concept of volunteerism has historically been defined as
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_house_hearings&docid=f:86861.pdf
Han, 2009
10
helping each other (huzhu) building up from the grassroots. 7 In addition to the
Confucian values of benevolence (ren), righteousness (yi), kindness (shan) and
truthfulness (xin), the current concept of volunteerism in China is also influenced by
civic values and growing understanding of the role of an emerging civil society,
especially in the context of globalisation and democratisation8. However, others suggest
that traditional China had a distinctly un-civic culture and that charity in China was
completely family-based with no basis for social trust between non-kin. It is for this
reason that Chinese society was characterized as a "loose tray of sand," where each grain
represented a family or lineage. Although influenced by Western concepts of civil
society, Chinese scholars have adapted and redefined the understanding of civil society to
include Chinese characteristics.
Under Maos Rule
Totalitarianism in the Communist state of China, under Mao, led to the breaking
down of all vertical links between individuals, including the family. Therefore by the end
of the Cultural Revolution any sense of individual liberty or community had been
shattered. The Brookings Institute suggests that, From 1948-78, when China functioned
under a planned economy system, social welfare was the responsibility of the
government, leaving no role for NGOs.9 Qiusha Ma further suggests that, After 1949,
first, the majority of civil associations were suppressed; and second; all the private
service providers were nationalized, following the Soviet Unions model. Therefore,
during that period in China there were no true private or non-governmental organizations
of any type. However, social organizations continue to exist and some old social
organizations, such as the Red Cross and other professional associations, remain.
Although eventually they were nationalized, on paper they were still called social
Li Xiaoxiao in Ding et al., 2007; 8-17
Appendix 4 looks at other motivations that people have for participating in philanthropic causes.
Zhang Ye, Brookings Institute, China's Emerging Civil Society,

http://www.brookings.edu/papers/2003/08china_ye.aspx
11
organizations.10 During this time, the focus was on participation in mass organizations,
rural collectives and the Communist Youth League. Any sense of civic responsibility
outside of state patronage mechanisms was not permitted. Carol Hamrin argues that this
history had a strong impact in shaping peoples conception of civic engagement. She
suggests, There is a deficit of humanitarian values throughout society stemming from
decades of class struggle mentality coupled with the current un-tempered pursuit of shortterm material gain.11
The Increase in Civic Consciousness
The state has traditionally played an extremely important role in China in terms of
the protection of citizens. Before Deng Xiaopings reforms in 1978, the danwei/work unit
system meant that people felt that they were supported by the state in such essential
services as healthcare and education. However, after the era of reform, this support
loosened up, and the vast majority of the population found themselves in dire need and
without support. It was clear that the distribution mechanisms for social services had to
be reformed and developed.
In the aftermath of the 2008 Wenchuan Earthquake in Sichuan Province, China,
many organizations gathered to try to determine what should be done. This earthquake
measuring 8 on the Richter scale struck Sichuan Province, killing around 90,000 people
and injuring 363,000, destroying more than 15 million homes and leaving 10 million
homeless and 1.5 million displaced. The estimated damage was $20 billion. The media,
in particular social media, was very quick to respond but the government was seen as
slow in their response12. The response was challenging because each of the NGOs
involved had their own mission and mandate and this was one of the first attempts to
form a coordinated response to a huge societal problem in China. Many people therefore

10
Congressional-Executive Commission on China, To serve the people: NGOs and the development of
civil society in China. http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=108_house_hearings&docid=f:86861.pdf
11
Carol Lee Hamrin, Chinas Social Capital Deficit, http://www.globalchinacenter.org/analysis/chinesesociety-politics/chinas-social-capital-deficit.php

12
Appendix 7 shows the increase in media coverage of philanthropic causes.
12
see the aftermath of the 2008 Wenchuan Earthquake as the beginning of a surge in
philanthropic engagement and strong civic responsibility in China. There was certainly a
great increase in philanthropic activity and donations from 2008 to 2010.13
The Hauser Center for Non-Profit Organizations argues that, The growth of
philanthropy in China is dramatic. Spurred by the 2008 Beijing Olympics and the
Szechuan earthquake in May of that year, 2008 became the first year of philanthropic
China.14 Despite the philanthropic activity that existed before 2008, the earthquake had
an important impact in terms of galvanizing the laobaoxing, or ordinary citizens, around
social causes.15 John Giszczak, Programme Division Coordinator of Save the Children,
China, argues that the Sichuan Earthquake of 2008 brought to peoples attention that the
government did not have much experience in dealing with any organization outside its
own direct rule. In the case of the immediate and overwhelming aid that was required
during and after the earthquake, NGOs, both foreign and local stepped in to fill the
breach. This underscored a grave deficiency in the Chinese Governments ability to
handle such disasters and coordinate between aid initiatives. The response to the Yushu
earthquake of 2010 was even more poorly managed.
The relative success of some NGOs in handling crises without posing a threat to
the government has led to a tentative trust and cooperation between the two, affording
more opportunities for civic engagement, for both registered and unregistered
organizations. Thomas Gold suggests that currently more and more Chinese are
participating in civic life on their own, such as in NGOs or via Internet chat rooms and
blogs. Chambers of Commerce, with local and foreign members, have also begun to

13
The earthquake inspired an increase in donations from RMB13.3 billion in 2007 to RMB76.4 billion in
2008 and highlighted philanthropy as an important approach to addressing these issues. Business for
Social Responsibility, Catalyzing Social Investment in China,
http://www.bsr.org/reports/Catalyzing_Social_Investment_in_China_BSR_CiYuan_November_2011.pdf
Business for Social Responsibility (BSR) works with its global network of more than 250 member
companies to develop sustainable business strategies and solutions through consulting, research, and crosssector collaboration.
14
P.152, Alex MacGillivray, Gefei Yin (China WTO Tribune), Kate Ives (Accountability), Joshua
Wickerham and Yi Shi (Accountability), The state of responsible competitiveness, 2009
15
Business for Social Responsibility, Catalyzing Social Investment in China
http://ciyuan.bsr.org/data/resources/Catalyzing_Social_Investment_in_China_BSR_CiYuan_November_20
11.pdf
13
assume an important role in Chinese life.16 Foreign NGOs, however, are under more
stringent restraints and surveillance as the government is ever watchful for subversion or
anti-government rhetoric.
Structure of Social Sector Organizations in China17
According to Xu Wang, There are three types of civil society organizations
within the Chinese context, all of which are called civilian non-state organizations18
The first group comprises social organizations, which are membership-based entities.
Included in this group are GONGOs (Government Operated NGOs) focused
predominantly on associations such as sports, business, academic and other such areas of
civil affairs, such as the Red Cross Society. The second group comprises of foundations,
which are fund and asset based. These are split up into private and public foundations.
The third group incorporate what are referred to elsewhere as non-governmental
organizations (NGOs) and civilian non-enterprise units such as private schools, nonprofit hospitals, and social service agencies which have a public-interest objective.
Those organizations that are not able to comply with the registration process for an NGO
register with the Bureau of Industry and Commerce and are considered as businesses with
a social cause. Technically, those not registered at all are considered illegal.19
GONGOs (Government Operated NGOs)

One of the largest contingents of social sector organizations in China are the
government operated non-governmental organizations (GONGOs).20 According to the
Hauser Center, many of these GONGOs are able to gain an edge over other non
16
P.18, Thomas Gold, China, Countries at the Crossroads
17
See Appendix 2 and 3 for statistics on social sector organizations
18
Anthony J. Spires, Contingent Symbiosis and Civil Society in an Authoritarian State: Understanding the
Survival of Chinas Grassroots NGOs http://www.jstor.org/stable/10.1086/660741#rid_rf1
19
Ye Zhang, Chinas Emerging Civil Society, http://www.oycf.org/Perspectives2/22_093003/2b.pdf
20
Zi Zhongyun, Crossing the New Threshold.
14
governmental organizations through a de facto unfair competition.21 Chen Jie suggests

that, One major category of GONGO is born of traditional Leninist mass organizations
(renmin tuanti). There are eight of them, including the All China Youth League, All
China Womens Federation, and the All China Federation of Trade Unions. The
government is trying to gradually restructure the function of these mass organizations
away from their original role as Communist Party overseers of particular constituencies,
towards one more of service facilitation and provision. As a result, satellite agencies
(associations and foundations) have been created.22 According to Chen Jie, The fear of
bottom-up social mobilization as well as practical needs have led the government to
create a semi-official NGO sector, a policy practiced with increasing enthusiasm from the
1990s. Government and Communist Party departments at various levels have been setting
up foundations and other organizations to advance charitable, research, information and
policy objectives.23 Spires suggests that the GONGOs are much more likely to attract
foreign funding than grassroots NGOs. This is because many of the grassroots NGOs,
due to difficulties with registration, often find it difficult to achieve legal status and are
sometimes working on radical issues. Therefore foreign funders often prefer to work with
professional and hierarchical grantees within existing institutional structures. As is seen
from the table below, the majority of US foundation giving has bypassed grassroots
NGOs. From 2002 to 2009, academic, government and GONGO grants together counted
for 86% of total grants. Whereas grassroots NGOs received only 5.61% of the total
grants.

21
Hauser Center, Shenzhen Government Delegates Some of Its Functions to Social Organizations,
http://hausercenter.org/chinanpo/2009/11/shenzhen-government-delegates-some-of-its-functions-to-socialorganizations/
22
Chen Jie, The NGO Community in China
23
Chen Jie, The NGO Community in China
15
24
NGOs (Non Governmental Organizations)

There is a difficulty in the conception of NGOs in China because of the fear that
they could be seen as anti-government. Therefore the term minjian zuzhi or the
peoples sphere organization is often preferred to the term fei zhengfu zuzhi as the
prefix fei implies anti government. 25 Any group that wants to establish a social
organization has to register through The Ministry of Civil Affairs and they are overseen
by the relevant affiliated supervisory branch. However, this can be an extremely difficult
process in terms of application to the institution and being monitored by it. They are also
closed down very quickly if they are seen as a threat. Anthony Spires suggests that the

24
http://yaleglobal.yale.edu/content/us-foundations-boost-chinese-government-not-ngos
For more information on US donor giving, see Appendix 9

25
Anthony J. Spires, Contingent Symbiosis and Civil Society in an Authoritarian State: Understanding the
Survival of Chinas Grassroots NGOs http://www.jstor.org/stable/10.1086/660741#rid_rf1
16
requirement to have a supervisory agency can be viewed as an enervating control

mechanism. However, the former head of the Ford Foundations Beijing office and
political scientist, Tony Saich suggests that registered NGOs can operate within the
constraints of the regulations in a fairly efficacious, albeit not completely independent,
manner. Saich, as others, argues that such organizations benefit from the legitimacy and
protection extended by their sponsoring agency and may also be granted greater access to
decision makers as new policies relevant to the field of their activities are formulated.26
Around 2002 was the time, according to Shue, when shehuihua, societalization, of
bringing society back into public service delivery, was trumpeted by the Chinese
government as an important reformist initiative that would help to relieve the heavy
welfare burdens on the state and mobilize otherwise dormant social forces and resources
for good causes. The government also wants to ensure that they can monitor civil society
and therefore does not enable civil society to develop as an autonomous unit. Xiaomin
Yu, a professor from Beijing Normal Universitys School of Development and Public
Policy, suggested in an interview that the Chinese government want to develop a strong
third sector as service providers rather than as a social movement. The Hauser Center
suggests that currently the government sees itself as the sponsor of all social
organizations. Instead, it seems as though it would be more advantageous for the
government to see social sector organizations as partners and establish mutual respect
with them. Ma Qiusha suggests that despite the large role of government in NGOs, NGOs
are still the mechanism through which people participate in public affairs, develop their
personal interests and get their voices heard.27
Gold suggests that, The governments policies toward NGOs pass through
alternating
periods
of
restriction
and
loosening,
and
the
shifts
are
often
unpredictableThe restrictions on NGOs are clearly motivated by the CCP (Chinese

Communist Partys) concerns that groups in China, including foreign ones, might play

26
Anthony J. Spires, Contingent Symbiosis and Civil Society in an Authoritarian State:

Understanding the Survival of Chinas Grassroots NGOs
http://www.jstor.org/stable/10.1086/660741#rid_rf1
27
Congressional-Executive Commission on China, To serve the people: NGOs and the development of
civil society in China. http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=108_house_hearings&docid=f:86861.pdf
17
the same sort of role as those in Georgia, Ukraine, and Kyrgyzstan in fomenting Color
Revolutions.28 The chart below gives some indication of how the government views
certain sectors:
Government
generally Government
generally
supportive/mutually beneficial
supportive/controversial
Running orphanages
not
HIV/AIDS
Delivering care to the elderly or Tibet and other minority groups

disabled
rights issues
Providing education and other Migrant education
forms of welfare to the rural poor,
especially girls
Nonetheless, numerous NGOs, especially in the environmental field, operate very

actively in China. Although there are no established channels by which civic
organizations can participate in the policy process, they comment quite forcefully on
affairs of the day through their websites and blogs. They have had some successes, such
as delaying (but apparently not canceling) dam building on the Nu River in the southwest
and on a sacred Tibetan lake.29
Foundations
There is a significant distinction in China between private and public foundations.
Foundations, in particular public foundations, traditionally act as operating entities rather
than grant-making foundations supporting NGOs. However, recently some public
foundations have taken on the role of grant making. Private foundations are independent
but are often associated with a company e.g. Vantone, Narada and Soho. Li Jing,
Secretary General and Executive Director of the Vantone Foundation, suggests that there
are an increasing number of public foundations which are beginning to follow the models
set by private foundations in innovation and grant-making with the encouragement and

28 Thomas Gold, China, Countries at the Crossroads
29
P.7, Thomas Gold, China, Countries at the Crossroads
18
support of the government.
Examples of this are the China Youth Development
Foundation and the China Poverty Alleviation Fund, which have recently been given
greater autonomy. According to statistics from the China Foundation Center, in 2011,
China had 1,284 non-public foundations and 1,181 public foundations as is shown in the
graph below.30 Even foundations that are trying to follow a grant-making model, find it
difficult to develop their capacity to fundraise. Currently, the non-public foundations do
not have the legal right to fundraise from the general public; instead they can only
fundraise from specific individuals. When private foundations give grants, they want to
see tangible results showing how their money has been used. When the NGOs do not
produce tangible results, distrust arises which raises the whole issue of transparency and
accountability. The lack of this leads to distrust, which in turn leads to less assistance.
A model of contingent symbiosis

It is important to consider ways in which the state and civil society can work
together to pursue mutually beneficial goals. Spires suggests that in the case of China, it
is important not to consider state and society as being inevitably in opposition and

30
Cheng Yingqi, Scandals put a big dent in donations http://www.chinadaily.com.cn/china/201110/19/content_13928884.htm
19
unalterably in competition with each other for influence and authoritythe relationship
between the two need not be imagined as zero-sum.31 According to Spires, there seems
to be a shift from a corporatist model to a model of contingent symbiosis between state
and social sector organizations in China. Corporatism is a system of economic, political,
or social organization that involves association of the people of society into corporate
groups such as agricultural, business, ethnic, etc. on the basis of common interests.
Corporatism is theoretically based upon the interpretation of a community as an organic
body. Often a corporatist model is used to describe how authoritarian states ensure tight
control over interest groups and prevent democracy from arising. Contingent symbiosis,
Spires suggests, acknowledges the real-life micro level negotiations that take place
between the state and bottom-up associations. It is in these details that we can start to
understand both the possibilities and the limits of political life in an authoritarian
regime.32 Spires further suggests that: While this may reflect the relationship between
government and official NGOsGONGOs, to be more accuratecorporatism cannot be
suitably applied to understand the existence and survival of ostensibly illegal grassroots
organizations.33 The protagonists of this model of contingent symbiosis suggest that
despite the fragility of the NGO-government relationship, such a relationship is
beneficial. Vivienne Shue agrees with Spires that there is an intriguing relationship that
exists and extols the mutual benefit achieved, between the emergence of a robust sphere
of civil associational life, on the one hand, and the consolidation of social power in
relatively strong or resilient state organizations, on the other. Putting it in simple terms,
we might propose thatunder certain conditions at least, strong and robust civil
associations can go together with powerful and resilient states.34

31
P.2, Vivienne Shue, The political economy of compassion
32

33
34
Shue, 1994:66
20
The Growth of Civil Society - Grassroots

The last decade has seen the emergence of a large number of grassroots
organizations. These groups are formed by Chinese citizens, some registered as
businesses and some not registered at all. Professor Wang Ming of the Tshinghua
University NGO Research Centre suggests that despite the fact that the official statistics
from the Ministry of Civil Affairs in 2010 suggest that there are 400,000 social sector
organizations; it seems as though the unofficial figure of 3-4 million is much closer to
reality. This research is based on rigorously going through old periodicals to find groups
that act as NGOs but have not officially registered.35 The advantages of them registering
is that they have the legal protection of the state and they are not acting illegally.
However the disadvantages of trying to register are that often the registration
requirements are too onerous and many groups prefer to avoid contact with the
authorities.
They perform an important function in society, engaged often in providing
essential social services to local communities. However, the government is often fearful
of fully empowering organizations to take responsibility for social causes for fear they
will not be able to control them. In an interview with Jianyu, a Tshinghua Professor, he
said, The Chinese government is cautious about supporting civil society because there is
fear that civil society organizations might play an anti-government role. Mutual trust
develops over time through social capital and organizations sharing resources amongst
themselves. 36
Therefore, unless the social sector organizations cause a social
disturbance or incite violence, by and large the government leaves them alone. Spires
quotes one grassroots activist as saying: In China, if the government doesnt say no,
you can experiment and understand their failure to say no to mean yes, or you can say
I thought since you didnt say no, I could do this. Thats the way things work here. So

35
Statistics from Chinese Ministry of Civil Affairs, Bureau of Management of Nongovernmental

organizations, http://www.chinanpo.gov.cn/web/listTitle.do?dictionid=2201
36
This interview took place between April and August, 2011
21
we do take some risks here in our work.37 One supportive government official explains
the suspicion from the governments perspective as follows, Not enough government
officials know anything about civil society. Some of them are very afraid of it, wondering
what it is and what political motives people haveBut I think that the government needs
to understand that civil society in China today is not political. These NGOs, the
grassroots NGOs who are mostly registered as businesses, theyre outside of the civil
affairs system, but theyre not looking to do anything political. Theyre trying to help
alleviate poverty or provide educational assistance or help people with diseases. This
is something the government needs to understand.38
There is additionally an incentive system for local government officials in
supporting grassroots initiatives.
The officials are largely judged based on GDP so
decisions they make are often based on short-term economic growth rather than longterm social benefit. Officials are also judged based on the lack of social unrest, disruption
and protests that take place in their area of jurisdiction. Therefore, the existence of both
official and unregistered social organizations that are addressing important social
challenges can be seen as useful to local officials. The officials are able to take credit for
positive social activities but attempt to hide unfavorable or unsuccessful ones. In like
manner, government-NGO conflicts do not necessarily represent central government
directives but rather clashes of interest between local NGO activities and local political
and economic interests.
Some social sector organizations, however, make their protests louder. Spires
comments that in more candid moments, many civil society spokespeople present
themselves as critical thinkers, patriotic progressives who dare to pursue the promises of
socialism that the government has seemingly abandoned in the name of economic reform.
With the Internet penetration into more households and daily lives, the information flow
has increased exponentially in recent years. It has become harder for social tensions to be

37
Anthony Spires, Contingent Symbiosis and Civil Society in an Authoritarian State: Understanding the
Survival of Chinas Grassroots NGOs
38
Anthony Spires, Contingent Symbiosis and Civil Society in an Authoritarian State: Understanding the
Survival of Chinas Grassroots NGOs
22
ignored or suppressed by powerful interests or some local governments. Civil society

groups allow the disadvantaged to be heard. Some take it to the next step.
Mounting Unrest
In an environment where civil society has very limited ability to apply pressure on
the government to rectify ills of social justice; where there is little rule of law, and
grievances are dealt with in an ad-hoc manner, it is not surprising that the only recourse
open to citizens is to resort to demonstrations, protests and occasionally to riots. Civil
unrest is officially known as mass incidents in China. It would seem that as China
surges ahead in becoming a world economic power and the Chinese elite are enjoying all
the excesses, which money can provide, the poor are becoming understandably aggrieved
and mass incidents are increasing exponentially.
According to a report in Open
Democracy Shenzhen alone, one of the more advanced industrial centers in China has
officially registered about six hundred unexpected mass incidents each year from 1990
onwards. Whilst there is no way of confirming the accuracy of the data, statistics have
been taken from various sources to indicate that grievances range from issues of
unemployment, pensions, wages, corruption, tax collection problems, misuse of funds,
widespread informal bankruptcy, neighborhood and housing issues, land acquisitions,
forced relocations, environmental damage and mismanagement. A graph representing the
rise in protests is shown below.
23
39
The strategy mostly used by the government is mainly to adopt measures between
concession and repression and to keep the protests localized. What the party seems to
fear the most is coordination between groups or across provinces, which would render the
situation untenable for the CCP.
Wen Jiabao called for urgent political reform in his
final news conference on March 14th 2012, cited in the China Post. He said: New
problems that have cropped up in Chinas society will not be fundamentally resolved, and
such historical tragedy as the Cultural Revolution may happen again.40 This would

39 1993-94 data from Murray Scott Tanner (2004) China Rethinks Unrest, The Washington Quarterly,
Vol. 27, No.3, Summer 2004, pp 138-39; 1995- 2002 data from Albert Keidel (2005) The Economic Basis
for Social Unrest in China, Carnegie Endowment for International Peace- for The Third EuropeanAmerican Dialogue on China; 2003-2004 data from South China Morning Post, July 7, 2005; 2005 data
from Thomas Lum (2006) Social Unrest in China, CRS Report for Congress, Congressional Research
Service; 2006-07 data from Ben Blanchard (2011) Riot in South China After Fruit Vendor Allegedly
Beaten to Death by Officials, July 27, 2011; 2008 data from Goh Sui Nui, (2010)Political Reform, China
Style, Asia New Network, November 4, 2010; 2009 data for from Gordon C. Chang (2011), Repression
in China Losing Its Effectiveness and Its People are Becoming Defiant, Fox News, April 25,
2011. Elizabeth J. Perry and Merle Goldman (2007) Grassroots Political Reform in Contemporary China,
Harvard University Press, Cambridge.Ching Kwan Lee (2007) Against the Law: Labour Protests in
Chinas Rustbelt and Sunbelt, University of California Press, London. Susan L. Shirk (2007) China:
Fragile Superpower, Oxford University Press, New York. Jenifer Huang McBeath and Jerry McBeath
(2010) Environmental Change and Food Security in China, Springer Dordrecht Heidelberg, London.
40
Tania Branigan, China needs political reform to avert 'historical tragedy', says Wen Jiabao
http://www.guardian.co.uk/world/2012/mar/14/china-political-reform-wen-jiabao
24
explain also why China is so adamant about controlling the civil society organizations
and the Internet.
Meeting Social Demand
It is assumed that the Chinese government is able to act uniformly to ensure
control over the various provinces and social service organizations within them, with a
top-down directive. However in todays China the central government in Beijing enjoys
much less control over these provinces and receives far less feedback.
It relies heavily
on the social sector to meet social needs and, as incentives are given to local and
provincial level authorities based on the economic performance in their areas of control,
societal development often takes second place. Much of the community-based social
service is government driven but relies on civil society participation, as the government
cannot take all of the financial responsibility.
For a number of years the government has referred to building a harmonious
society. In the National Peoples Congress in 2005 and in the recent 12th 5-year plan, it
refers to inclusiveness and improving peoples livelihoods by way of the promotion of
happiness, sustainability and addressing economic disparity. As much as this may be
rhetoric, it acknowledges the fact that there are problems with the provision of social
services. Carol Hamrin suggests that, To NGOs on the receiving end of policy, the
(focus on building a harmonious society) appears to be a cover for cutbacks in state
funding, without adequate tax incentives for donors or protection for genuine autonomy
in decision-making. This problem is aggravated by the fact that there is little
communication and coordination amongst the NGOs. Furthermore, there is often a
disconnect between the NGOs and other sectors of society.41 The UNDP has been
working with the government on public-private partnerships. These partnerships are often
useful because they help to keep each organization accountable.42 Linxiu Zhang of the
Rural Education Action Project further reiterated in an interview the importance of
participatory governance whereby there was teamwork between local organizations and

41
Carol Lee Hamrin, Chinas social capital deficit http://www.globalchinacenter.org/analysis/chinesesociety-politics/chinas-social-capital-deficit.php

42
UNDP, Public Private Partnerships,
http://www.undp.org.cn/modules.php?op=modload&name=News&sid=12&file=article&pageid=3
25
policymakers. In this way, each is able to bring their expertise to the table and each is
able to benefit from the other.
In a report in Caixin newspaper on April 6th 2012, East China Normal University
Professor Xu Jilin says it is no longer a question of whether social organizations will
reform, but when the next step will be made. He is further quoted as commenting: If
there are no grassroots-level reforms, top-down reforms will be rendered ineffectual43.
Xu Jilin further argues that, in the absence of vibrant social organizations, harmful
activities fill a vacuum of services catering to social needs. 44 For example, the
emergence of criminal gangs.
This raises the whole issue of building trust. Bonds of trust and cooperation help
to promote the strength of the social sector and depend heavily on transparency. Putnam
argues, "In all societies dilemmas of collective action hamper attempts to cooperate for
mutual benefit, whether in politics or in economics. Third-party enforcement is an
inadequate solution to this problem. Voluntary cooperation (like rotating credit
associations) depends on social capital. Norms of generalized reciprocity [for favors
received] and networks of civic engagement encourage social trust and cooperation
because they reduce incentives to defect, reduce uncertainty, and provide models for
future cooperation. Trust itself is an emergent property of the social system, as much as a
personal attribute. Individuals are able to be trusting (and not merely gullible) because the
social norms and networks within which their actions are embedded.45"
Premier Wen Jiabao, in a report released on March 19th, 2012, pushed for further
social innovation and for redefining the relationships among the government, citizens,
and social organizations46. The Chinese Ministry of Civil Affairs has recognized the

43
Wang Su, In the Field of Social Organizations, a Constant Need for Reforms
http://english.caixin.com/2012-04-06/100376927.html
44 Wang
Su, In the Field of Social Organizations, a Constant Need for Reforms

http://english.caixin.com/2012-04-06/100376927.html
45
p.177 Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy
46
Social media give voice to the disadvantaged

http://www.herald.co.zw/index.php?option=com_content&view=article&id=37075:social-media-givevoice-to-the-disadvantaged&catid=45:international-news&Itemid=137
26
need for a supportive legislative framework for social sector organizations. On July 4,
2011, Li Liguo, the head of the Ministry of Civil Affairs, announced that charity, social
welfare, and social service organizations would be permitted to register directly at local
civil affairs agencies. This initiative was spearheaded by Guangdong provinces recent
reforms relaxing the registration requirements for social organizations. These reforms
were followed up with The Standing Committee of the Guangzhou Municipality Peoples
Congress passing a law entitled, Guangzhou Municipalitys Fundraising Regulations.
This enabled more social organizations and public institutions to expand their fundraising
activities.47 It is hoped that this will set the pace for reforms across the country. The
greatest hope and aspiration of Chinese civil society organizations is that they can bridge
the ever-widening gap between the rich and poor. Lifting people out of poverty could
also have marked advantages for Chinas domestic markets, especially now that China
can no longer depend on sustained growth in exports.
The jury is still out on whether the new administration will implement the reform
measures outlined by Premier Wen Jiabao in his last public speech, but few doubt the
need for such measures. It is worth speculating that if the government put as much effort
into creating a harmonious society as it has done in achieving the miraculous economic
growth China has witnessed, then the world may in many ways look to China as the new
paradigm of world order.

47
China
Development
Brief,
http://www.chinadevelopmentbrief.cn/?p=603
Guangzhou
27
frees
fundraisers
28
Chapter 3: The Case for

Transparency and Accountability in
Social Sector Organizations
29
Chapter 3: The Case for Transparency and Accountability in Social Sector

Organizations
During my five month stay in Beijing in 2011, I visited more than seventy
organizations offering some form of social benefit to the Chinese society, from
Registered Government NGOs (GONGOS) to NGOs, to Public and Private Foundations,
to philanthropists, to grassroots organizations (civil society). My aim was to interview
each to get a sense of how the social sector has developed in China over the past ten
years, what role various organizations play and what relevance transparency and
accountability have played in their development. My particular interest was in looking at
the benefits and challenges for each sector providing a social service, the role of the
government, and trends over the past ten years in relationship to the broader questions of
modernization in 21st century China.
One of the greatest challenges in the development of Chinas social sector is the
legitimacy for providers of services, for donors, for recipients of non-profit organizations
(NPOs) and for the general public. It is also important to make sure that money is being
used effectively. The absence of transparency in social sector organizations has been
important in a number of recent famous cases. Various non-profit organizations in China
have been discredited due to claims of corruption and this has had negative repercussions
on the sector in general. Transparency is important from the perspective of donors,
recipients and the government. If there is no transparency, then the organizations become
de-legitimized and cannot be trusted by either donors or the government. Transparency is
therefore considered as a means to an end where the end is effective delivery of social
services. Unless there are more transparent organizations, there is no way that the sector
will gain legitimacy and that these organizations will be able to receive funds and thrive.
Transparency in social sector organizations: a comparative perspective

Transparency is incredibly difficult to encourage, irrespective of the country or
organization concerned. Whether it is foundation leaders reporting the provenance of
their donations or the philanthropic organizations accountability on distributing funds,

30
transparency is a murky area. It may not be a question of dishonest dealings, it might be

just a reluctance in the philanthropic sector to openly report failures for fear that this will
have negative repercussions on the branding of the organization and hence peoples
willingness to donate. It has been widely observed that there is not an open discussion of
failure within the philanthropic sector. Organizations want to present a positive image of
themselves and often do not want all of their work to be evaluated. This is particularly the
case with respect to US foundations that have a huge repository of data and information
but often do not reveal this information to the public. The supposition is that if there are
any negative issues revealed, or failures reported, this may disincline the American public
from donating. There are various initiatives based in the US that are focused on
promoting transparency.
For example, Guidestars mission is to revolutionize
philanthropy and nonprofit practice by providing information that advances transparency,

enables users to make better decisions, and encourages charitable giving.48
The National Committee for Responsive Philanthropy (NCRP) in the United
States works on promoting transparency and conducting action research. They analyze
and advocate for the support of institutional philanthropy operating with integrity and
openness.49 In Hong Kong, the National Council of Social Service50 plays an important
role in promoting transparency and impact measurement. Stoner Weiss describes the
difficulty for civil society organizations in Russia, civil society and non-governmental
organizations (NGOs) have been stifled through legislation that imposes onerous reregistration requirements. A few of these organizations have been unceremoniously
raided and closed by the authorities, while human rights and democracy groups have been
accused of pushing an agenda that benefits foreign states. More generally, civil society
finds itself increasingly unable to serve as an effective check on abusive state practices at
a time when the hollowing out of political opposition has increased the importance of

48
GuideStar, http://guidestar.org/
49
National Committee for Responsive Philanthropy, http://www.ncrp.org/campaigns-researchpolicy/accountability

50
National Council of Social Service, http://www.ncss.gov.sg/home/index.asp
31
external monitoring.51 Russia, like China, is fearful of negative feedback from civil
society organizations.
Why is transparency in social sector organizations in China important?
Lack of transparency and accountability in social sector organizations is one of
the biggest hindrances to charitable giving and the development of the social sector in
China.52 The various cases of corruption reported over the past couple of years have had a
very negative affect on the perceptions of Chinese civil society.
The US has taken steps to encourage accountability in social sector organizations.
The US government requires non-profit organizations, or 501C3s, to complete annual tax
forms (entitled 990 forms), which provides an accountability mechanism; the absence of
completely stringent requirements in China impedes accountability. Donors often have no
idea how their money is spent. Deng Guosheng, an associate professor at Tsinghua
Universitys School of Public Policy and Management, suggests that, Charitable
organizations seldom respond to donors requests for information about financial reports
so few donors have a clear understanding of what their money is used for and what
effects it brings about. 53 Over recent years, there has been an increase in annual
philanthropic giving. However, in a recent survey of people who donated to the Sichuan
relief efforts, Deng found that of the 1,684 who responded, more than 60 percent had
little or no idea how the money was being spent.
Tsinghua's Deng argues that although there is officially a national tax deduction
policy for charity donations, these are often extremely difficult to actually claim. Jessie
Jiang argues that, Today, even for China's nouveau riche who are willing to give,

51
P.2, Stoner-Weiss, Kathryn, Russia, Countries at the Crossroads
52
According to Business for Social Responsibility (BSR), Beijing, While the growing dollar amount of
donations is encouraging, the donations impact also deeply matters. Frustrated by the lack of information
about how their donations have been used, individuals and corporate donors are demanding increased
transparency from organizations. Catalyzing Social Investment in China:
11.pdf
53
Hauser Center, Donors Kept in the Dark on Where Money Goes

http://hausercenter.org/chinanpo/2010/06/donors-kept-in-the-dark-on-where-money-goes/
32
government policies often fail to encourage charitable actions...Moreover, the policy only
applies to donations made to the very few government-sanctioned charities, which are
commonly blamed for lack of transparency or even corruption.54 Domestic foundations
receive annual government inspections and submit annual reports every year, but the
responses are only accessible by the government, not the public. A lack of rating agencies
also contributes to the problem. Apart from government supervision, there are no
independent third-party agencies monitoring these charities.55 Deng Guosheng further
argues that the scandals in the social sector industry might disappoint the public, but
refusing to donate was not a reasonable action and it would eventually hurt people in
need. Instead, people could and should invest time in finding the most transparently
operated charity organizations.56
The State and transparency
Transparency is important both from the perspective of the government and
society. Transparency regarding the activities of social sector organizations is important
for the government because it is helpful for them to know what types of activities these
organizations are engaged in so that they can develop stronger partnerships with these
organizations. For the general society, transparency is important because it helps to build
trust in the social sector organizations. The Ministry of Civil Affairs suggests that, Still,
much can be done to improve the professionalization and accountability of Chinas
burgeoning civil society sector. The governments proposed reforms to expand
registration options for NGOs in China will help broaden the scope and potential of civil
society to promote responsible competitiveness. 57 Zhou Xiaozheng, a professor of
sociology at Renmin University, suggests that, "We urgently need laws to regulate the
area of charityPeople can't just say they are going to donate to charity, receive the
public's praise and do nothing afterwards. 58" Zhou further points out that promised

54
Jessie Jiang, Amid China's Economic Boom, Philanthropy Lags

http://www.time.com/time/world/article/0,8599,2027055,00.html
55
Hauser Center, Charity transparency criticized, http://hausercenter.org/chinanpo/2011/02/charitytransparency-criticised/
56
Global Times, Trust in charities waning http://china.globaltimes.cn/society/2011-04/646502.html
33
charity recipients have the right to sue donors for fraud if they do not carry through on
their promises. However, this channel is rarely used, as there is limited legal support for
transparency cases.
The Wenchuan earthquake of 2008 had a significant impact on transparency in
philanthropic organizations in China. The state insisted on maintaining control over all
emergency aid initiatives. Brian Hoyer suggests, Although the state deserves praise for
its handling of the response, a lack of transparency in terms of specific data and details of
the response have concealed many of these successes, as well as obscuring areas for
improvement.59 After the initial rush of donations had passed, the disaster and the large
donations triggered public scrutiny and transparency over the use and impact of
charitable funds. 60
Challenges of promoting transparency amongst donors
The Chinese philanthropists are generally unwilling to divulge much information

about philanthropic activities they undertake. This proved to be a potential problem
when Bill Gates and Warren Buffett organized a dinner for Chinese billionaires on
September 29th 2010. Many of the invitees were concerned that they would be asked to
participate in a public pledge.61 One of the reasons that people are reluctant to be too
public about their giving is the fear that they will then be harassed to donate to many
different causes. One philanthropist that I interviewed in Hong Kong indicated that

57
Statistics from Chinese Ministry of Civil Affairs, Bureau of Management of Nongovernmental

organizations, http://www.chinanpo.gov.cn/web/listTitle.do?dictionid=2201
58
Beijing Global Times, Checking up on charity, http://beijing.globaltimes.cn/society/201104/635928.html

59
Brian Hoyer, Humanitarian Exchange Magazine, Lessons from the Sichuan earthquake
http://www.odihpn.org/report.asp?id=3008
60
11.pdf
61 However,
approximately two-thirds of the invitees eventually came.
34
Chinese billionaires have an iron-wall security around them protecting them from being
harassed by the many needy people and organizations. However there are some
exceptions to this. Some people enjoy the public attention that they receive from giving
and are actually criticized for how public they are about their giving. For example, Chen
Guangbiao, president of Jiangsu Huangpu Renewable Resources Company, constructed a
money wall at the Industrial and Commercial Bank of Chinas (ICBC) Jiangsu Branch
to collect donations. The wall had 330 bricks made up of 100-Yuan bills worth 100,000
Yuan. He also goes into the streets and hands out money and encourages others to do the
same.62 He visited Taiwan in early 2011, on a thanksgiving trip to thank the Taiwanese
for their contribution to the Wenchuan earthquake relief effort63.
However, the notion of Chinese personal and corporate philanthropy is growing.
Many super-rich Chinese have come from humble backgrounds and have a sense of
wanting to help the less fortunate. The obstacles are that they are not always sure
whether their philanthropic gifts will reach the desired recipients.
Appendix 5 shows
the increase in Chinese Corporate Philanthropy.
Social Sector Organizations Visited in Beijing:

A common thread that ran throughout my interviews was the emphasis that was
placed on the importance of accountability and transparency amongst social sector
organizations64. Another important element that emerged was the extent to which an
individuals status and their guanxi (relationships) played in their perception of the
social sector. Xiaotong Fei describes the interconnectedness of personal relationships,
"The path runs from the self to the family, from the family to the state, and from the state

62
Xinji Letu, Top philanthropist tangled in fraud accusations http://www.beijingtoday.com.cn/tag/chenguangbiao

63
Ko-Shu-ling, Government stewed over tycoons visit

http://www.taipeitimes.com/News/taiwan/archives/2011/01/28/2003494635
64
See Appendix 1 for Interview list
35
to the whole world.65" The higher an organizations social standing, the stronger their
government connections, the more likely they are to have a favorable view of the sector.
This is because it is much easier for individuals and organizations that have these types of
relationships to gain access to funds and to freely operate. For a full list of all
organizations and individuals interviewed, please see Appendix 1. I have documented a
few particularly noteworthy examples below.
1) China Foundation Center (CFC)
The China Foundation Centers66 mission is to bring transparency to philanthropic
markets through access to the highest quality data, news, and analytics to enhance a
bigger social impact of philanthropy. In 2009, a delegation of several Chinese Private
Foundations visited the US Foundation Center in New York. The participants on this trip
were greatly inspired by the US Foundation Center and this led to the formation of the
China Foundation Center in 2010. The US Foundation Center uses data, analysis, and
training to connect people who want to effect social change to the resources they need to
succeed. Their aim is to inform public discourse around philanthropy and encourage a
broad understanding of the role that non-profits can play.
The China Foundation Centers executive team includes Cheng Gang, Geng
Hesun and Tao Ze who all have experience working in the philanthropic sector. CFC
received initial seed funding from the Ford Foundation and has recently received further
funding from LGT Venture Philanthropy. CFC uses a network map system designed and
developed to provide easily accessible information about foundations. Foundations can
voluntarily upload information regarding their annual giving and annual expenditure,
which can then be viewed by the general public. CFC is currently working on developing
a transparency index and rating system that would be similar to Morningstar or Nasdaq
for social sector organizations. They are also working on initiatives to promote more

65
p.66, Xiaotong Fei, From the Soil: The Foundations of Chinese Society
66
China Foundation Center, http://en.foundationcenter.org.cn/index.html
36
professionalism in the social sector through training programs for foundation leaders. I
have had the opportunity to spend extended periods of time with both Cheng Gang and
Tao Ze and they both have a keen desire to help support an infrastructure for social sector
organizations in China.
2) China Charity Donation Information Center (CCDIC)
Established in 2008, and led by Peng Jianmei, who has extensive experience
working in the media, business and the philanthropy sectors in China, the China Charity
Donation and Information Center (CCDIC) is a non-profit organization supported by, and
working closely with, the Ministry of Civil Affairs in China. Its mission is to promote
effectiveness and transparency of Chinese civil society organizations (CSOs) and of the
sector as a whole.
In 2011, in response to growing transparency problems, the CCDIC published a
report on the state of the charity sector transparency in China. The CCDIC reviewed the
disclosure practices of 99 nonprofits but received feedback from only 65 of them. These
organizations included non-public offerings and local non-governmental organizations.
Of the 65, 42 percent of them claimed to have no guidelines on information disclosure,
and 37 percent said no staff was specially designated for carrying out related work.
Furthermore, the report found that, 90 percent of the public is dissatisfied with how much
information is being disclosed and the way it is made public. Among the 99
organizations, 20 percent of them did not have their own websites and, for those with
websites, 43 percent were not updated regularly or users found them to be unhelpful
when searching for information. Only 10 percent of the public interviewed in this survey,
expressed that they were partly or very satisfied with the state of information disclosure.
According to the Global Times, 90 percent of interviewees felt that they were not given
enough information about the use of donations, the result of sponsored projects, and the
final
destination
37
of
their money. 67 CCDICs research team believes that a lack of relevant laws and
regulations, standards for information disclosure and the training of professional
personnel were the main reasons for poor performance in transparency for domestic
charitable organizations. In the charity field of China, information disclosure has both
mandatory and voluntary aspects. A related government department supervises
mandatory disclosure but there are differences in the responsibilities between local and
central government and this makes it difficult for The Ministry of Civil Affairs (MOCA)
to oversee charities that lack registration records.68
In November 2011, CCDIC announced that its newly-created online disclosure
platform would kick off next year, enabling any member of the public to see how
charities are receiving donations, and where they are spending them. The Ministry of
Civil Affairswhich oversees the CCDICsaid a new 2012 donation information law
will also force charity organizations to disclose more of their accounting records.69 If
this is passed, this could have significant consequences on building transparency in social
sector organizations in China. It is however extremely difficult for them to collect
information from public channels to match the high scores charitable organizations give
themselves. The biggest gaps in the information disclosure are found in financial auditing
and personnel appointments. In an interview, Kong Can suggested that the CCDIC are
working hard to create training materials and programs to support the work of
philanthropic organisations in China.

67
Global Times, Trust in charities waning http://china.globaltimes.cn/society/201104/646502.html
68

11.pdf
69
Hauser Center, Charity Transparency Criticized http://hausercenter.org/chinanpo/2011/02/charitytransparency-criticised/
38
3) Vantone Foundation
The Vantone Foundation was established in April 2008 as a non-public
foundation registered with the Beijing Municipal Civil Administration. The Foundation
aims to promote environmental protection and energy conservation, and to promote
harmony between man and nature. Its main business endeavor is to promote the
construction of ecological communities. The Foundation aims to become an important
driving force for the construction of urban ecological communities in China.70 Li Jing,
the Executive Director and Secretary General of The Vantone Foundation suggested in an
interview that The Vantone Foundation aims to build these ecological communities by
developing local partners and a strong feedback mechanism. This feedback mechanism
helps to ensure accountability and transparency. The foundation is run using a business
model and therefore has a strong set of internal metrics. They believe in attracting strong
talent and professionalism to the social sector and therefore pay their employees a lot
more than most other foundations. The Vantone Foundation is one of the few private,
grant-making foundations in China. Their vision is to generate positive social change
through developing the capacity of NGOs to influence the environment around them.
They have recognized that if they want these organizations to grow and prosper, it is
essential that they have a strong level of accountability between themselves and their
NGO partners to ensure that money is being used as intended. Mr. Feng Lun, the
chairman of Vantone Holdings, has great hopes for the Vantone Foundation and the
development of the philanthropic sector more generally in China. Therefore, they place
great emphasis on developing innovative models. They have a very strong internal
mechanism of accountability and transparency whereby projects are regularly presented
to the board and communicated to their partners. Furthermore, the Vantone Foundation
often runs capacity-building sessions with their community leaders to ensure efficient use
of funds.

70
Vantone Foundation, http://www.vantone.net/en/contents/427/1568.html
39
4) Red Cross Society, Guo Mei Mei

As mentioned, transparency has become particularly important over the past year
because there have been some cases of corruption in social sector organizations that has
had the impact of in some ways delegitimizing the sector. In particular the Guo Mei Mei
case of June 2011 had a negative affect on peoples attitude towards the Red Cross
Society. Guo Mei Mei, a 20-year-old female Chinese micro blogger, flaunted her
extravagant lifestyle by posting photos of herself with luxury sports cars. She claimed to
be a general manager at a branch of the Red Cross Society. Although it turned out that
she did not work for the Red Cross, this case began to raise questions about the
legitimacy of not only the Red Cross Society but also other philanthropic organizations in
China. Data from the China Charity and Donation Information Center under the Ministry
of Civil Affairs suggests that there is a connection between this case and general giving
in the social sector. Certainly the case of the Red Cross scandal came up in many of my
interviews
as
significant
impediment
to
giving.
Public
donations to charitable organizations dropped from March to May
2011
from
6.26 billion Yuan to 840 million Yuan, with a decrease of 86.6%, from June to August
2011.
The Guo Mei Mei case added to problems that the Red Cross was already facing
as a result of the information that came out earlier in the year regarding a huge amount of
funds being embezzled. There was exposure of a 9,859 Yuan ($1,510) dinner bill for Red
Cross
staff
in
its
Luwan,
Shanghai
branch.
Despite the quick handling of the case by the organization, public trust in the charity
plummeted
as
news of the scandal spread. According to a report in the Beijing Times, the image of a
receipt was uploaded onto a sina.com micro blog. Many netizens were soon complaining
of the Red Cross' extravagance, and wondering where their donations were going. As one
of China's major charities, China's Red Cross enjoys heavy subsidies and its staff is often
treated as if they were government officials. It claimed that the money had already been
reimbursed

but
also
40
appealed
to
all the Red Cross branches in the city to discipline themselves. There have been other
cases of corruption with the Red Cross. Southern Weekly reported that a staff member of
the Red Cross said they would send over 1,000 tents worth 13 million Yuan ($1.9
million)
to
the
earthquake-stricken area. The extortionate prices for the tents raised questions as to how
the funds were being spent.
5) Henan Soong Ching-ling Foundation
An accusation was made against The Henan branch of the Soong Ching Ling
Foundation that they have been 'abusing and profiteering from donation money' including
investing in a US$6.2mn land project in Zhengzhou, Henan's capital. According to Toby
Webb, This is a serious allegation as it is not just anonymous donations that have gone
astray but from poor farmers who have invested in the Foundation's "public welfare
medical insurance" scheme, run by the Foundation, and supposedly offering better
interest rates than the local banks. The financial experts argue the land deal makes the
fund fragile and any collapse would mean huge losses for very poor farmers.71 However,
others argue that the Soong Ching Ling Foundation are merely exploring innovative ways
of addressing social problems and are therefore not inherently corrupt.
6) Initiatives supporting corporate social responsibility

One initiative supporting corporate social responsibility in China was initiated by
Business for Social Responsibility (BSR). BSR was founded in 2002 and has the mission
to work with businesses to create a just and more sustainable world. In Spring 2011, I had
the opportunity to work with BSR to conduct monitoring and evaluation of a partnership
they were supporting between Nike and the China Youth Development Foundation. This
partnership helped to promote transparency in both organizations. Nikes community

71
Toby Webb, China charity tales: Where philanthropy meets corruption

http://tobywebb.blogspot.com/2011/11/china-charity-tales-wherephilanthropy.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Tobywebbss
marterbusinessblog+%28Toby+Webb%27s+Smarter+Business+Blog%29
41
investment strategy uses sport as a tool for positive change. This strategy leverages its
brand, experience, and passion for sport to improve the lives of the disadvantaged and
inspire others to take action. Nike launched a program to ignite a grassroots youth
movement using sports to tackle social causes. To achieve the desired impact in China
the company sought a partnership with the China Youth Development Foundation
(CYDF), which also engages and empowers youth. CYDF has networks nationwide and
the resources to connect with local government and local communities to expand Nikes
program. More information can be found about Business for Social Responsibility and
this partnership in Appendix 8.
7) Other Initiatives promoting transparency in social sector organizations in China:
Other organizations that are making significant headway in promoting
transparency amongst social sector organizations are the Social Venture Network, Qifang
and the Beijing Charity Association. The Internet, in particular social media, is playing an
important role in the promotion of transparency. One such organization is Qifang. Qifang
is an open platform and online community whose mission is to give everyone a way to
pay for their education. Leveraging the latest in web and community technologies, Qifang
efficiently brokers data and relationships through a transparent platform built on trust to
connect and assist everyone involved in education finance. Qifang is committed to
maximize social benefits through a sustainable business model.72
The government recognizes the importance of contributions and wants to facilitate

this by making the social sector organizations worthy of funding. The Ministry of Civil
Affairs has made significant steps in utilizing the web to promote transparency. They
have a very robust web portal for civil society, both nationally and locally. Karla Simon
suggests that, The national web portal73 has online application and filing mechanisms
for acquiring registration or changing registration and for filing annual reports. On the
basis of such reports, all CSOs (civil society organizations) are awarded grades and they

72
Qifang, http://qifang.com/pageAboutUs.htm?pageName=aboutUs
73
www.chinanpo.gov.cn
42
are required to prominently display the plaques showing the grades awarded in the annual
inspection. These processes are obviously designed to enhance accountability and
transparency for CSOs. After a report unveiled by a subdivision of the Ministry of Civil
Affairs showed that about 75 percent of charitable organizations in China either lack or
have no guidelines on the disclosure of information, MoCA has taken these facts into
account and has responded in important ways. First, in the Five Year Plan for the
Development of Charity published in July 2011, MoCA pledged to adopt rules that allow
for an organized and regulated system that will encourage further charitable initiatives
from various enterprises. Specifically these will be: (i) the implementation of the charity
law; (ii) regulations pertaining to community fund raising and volunteerism; and (iii) new
regulations for the management of social organizations (including foundations and nonprofit social enterprises). 74 If these initiatives are put into place, this will have
significant ramifications for the social sector in China.
8) Other types of organizations that are engaging in the social sector: Impact Investing
The Impact Investing space is an emergent sector in the world in general but
particularly in China. Impact Investing involves investing in social ventures or triple
bottom line companies, which are companies that are trying to, maximize their social,
financial and environmental impact. The development of metrics to assess social ventures
has been essential for the growth of the impact investing space. These metrics help to
ensure accountability of the businesses. One of the most successful that has been created
so far is the Impact Investing Reporting Standards (IRIS). Societal demand for such
standards plays an incredibly important role in encouraging the development of impact
investing. As Amy Domini argues, For socially responsible investors, impact starts by
changing the dialog. That's what is accomplished by setting standards to what you buy.
There was no such thing as a corporate social responsibility report until responsible

74
Karla Simon, Fashioning new government-mandated charity policies for accountability and
transparency http://philanthropynews.alliancemagazine.org/fashioning-new-government-mandatedcharity-policies-for-accountability-andtransparency/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+alliancemagazine
%2FDeMY+%28Latest+from+Alliance%29
43
investors demanded them. Now there are over 4,000 published each year, according to
the Corporate Register. There was no pressure on the Securities Exchange Commission
for greater disclosure until socially responsible investors raised the issue. There was no
baseline ongoing corporate social impact being studied until the research needed by my
field created it. Applying standards to what we buy has literally changed laws; it has
changed corporate behavior; and it has done this globally.75
There are a number of impact investing funds that are currently operating in
China that I had the opportunity to interview. For example, LGT Venture Philanthropy,
which is the Lichentensteins princely familys impact investing branch, has a presence in
China with most of their investments being $1 million or more. There are a number of
smaller funds such as the Lanshan social investment fund, the Yu fund and Transist.
Although it is early days, these organizations have the potential to really drive forward
impact investing in China.
9) Social Entrepreneurship
Social entrepreneurship is a relatively new concept in China. Meng Zhao suggests
that there are three forms of social entrepreneurship in China. There is shehui qiye (the
social enterprise), shehui chuangye (the social startup), and gongyi chuangye (the startup
for public good). The reason for these distinctions is that in Chinese the words social
and enterprise have different meanings than in English. The word social in Chinese
does not connote nonprofit, philanthropy, or charity, nor is it used in phrases like social
sector or social economy. In Chinese, the term public good has been used more
frequently to refer to philanthropy or charity. The word enterprise in Chinese contains
little implication of innovation, risk taking, or venture. It narrowly indicates business or
company. On the other hand, startup has a clearer reference to innovation and
venture.76 One of the challenges with the growth of the sector is the lack of government

75
Amy Domini, Want to Make a Difference? Invest Responsibly

http://www.huffingtonpost.com/amy-domini/want-to-make-a-difference_b_834756.html
76
Meng Zhao, The Social Enterprise Emerges in China
44
recognition of the term social entrepreneurship. Therefore currently no organization can

register as a social enterprise. Currently, it is not possible for organizations to register as
social enterprises. For social enterprises that have a revenue producing model, there can
be a challenge conceptually as to whether an organization that is doing good should be
allowed to also make a profit out of this. As with many other grassroots organizations,
the government neither bans them nor overtly gives them the right to operate. There are a
number of organizations, which help to support the emerging social enterprise sector. For
example, the Schoenfeld Foundations ECSEL Program. The ECSEL Program helps to
support some incredible social entrepreneurs through mentorship, training and seed
funding.77

77
ECSEL Fellows Program, http://www.ecselfellows.org/en/about-ecsel
45
46
Chapter 4: The Business Environment
47
Chapter 4: The Business Environment

As China positions itself more and more on the central stage as a world economic
power, it is challenged both internally and externally on the need to be both accountable
and transparent. Internally, companies, especially those set up to supply the West with
branded labels made in China, are under scrutiny to incorporate more responsible
business practice and CSR (corporate social responsibility) into their working
environments; Chinese workers are equally demanding better working conditions and fair
wages. On the international scene, there is pressure on China to comply with international
norms on disclosure for company listings on the stock markets and to allow the Chinese
currency to float on international currency exchanges. The more powerful China gets,
the more it will be subject to intense scrutiny about its trading practices. China has a long
way to go to meet these demands, much of which is dependent on an evolving rule of law
The CCP is being forced to take account of these issues of accountability to maintain
power and yet push forward its agenda of balancing its domestic and foreign agenda of
reform and economic stability.
Whilst China is coming to terms with Western demands for transparency when
dealing with international norms of trade, it has not progressed very far with labor rights
in the workplace. In the West workers rights are protected by labor unions for better
working conditions, minimum wage, security, etc. Although laws protecting the workers
rights do exist in China under the All-China Federation of Trade Unions, It has been
suggested that there is very little effort made to enforce any laws made.
As the scope of this paper covers the role of civil society in China, the focus is
necessarily limited to working conditions within China and the calls for corporate social
responsibility in the workplace, whether from foreign stakeholders or citizen demands.
Whilst there is a significant case to be made for business as it relates to the stock market,
currency trading, investors, property development and expansionist practices, these
subjects are too broad to cover in this paper.
48
International Pressure for Corporate Social Responsibility

China officially joined the World Trade Organization in 2001. Since then, many
Chinese companies have expanded all across the world and are playing an increasingly
important role in the global system. Partly as a result of their engagement with
international markets, these companies have begun to take steps towards a greater
consideration of corporate citizenship. A significant factor pressuring these companies to
become more accountable has been the role of a broad range of stakeholders, including,
foreign partners, governments, the general public, nongovernmental organizations, the
media and internal and external investors. The influence of these actors has led to
significant progress both in China and abroad.
The World Economic Forum and BCG (Boston Consulting Group) released a
report in 2011 that details the change in perspective on corporate responsibility that has
taken place in China over the years. The document suggests that, In the era of planned
economy, state-owned enterprises played a large role in assisting local governments and
communities. They offered healthcare and job training for their workers, and maintained
full employment as a form of economic contribution. They also built hospitals and
schools for their employees families, and replaced workers with their sons or daughters
after their retirement, to provide a predictable and secure life for everyone. These
practices together formed the system commonly known as an enterprise-run society.
However, such citizenship practices were not sustainable, as they did not help companies
to become more efficient. As a result, China reformed its state-owned enterprises (SOEs),
through ownership reform and price liberation. An initial outcome of this transition was
that many Chinese companies focused purely on profit and growth, leading to many
environmental problems. Facing this situation, China actively sought a more effective
balance between profitable growth and contributions to society, by learning from foreign
companies and joining the WTO. 78 There have been a number of rules and guidelines
that have been passed over the years to encourage corporate accountability and
responsibility. For example, in 2008, the State-Owned Assets Supervision and

78
P.10, World Economic Forum, Emerging Best Practices of Chinese Globalizers The Corporate Global
Citizenship Challenge
49
Administration Commission (SASAC) released a formal set of guidelines for how central
government-controlled SOEs (CSOEs) could engage in corporate social responsibility
(CSR) and report their CSR activities. These guidelines required that all central
government-controlled SOEs publish corporate citizenship-related reports by 2012.79
One of the main incentives for companies to become more transparent and to pay
more attention to governance was their desire to be listed on public stock exchanges. The
Shenzhen and Shanghai Stock Exchanges were established in the early 1990s. Since then,
more than 2,000 domestically listed companies have been obliged to comply with key
disclosure requirements. There is still much more that can be done. However, there have
certainly been a number of initiatives that have spurred information disclosure and
modernization of corporate governance among vast Chinese companies. In 1999, China
initiated a strategy entitled The Go Out Policy whereby the Chinese government
promoted Chinese investments abroad. As a result, around 700 Chinese companies listed
on overseas stock exchanges, which enabled them to obtain capital from foreign markets
as well as other benefits. To list on these foreign stock exchanges there are significant
requirements that Chinese companies have to comply with. This has led to Chinese
companies beginning to adopt rules and standards that are widely accepted across the
world.80
Bad Working Conditions
One of the biggest challenges in developing corporate social responsibility in
China is the lack of a strong regulatory environment. Zheng Yongnian argues that it has
not been an easy task for the Chinese leadership to build this regulatory environment. In
particular, legal fragmentation makes it extremely difficult, if not completely
impossible, to enforce laws, regulations, and contracts.81 Chinese labor law is extremely

79
p.12, World Economic Forum, Emerging Best Practices of Chinese Globalizers The Corporate Global
80
81
p.114, Joseph Fewsmith and Zheng Yongnian, Chinas Opening Society: The Non-State Sector and
Governance
50
comprehensive. However it is very difficult to enforce it due to the lack of accountability.

Yongnian suggests, The lack of law enforcement gives firms an incentive not to perform
CSR.82
Zheng Yongnian points out the huge affect that corporations have had on
peoples standard of living. For example, over 263,500 people died in industrial accidents
in two years (2004-2005). In the coal-mining sector, nearly 6000 miners died in 2005.
However, Yongnian also points out that it has been extremely difficult to enforce
effective policies to bring the situation under control.83 Cases involving labor rights are
particularly challenging. According to Yongnian, Workers rights are routinely violated.
Workers are often required to work far more than 40 hours a week, have few days off,
paid below the minimum wage, and not paid required overtime compensation. Physical
abuse of workers and dangerous working conditions are also common.84 The lack of
accountability of this issue further perpetuates the problem.
One of the most significant cases of controversy that caught the attention of the
media and the world over the past year (2011-12) has been that of Foxconn. Foxconn is a
multinational electronics company headquartered in Taiwan. It is the world's largest
maker of electronic components and the largest exporter in China. Foxconn has been
involved in several controversies, mostly relating to how it manages employees in China.
Foxconn's largest factory worldwide is in Shenzhen where hundreds of thousands of
workers are employed at the Longhua Science & Technology Park, a walled campus
sometimes referred to as "Foxconn City or "iPod City. This area does not just include
the factories but also workers dormitories, a grocery store, bank, restaurants and various
other amenities. There have been various allegations of poor working conditions that
have been raised on a number of occasions85. In particular, there have been reports

82
Governance
83 p.106, Joseph Fewsmith and Zheng Yongnian, Chinas Opening Society: The Non-State Sector and
Governance
84
Governance
85
The stark reality of iPod's Chinese factories, http://www.dailymail.co.uk/news/article-401234/Thestark-reality-iPods-Chinese-factories.html
51
highlighting long working hours, sometimes 16 hours a day for a paltry wage of $22.00
daily and discrimination against Mainland Chinese and peasant workers by
their Taiwanese co-workers. In 2012, Apple hired the Fair Labor Association to audit
working conditions at Foxconn. Foxconn was in fact found to be compliant in the
majority of areas when Apple conducted its audit. However the audit did substantiate
some of the allegations. As recently as March, 2012, there were strikes for better
conditions and a riot ensued at the plant in Chengdu following an explosion at a Foxconn
factory.
There have been a number of suicides that have been associated with Foxconn.
Sun Danyong, a 25-year-old male, committed suicide in July 2009 after reporting the loss
of an iPhone 4 prototype in his possession. In 2010, there were fourteen suicides of
Foxconn employees. Brown describes how the pressures in China, became all too clear
in the spate of suicideswhere workers in what seemed like a model environment with
state of the art facilities threw themselves off the top of one of the taller buildings on the
site. International coverage of this issue forced the owner, Taiwanese Terry Gao, to
mount a campaign to improve conditions in the factory.86 Foxconn installed suicideprevention netting at some facilities, and it promised to offer higher wages at its
Shenzhen production bases. However, workers are also forced to sign a legally binding
document guaranteeing that they and their descendants would not sue the company as a
result of unexpected death, self-injury, or suicide.
Midler describes how outsourcing to China has not been as successful as is often
described. Midler argues, Chinas manufacturing operated in a world where principles
were in short supply and the court system could not be counted on to keep operators
honest.87 This was particularly the case because badly-made goods were involved, some
of which were actually harmful. Furthermore, Brown suggests that increasingly powerful
Chinese factories were turning the tables on their foreign customers because of the

86
P.72, Kerry Brown, Hu Jintao: Chinas Silent Ruler. A political biography.
87
Paul Midler, Poorly Made in China: An Insider's Account of the China Production Game
52
monopoly they were eventually able to exercise.88 A large part of the reason that Chinese
companies become more ethical is because of societal pressure to do so. Appendix 6
shows the increase in stakeholder pressure on companies in China. From the perspective
of the government, CSR initiatives took off in the West in the late 1990s, but mid 2005
was a turning point for CSR in China. In 2006, a law was passed which calls for greater
CSR. From 2006 to 2009, eight national CSR guidelines and standards were passed.
Steps towards Better Practice in the Workplace
As the demands continue for better working conditions and an end to social
injustice, especially for migrant workers who enjoy less rights than citizens of a particular
township, there is often little other choice than for workers to take to the streets in protest,
which often leads to beatings to dispel the crowds, and growing discontent.
In June, 2011 a senior official, Guo Chen, of Chinas official trade union, the AllChina Federation of Trade Unions (ACTFU), is reported to have said that unlike western
unions, which always stand against the employer, Chinese unions are obliged to boost the
corporations development and maintain sound labor relations. However, this new era
of activism is forcing the hand of the ACFTU to re-examine its role and look for ways to
become an organization that really does represent workers interests. Although some
ACFTU officials are trying to make a positive impact, there are still many others who are
reluctant to involve workers and bring them into the collective bargaining process. Of
course any decision about the future direction of the ACFTU ultimately lies with the
Communist Party of China. But, the partys ideals are not s et in stone; in todays market
economy it has to be flexible, and officials are sometimes open to persuasion, especially
on issues related to labor. If the ACFTU can show it can better serve the partys interests
(ensuring economic growth as well as social stability) by standing up for the rights and
interests of workers, the party will certainly take note. One thing is sure, the CCP cannot
ignore the increasingly angry calls for better working conditions.

88
p.64, Kerry Brown, Hu Jintao: Chinas Silent Ruler. A political biography.
53
Governments Role in Promoting Corporate Social Responsibility

In 2003, the Chinese central government launched The Scientific Outlook on
Development. Local governments followed with a number of similar initiatives. The
Shenzhen government started tracking social responsibility efforts in 2003 and published
a report, Shenzhen Should Urge Companies to Fulfill Their Social Responsibilities in
2005. In 2004, the Changzhou government established a Corporate Citizenship
Standardization Committee. This was the first system in the country to create formal
standards for these practices.89 The government seems to be taking steps to improve CSR
in big state firms. Zheng Yongnian suggests that, the development of the regulatory
regime pushes the firms to improve their corporate governance and thus become more
socially responsible.90
Steps towards Transparency and Reform

The CCP faces mounting problems of sustaining economic growth whilst being
subject to intense scrutiny about Chinas trading practices. For example, it can seem very
attractive to partially privatize a state-owned enterprise to bring in foreign investors; but
afterwards there are demands for higher standards of transparency and accountability.
Beijing also wants to see small and medium-sized firms flourish as part of broader
economic and political reforms. Prime Minister Wen Jiabao said in March 2012 that
Beijing had to cut its growth target from 8% to 7.5% in order to meet economic
challenges.91 China is aware that in order to raise the productivity of Chinese enterprises
and rebalance the Chinese economy, it needs to generate savings and investment and
boost the internal market, which is vital to generating jobs and ensuring social stability.

89
90
Governance
91
Euronews Business, China Praised for Easing Yuan Rules

http://www.euronews.com/2012/04/16/china-praised-for-easing-yuan-rules/
54
In order to achieve this, however, China will have to accept better conditions in the
workplace, more economic and political pluralism, and the processes of justification and
accountability that go with it.
55
56
Chapter 5: Government and Civil Society
57
Chapter 5: Government and Civil Society

Policy of the Communist Central Party (CCP)
The challenges facing the CCP are enormous. On the one hand, stability, secrecy
and control from the inner circle are held as sacrosanct. Its top down and autocratic
approach to governance is strictly upheld and any attempt to dislodge this power is dealt
with sharply and without remorse. On the other hand, the CCP is not immune from the
growing discontent of civil society at the grass roots level. Public anger is growing over
the costs of reform with protests by laid-off workers, land grabs, demolitions, corruption,
and unpaid wages and pensions. Far from remaining obdurate and static, there are signs
the CCP is poised to make maximum use of research data and public opinion to start
making changes, primarily at the local level. The CCP absorbs many models from around
the world, experiments with them and adapts them, Chinese style.
Their approach
embodies the combination of pragmatism and incrementalism. They have a vast body of
think-tank research centers, with over 4000 fulltime researchers at one of the centers in
Beijing alone92. Experiments are constantly being made through Special Economic
Zones93 to test out different models of market philosophy and social experiments. So,
despite their apparent fixed attitude, the CCP remains alert, adaptive and ready to meet
challenges, albeit in a measured way.
Government Transparency
The history of top down lack of transparency and accountability goes back a long
way. Fukuyama suggests that, Dynastic Chinafailed to create formal institutions of
accountabilityThe precocious consolidation of a modern state allowed Chinese
governments over the centuries to prevent the spontaneous emergence of new social
actors that would challenge its power, such as blood aristocracy, a commercial
bourgeoisie, independent cities, religious institutions, or an organized peasantry.94 He
further states that: There is virtually no formal downward political accountability in the

92
Chinese Academy of Social Sciences (CASS)
Special Economic Zones: http://www.china.org.cn/e-china/openingup/sez.htm
94
p.15, Francis Fukuyama, The patterns of history, Journal of Democracy
58
Chinese political system. There are limited local elections, and Chinese citizens have the
right to sue local government agencies for performance failures as in other Asian
countries. Most observers contend, however, that these institutions do not confer any
significant power on citizens to change government behavior.95
Strong institutions to promote accountability do not exist. Wang Xinsong,
Professor at the School of Social Development and Public Policy, Beijing Normal
University, in an interview, argued that there is a great need for local accountability and
in particular horizontal accountability within the system of governance. To do this, the
capacity of institutions needs to be developed. The Central Government issues dictate to
the Provincial Committees and from there the chain of command goes to the City
Committees, County Committees, Township Committees and Village Committees. At
each stage government officials are accountable only to their superiors. Their personal
and political fortunes are determined by how those above judge their accomplishments
and their failures. Political credit is given primarily for meeting economic growth rate
targets and ensuring social stability. With no transparency this often gives rise to
efforts to hide bad news, seek favor from higher officials and manipulate the truth.
Because, once they admit the problem, they know that they could lose political favor and
maybe lose their jobs. A well-known case of contaminated baby milk, for example, was
kept quiet to avoid political wrath. Fu Jianfeng, Southern Weekend newspaper wrote:
For reasons that everybody knows, we were not able to investigate the Sanlu case,
because harmony was needed everywhere. I was deeply concerned because I sensed that
this was going to be a huge public health catastrophe, but I could not send reporters to
investigate.96
However there are some ways in which the Chinese government has used its lack
of accountability as a source of its strength. Fukuyama suggests that, The Chinese
governments lack of accountability allows it to make fast decisions and put massive
infrastructure projects in place quickly.97 Certainly there is a benefit of not having to be

95
96
Fu Jianfeng, Southern Weekend
97
Francis Fukuyama, What is governance?
59
accountable to the people in terms of the speed within which decisions are able to be
made.
Corruption:
The lack of transparency and accountability in Chinas history has given rise to
corruption. Gold suggests that, Corruption intensified during the 1990s as economic
growth accelerated and the opportunities for officials to profit from their positions
multiplied. Officials personal assets are not disclosed in a reliable way, and much of
their corrupt activity is conducted through family members. Many cases have involved
the collection of bribes for the procurement of licenses or the manipulation of regulations,
but the most flagrant examples of corruption center on land deals. While less common
than the mass protests in rural areas over corrupt land deals, protests also occur in the
cities, where many officials use their power to exploit the booming real-estate market.98
Fukuyama suggests, however, that corruption is not so apparent in the Central Party,
Most stories of egregious corruption come from the lower levels of the party and
government. Although high CCP cadres enjoy huge perks for themselves and their
families, one does not get the sense that they are diverting massive sums of money to
their own accounts on the scale of, say, senior Russian political figures.99
The CCP takes enormous steps to maintain their monopoly on power and
maintain order. Any scandal, internal disputes or challenge to power is therefore kept
strictly out of the public domain. It was therefore with great interest that the world press
and Chinese media reported on Bo XiLais expulsion from the CCP in April 2012. His
sacking was all the more extraordinary as he was part of the 25-member Politburo and
contender to the inner circle of the nine member Standing Committee, effectively the
ruling power of China, in October 2012. There are various suggestions and rumours
regarding the precise reasons for Bo Xilais fall from power. Many consider that he had
become a political liability. He was a firm supporter of Maoist ideologies but he also
promoted capitalist development in Chongqing through what became termed, The

98
P.23, Gold, Thomas, China, Countries at the Crossroads
99
p.21, Francis Fukuyama, The patterns of history
60
Chongqing Model. Outwardly his fall from grace was a direct result of the attempted
defection of Wang Lijun, Chongqings gang-busting police chief and the suspected
involvement of his wife, Gu Kailai in the murder of Neil Heywood.
It has been
suggested, however, that his extravagance, corruption and maverick approach to

leadership was an embarrassment to the CCP. The ultimate goal for the government is
stability. Roach suggests, Those at the top no longer want to concede anything when it
comes to stability. By addressingpolitical instability by removing Bo, stability has
gone from a risk factor to an ironclad commitment.100 The inviolability of the CCP does
not extend to the local levels of government, especially in cases of well-publicized
violations and corruption.
Shanghai Land Corruption
In Shanghai, tens of thousands of people lost their homes and businesses from the
1990s to the early part of the 21st century in a frenzied land-grab which resulted in one
of the largest building booms in recorded history. About 20 million square meters of land
was developed in the city between 2000 and 2005 alone.
Citizens with justified
grievances found themselves fighting a city government and corrupt officials who were
making huge profits under the Shanghai Party Secretary, Chen Liangyu, receiving payoffs from developers. Chen was in a very privileged position and he and his minions felt
impervious. Firstly he held a seat on the Politburo and so had strong connections to the
CCP; secondly revenue from Shanghais government initiatives accounted for 80% of
Shanghais GDP and so was a very important source of income to the CCP and thirdly
too many people were earning vast fortunes out of these land-grabs to want to do
anything about it.
In the end Chen Liangyu went too far and over-stepped the mark. Unchecked
corruption resulting from these land gabs amounted to millions of dollars and created a
black-collar class of rich bureaucrats living an elitist life. Tales of the multiple land
disputes in Shanghai began to seep out of the city to the press and online platforms and

100
Stephen Roach, Chinas Stability Gambit, http://www.project-syndicate.org/commentary/china-sstability-gambit
61
complaints came pouring into Beijing. In 2006, Hu Jintao faced with many revelations
about corrupt officials throughout China blamed the abuse of power by party bureaucrats
for rising social conflict and public protests. In a speech in 2006 addressing the anticorruption commission, he said these protests could, lead to a series of explosions which
would cause chaos throughout society and paralyze the administration101. Chens final
downfall came when he challenged Hu Jintao publically over the CCPs decision to cut
back Shanghais development programs because of the economic recession worldwide,
and public protests reached an embarrassing level for the CCP. Chen Liangyu was
imprisoned while his cronys new people were brought in to take their place.
In May 2008, faced with the corruption charges related to the Shanghai land
seizures, a decree was announced by the central government which stated it recognized
the need for transparency that the local authorities were required to open their books and
reveal the terms and compensation for land seizures to citizens who requested the
information. However, a phrase was included that any information that could be
considered as harmful to state security and social stability could not be disclosed. Beijing
then closed ranks, the matter was considered settled, and further comment was
suppressed. The Shanghai case had nevertheless been one of the most highly charged
corruption investigation in the history of the Peoples Republic of China.
The Wukan Approach
Problems in 2011 resulting from extensive protests related to land deals in Wukan
were dealt with in a different way. This gives an example of an attempt that has been
made to promote more accountability between local government and the people. For at
least twenty years, there had been complaints and petitions regarding illegal land grabs in
Wukan, Guangdong Province. 102 The Guangdong officials largely ignored these
complaints. In September 2011, the residents of Wukan had had enough and they went to
the streets in protest, storming a police station and an industrial park. Party officials were

101
p. 139, Richard McGregor The Party
102
Kent Ewing, Guangdong boss bets on velvet glove.

http://www.atimes.com/atimes/China/NA07Ad02.html
62
forced to flee the scene to avoid the wrath of the mob. Rather than responding with an
expected, iron-fisted crackdown, Zhu Mingguo, Wang Yangs deputy suggested a peace
offering. Wang Yang is the Chinese Communist Party (CCP) chief in Guangdong. This
response resulted in the immediate diffusion of the protests and instead the village elders
showered praise on the provincial authorities. This has been heralded as the Wukan
approach and there is hope that this occurrence will set a precedent for the response from
local Chinese government to future challenges in other areas.
As a response to the Wukan protests, the Guangdong Provincials gave Wukan
residents the opportunity to vote. On February 1st 2012, villagers were given the
opportunity to cast their ballots to select an election committee. According to Caixin
magazine, the elections were both open and transparent. Caixin magazine suggests, At
the end of the day, nearly half of the 13,000-person village had entered the school yard to
elect 11 residents to the election committee, which will monitor upcoming elections in
March for the village committee that will oversee all local government operations. Weeks
ago, Guangdong officials appointed protest leader Liu Zuluan to the post of party
secretary, in a sign that they sincerely wanted to see free and open elections. The
villagers, however, say provincial officials have yet to fulfill other promises. For one,
they are still waiting for the return of the body of protest leader Xue Jinbo, whose death
in custody sparked the protests' resurgence late last year. Officials have also yet to move
forward with returning the tracts of land that villagers said were seized unfairly over the
last ten years.103
The protests that took place in Wukan are not unique. However, the response
from the officials was. There have been increasing demands from civil society for more
accountability from the government. The World Bank suggests that, Social risks are also
expected to ariseIf the experiences of other countries is any guide, the rising ranks of
the middle class and higher education levels will inevitably increase the demand for
better social governance and greater opportunities for participation in public policy
debate and implementation. Unmet, these demands could raise social tensions; but if the

103
Caixin magazine, Weeks After Protests, Wukan Holds Elections http://english.caixin.com/2012-0202/100352814_2.html
63
government finds ways to improve consultation and tap the knowledge and social capital
of individuals and nongovernment agencies, these demands can be transformed into a
positive force supportive of improved governance and public policy formulation.104 It is
therefore in the governments incentive to work out ways to be responsive to the needs of
its citizens.
Hong Kong
In Hong Kong, the officials are checked by a three-prong system whereby the
officials would not want to be corrupt morally, do not need to be corrupt financially,
and do not dare to be corrupt legally105. This three-pronged system can work as a check
on corruption of all government officials. It provides economic incentives as well as
moral persuasion and legal constraints for being less corrupt.
Experiments with democracy at the village and township level
Mark Leonard suggests that the Chinese government has been increasingly
finding ways of involving the people in its major decisions about policy.
Public
consultations, expert meetings and surveys are becoming a central part of Chinese
decision-making106. Various experiments with different forms of governance have taken
place in Chongqing. To some extent, all of the information that came out Spring 2012
regarding Bo Xilai undermines much of this experimentation but there are still lessons
that can be learnt from these experiments that can be applied elsewhere. Leonard
suggests, Chongqing is trying to become a living laboratory for the ideas that Pan Wei,
Wang Shaoguang and Fang Ning described: strengthening the rule of law and consulting
the public over major decisions. Li Dianxun, the director of the city governments legal
affairs office, has spearheaded the process107 It is not clear however that the public
were genuinely consulted or whether this was merely another attempt at coercion. Li has
gathered around him a group of equally super-charged high-flyers: all with law degrees,

104
P.13, World Bank, China 2030
105
p.103, George Fusun Ling, China Developing: Cultural Identity of Emerging Societies
106 p 67, Mark Leonard, What does china think?

107
Mark Leonard, What does china think?
64
some experience of living abroad and a good command of the English language. He
speaks of his freedom of information clause, and his regulation on accountability,
which allows the local heads of government offices to be questioned and investigated if
they make debatable decisions. However, they have also made the decision to make all
significant government rulings subject to public hearings in person, on the television or
on the Internet. So far, Li has organized over 600 public hearings involving 100,000
citizens on compensation for peasants whose land has been requisitioned; on the level
of the minimum wage; and on the setting of prices for public utilities like water,
electricity, natural gas, road, bridges, education, public health, public transport, sewage
and refuse disposal. Hu Jintao and Wen Jiabao invited Li to make a presentation at the
governments headquarters and the experiment is being emulated in other cities around
China. Chongqing is a huge city with a population of approximately 28 million. Its
bewildering scale even by Chinas standards, could give its experiments with public
consultation national significance.108 However it is possible that the overthrow of Bo
XiLai will make people question the integrity of these public consultations. It is not clear
that the motivation for these public consultations was a genuine attempt to understand the
needs of the masses but rather as an attempt to appease them and make them feel as
though they were part of the process when really their opinions did not matter to the local
leadership.
Experiment in Zeguo in Wenling City: Deliberative democracy
The experiments have not just been with elections but also with different forms of
democracy. For example, Zeguo experimented with different forms of consultation.
These consultations were unique, not just in China but in the world. They used a novel
technique called deliberative polling to decide on major spending decisions. This
method, which was developed by the Stanford political scientist, James Fishkin, is
designed to help policy-makers consult their citizens.109 Deliberative polling tries to solve
the problem of uninformed voters by randomly selecting a sample of the population but

108
p.68, Mark Leonard, What does china think?
109
65
then invoking them in a consultation process with experts, before asking them to vote on
their decisions. So far, this is a one-off experiment but Fishkin and the Chinese political
scientist He Baogang, who advised the Zeguo government on the mechanics of the
consultation, believe that deliberative democracy could provide a template for political
reform in China. Leonard argues that, It shows how governments, without party
competition or the conventional institutions of representative democracy as practiced in
the West, can nevertheless realize, to a high degree, two fundamental democratic values
at the same time political equality and deliberation.110 Deliberative democracy is a
form of democracy in which deliberation is central to decision making. It adopts elements
of both consensus decision-making and majority rule. Deliberative democracy differs
from traditional democratic theory in that authentic deliberation, not mere voting, is the
primary source of legitimacy for the lawmaking processes.
Lin Shangli at Fudan
University has argued that the deliberative model of democracy is more suitable to
Chinas local conditions than traditional forms of democracy. He suggests that, In facing
the pressures associated with the rapid democratization in Eastern Europe and Asia,
Beijing has tried to develop a new art of ruling that combines administrative order with a
consultative mechanism that will bring governments and people together, improve the
relations between cadres and the masses, and achieve good governance in local
politics.111
The Appeals Process
One way in which the government has tried to give the impression that it is
responsive to the needs of its citizens is the Appeals Process. The Appeals Process is a
mechanism whereby constituents fundamental grievances can be brought to the attention
of local government officials. If the government is seen to be responsive to the peoples
requests, then this forum creates a sense of accountability and justice. However, the
appeals process often just acts as an appeasement rather than an appeal to justice. Cai
suggests that, Believing that intervention by higher level authorities or leaders is helpful,

110
111
Governance
66
Chinese citizens do not hesitate to appeal to them.112 With the Appeals process, it is
seen that local officials often try to cover up the extent of the problems. Cai continues,
To achieve the goals set by the higher-level government, lower level officials at times
use repression to silence the discontented. Yet repression may not be sufficient to lower
the number of appeals, especially because most of the demands are legitimate.113 There
are, however, limits to what type of appeal would be allowed. Cai argues that, The
government is tolerant of nonpolitical requests, but not of political ones114. Further: In
terms of modes of action, large, well-organized collective action is discouraged by the
government.115
Social Media
The Internet in some ways is forcing the Chinese government to look at ways in
which they can become more transparent and to be more responsive to the desires of the
Chinese citizens and therefore ensure stability. The BBC suggests, The State Council,
the Chinese government's highest decision-making body, issued a notice calling on
officials to "make more efforts to ensure transparency in government affairs."116 The
Internet has certainly played a powerful role as a potential source of transparency.
Fukuyama suggests that, Countless stories appear in the Chinese press or on micro blogs
about corrupt deals involving local officials, developers, and other elites. Periodically one
will erupt into a major scandal, such as the melamine-tainted infant formula of 2008 or
the shoddy construction revealed by the Sichuan earthquake that same year. Selection of
political leaders, including for the upcoming transition in 2012, is a totally nontransparent
process.117

112
P.437, Yongshun Cai, Managed Participation in China
113
114
115
116
BBC News, Can micro blogs change Chinese rulers? http://www.bbc.co.uk/news/world-asia-pacific14422581

117
67
Rawnsley suggests that, Since its invention the Internet has been associated with
democratic political communication.
118
Rheingold further suggests that, The
Internetif properly understood and defended by enough citizens, does have

democratizing potential in the same way that alphabets and printing presses have
democratizing potential.119 Blogging in particular has had this affect. According to
Rawnsley, Most attractive about blogging is that it represents a genuine bottom-up
process of unmediated and unfiltered communication. Bloggers can also challenge
prevailing social orders.120
Despite some attempts to open up, there are still many limits on the Internet. Gold
suggests that, The blogosphere may come to serve as a healthy safety valve for public
debate as well as an important means of communication between the people and the state.
However, the state continues its efforts to monitor, filter, and control the Internet,
erecting what foreigners call The Great Firewall of China.121
Many have highlighted the interference of the Chinese Communist Party to
restrict the Internet in China. The withdrawal of Google because of censorship, the
extensive monitoring of email, tweets and bloggers, and arrests made following
subversive comments are a very negative side of the Internet in China. Despite all this,
China now has the worlds largest population of Internet users, more than 380 million
people, and the use of the Internet has and is transforming Chinese society at a
remarkable pace. Weibo, Chinas version of twitter has approximately 250 million
members. The Sichuan earthquake in 2008 received extensive coverage through the
Internet and helped to raise funds, which poured into the relief effort. Jet Lis One
Foundation raised approx $4 million within three days of the quake. Most of this amount
came from individual online donors. This was an unprecedented response from society in
China.

118 P.126, Joseph Fewsmith and Zheng Yongnian, Chinas Opening Society: The Non-State Sector and
Governance
119
P.126, Joseph Fewsmith and Zheng Yongnian, Chinas Opening Society: The Non-State Sector and
Governance
120
Governance
121
p.9, Gold, Thomas, China, Countries at the Crossroads
68
Furthermore, in July 2011, the crash of a high-speed train in Zhejiang Province

was immediately shown on the Internet through Chinese twitter, weibo, despite
Government attempts to suppress the news, and the Government was obliged to take
responsible action. Branigan suggests that, Internet users attacked the government's
response to the disaster after authorities muzzled media coverage and urged reporters to
focus on rescue efforts. "We have the right to know the truth!" wrote one micro blogger
called kangfu xiaodingdang. "That's our basic right!122"
Often the Internet can create the illusion of transparency when in reality, it does
not exist. Fukuyama suggests that, The Chinese governments control and monitoring of
the Internet is legendary and, with a reported fifty-thousand censors, is much more
extensive than in other authoritarian countries. As is well known, when the extensive
micro blogging and Internet discussions move toward criticism of government
performance, they are usually shut down. But that several hour window in which
comments circulate allows the government not just to identify its critics, but also to listen
to what they say. It is rumored that Hu Jintao receives regular reports of public opinion as
expressed on Internet forums and Sina.coms Weibo (Twitter-like) service. Through this
kind of mechanism, the Party does not just shape public opinion, but seeks to stay on top
of it enough to be able to respond to popular pressures before they erupt into violent acts
of social protest. One can look at this cynically and say that the government is letting
people blow off just enough steam to protect its own power and privileges; or one can
regard it as a form of democratic mimicry by which rulers seek to be responsive to public
opinion.123
Rawnsley argues that, with so many suggesting that the Internet will force the
eventual collapse of the CCP, it is little wonder that the regime feels under siege. It
therefore imposes control on Internet use.124 It is therefore clear that the tool of the

122
Tania Branigan, Chinese anger over alleged cover-up of high-speed rail crash
http://www.guardian.co.uk/world/2011/jul/25/chinese-rail-crash-cover-up-claims
123
124
Governance
69
Internet can both be used for liberalizing goals but also as an instrument of tyranny. The
government is clearly committed to the potential of the Internet as a tool of governance,
but also anxious to restrain the use of the Internet and contain its power. The challenge,
as Rawnsley describes, is that what is good for governance in China the free flow of
information and ideas is ultimately bad for the Chinese government.125 George Fusun
Ling suggests that, The Chinese government through open expression on the Internet,
now has many ways to know the peoples interests and needs as to work toward their
well-being and also for what is socially beneficialin the information age, technological
resources can give the government the means to listen to the voice of its people, apart
from the structured channel of the Peoples Congress.126
The Future:
There has been a lot of rhetoric about the need to be more responsive to the
demands of citizens. Mao Zedong was certainly very clear about the role that the Party
had in being accountable to the people. He argued, Another hallmark distinguishing our
Party from all other political parties is that we have very close ties with the broadest
masses of the people. Our point of departure is to serve the people wholeheartedly, and
never for a moment divorce ourselves from the masses, to proceed in all cases from the
interests of the people, and not from the interests of individuals or groups...It (the Party)
should teach every comrade to love the people and listen attentively to the voice of the
masses; to identify himself with the masses wherever he goes, instead of standing above
them.127
Wandering China also suggests that, Wen Jiabao and other Chinese leaders have
pledged greater transparency and more attention to disputes between citizens and local
officials in an effort to reduce social unrest that could erode the Communist Partys claim

125
Governance
126
127
p.315, The Selected Works of Mao Tse-Tung Vol. III
70
to power.128 However, it is not clear to what extent this rhetoric is matched with action.
The CCP is aware of the corruption charges and the unrest of the people but it is also
aware that it is very much dependent on strong support from the whole chain of
provincial and local government. Richard McGregor in his book The party quotes one
local official in Shanghai as saying: We cant push the anti-corruption campaign
indefinitely. For who else can the regime depend on for support but the great masses of
middle-level cadres? If they are not given some advantages, why should they dedicate
themselves to the regime? They give their unwavering support to the regime because
they get benefits from the system. Corruption makes our political system more stable.129
As a result, a blind eye is often given to corruption unless the problem becomes acute or
overly publicized.130
As the voices of the poor of China become louder, the CCP is prompted to do
everything possible to maintain stability. Wen Jiabao, Premier of the State Council,
warned in 2007 of a Chinese economy that was in danger of becoming unstable,
unbalanced, uncoordinated, and unsustainable.131 At the end of his term of office in
March, 2012, he said: We must act with a strong sense of responsibility toward the
country and the people, take more effective steps to resolve these problems, strive to do
all our work better, and truly live up to the people's expectations132. The CCP is fearful
of bottom-up rebellion and they want to avoid it at all costs. Wen Jiabao, when reviewing
his term in office, indicated that the CCP was very much aware of the mood of the
country: He said: We will carry forward reforms in social programs and income
distribution, strike a balance between economic and social development, and effectively
safeguard social fairness and justice. We will run the government in accordance with the

128
Wandering China, Wen Says China should allow people to criticize government
http://wanderingchina.org/2012/02/02/wen-says-china-should-allow-people-to-criticize-governmentbloomberg/
129
p.168, Richard McGregor ,The Party
As in the corruption related to the Shanghai land seizures and Wukan Land seizures,
http://en.wikipedia.org/wiki/Protests_of_Wukan
131
Stephen Roach, Chinas Stability Gambit, http://www.project-syndicate.org/commentary/china-sstability-gambit

4
Fifth session of the Eleventh National Peoples Congress on March 5th, 2012
71
law and promote innovation in social administration, properly handle the relationship
among the government, citizens and social organizations, and build a service-oriented,
responsible, law-based and clean government.133
Despite the many deficiencies in transparency and legal institutions, the Chinese
state has nevertheless held China together during the most dramatic economic upsurge in
recent history. It is yet to be seen whether the thrust of creating a harmonious society can
keep pace with this massive modernization program and increasing boldness by Chinese
citizens demanding social justice.

133
Fifth session of the Eleventh National Peoples Congress on March 5th, 2012
72
Chapter 6: Conclusion
73
Chapter 6: Conclusion
Despite the significant growth that has taken place since 1978 both in terms of
gross domestic product (GDP), business expansion, real estate development and social
organizations, there are still enormous social problems in China. The Chinese Communist
Party (CCP) has been reshaping The Peoples Republic of China (PRC) into a marketbased and globally integrated economy, society, and culture. The poor are often left to
fend for themselves. Gold suggests that, While producing GDP growth rates that are
among the worlds highest, the partys strategy has led to the sort of severe inequality,
weak social-welfare system, worker exploitation, job insecurity, and environmental
degradation that is associated with capitalism at its worst.134
Shifting away from export-oriented low-wage production, upgrading its economy,
improving social services, and boosting domestic spending are the inevitable direction
China needs to go. However, it is difficult for this to happen quickly due to Chinas huge
population, complex state politics, warped yet hard-to-reform education system, and long
cultural tradition that have not emphasized innovation and originality.
As Jianying Zha argues, The next great transition, from compliant subjects to
true citizens, from Made in China to Created in China, will be even harder to achieve
than whats been accomplished thus far.
It needs a good deal of bold yet careful
rethinking about existing political institutions, economic structures, education,

philosophy, and cultural conventions. It needs patient consensus building, complicated
negotiations, and difficult reforms. It needs vision, resolve, talent, and some luck. It
takes courage. It takes time. But everyone understands that only when China solves
these critical problems can one then talk about a true cultural renaissance.135
Interestingly, despite the excessive focus on money-making and materialistic
success in modern-day China, the Confucian and Taoist virtues of common sense and

134
Thomas Gold, China, Countries at the Crossroads
135
p224, Jianying Zha, Tide Players
74
decency, moderation and restraint, are also being discussed more and more. Along with
this comes the call for happiness indicators and the need to create and sustain a
harmonious society. The calls on Taoism and creating a harmonious and happy society
can be seen as attempts to quell a potentially rebellious society, but equally they can be
seen as setting the standard towards which all sectors of government and society should
aspire.
Civil Society Calls for Reform
In early 2011, various anonymous online calls for a jasmine revolution along the
lines of the Arab spring led to a wave of arrests by the security apparatus136. To add a
further dimension to this, the Great Firewall of China, a filtering system that blocks
websites hosted outside the country, began to disrupt a much larger number of sites in the
early months of 2011. Whilst the response to a perceived threat seemed somewhat
draconian, if one puts it into historical perspective, it was merely a manifestation of an
age-old preoccupation of Chinese leaders with stability faced with ruling over a country
of such vast proportions. The interesting thing was that there was little popular support
for a revolution. In fact in a Pew poll in spring 2010, 87% of Chinese expressed
satisfaction with their countrys direction.
Two thirds believed that their lives were
better than five years ago and almost three-quarters of Chinese expressed optimism about
the future.
In a similar survey conducted by Tony Saich, reported in the East Asia Forum on
July 24, 2011, he said: Two clear trends are visible. Citizens disaggregate the state
and, while they express high levels of satisfaction with the central government,
satisfaction declines with each lower level of government. While in 2009, 95.9 % were
either relatively or extremely satisfied with the central government, this dropped to 65%
at the local level.137

136 China: A sharper focus, Financial Times, 10 May 2011
137
Tony Saich, Chinese governance seen through the peoples eyes
75
It would seem therefore that the calls for reform are primarily focused on the need
for the lower echelons of administration to be more accountable. The survey conducted
by Saich in 2009 indicated that 30% of the targeted poll thought their local officials were
incompetent, and 40% thought they just looked after their own interests. Corruption is
always ranked as the biggest problem. A graph showing his findings in surveys he
conducted from 2003-2009 is reproduced below.
Percentage of citizens relatively satisfied or extremely satisfied with
government
The key challenge seems to be whether the CCP can deliver the reforms
acknowledged by Premier Wen Jiabao as he leaves his term in office in 2012. He has
been remarkably forthright and persistent in calling for political and legal reform. The
key factor is whether the new top leadership will follow through with these reforms and
find ways to deal with the multiple challenges it faces (inequality, social unrest,
unemployment, effective urbanization, environmental degradation).
The absence of
checks and balances, official secrecy, cronyism, the misuse of official positions along
with poor safety standards and weak regulation raises the question as to whether these
76
obstacles will rise to a level where they overwhelm the administrative capacity to deal
with them.
According to the chart above, Chinese citizens are looking to the CCP for reform;
the question is whether and to what extent they will be able to deliver.
Legal system and Government Reform
Whilst there is a long way to go, there are some attempts to support accountability
and transparency within the legal system. China is one of the only one-party states to
allow citizens to sue the state in court. The number of law suits of citizens against the
government has increased from 10,000 five years ago to 100,000 in 2005 and the
success rate is slowly improving.138 It seems that the government realizes that developing
institutional ways of dealing with grievances can make the state more stable. They are to
some extent working out ways in which citizens can be compensated for ills rather than
merely punished for dissent. The senior leadership has intervened on several occasions,
managing to deflect criticism on to corrupt local authorities thereby allowing
themselves to take the side of the little guy. However this is seen as appeasement and
may prove more challenging in the long run.
This seems to highlight a greater need for increased feedback loops between
society and the government. It is in the governments interest to allow for more openness
of information as it enables them to understand the needs of the population better. It helps
to maintain stability and decrease the likelihood of significant protests. As this paper has
continually argued, one of the greatest needs and challenges in China is that of
accountability, transparency and better governance of many different types of
organizations,
from
business
to
foundations
to
grassroots
non-governmental
organizations to the government itself. I strongly agree with Lings suggestion that, the
Chinese centralized government need not be authoritarian, nor need it be operating only

138 p. 73, Mark Leonard, What does china think?

77
for its own benefits. It could be a centralized effort to implement programs for social
benefits in a pluralistic society with transparency and accountability.139
Increasing Role of China in the Global Sphere

The implication of transparent and accountable Chinese institutions is not just felt
within China but all across the world. In the long term, as some Chinese scholars
recognize, Beijing will struggle to achieve global legitimacy without substantial changes
at home. The CCP talk about the success of gradualism and the Harmonious Society,
and peaceful development but to achieve acceptance on the world stage, they will have to
back this up with building trust through the rule of law and accountability. Leonard
suggests, Its gargantuan domestic problems are driving it to seek a new model of
globalization. And its huge size means that other economies and nations connected to it
from America to Zimbabwe will need to reform their own systems to cope with Chinas
new ideas about economic development, political reform and world order.140

139
140 P. 7, Mark Leonard, What Does China Think?
78
Appendix
79
Appendix
Appendix 1: List of Interviewees
Adam Lane, CI Yuan, BSR
Adam Mahamat, China Africa Business Council (CABC)
Ben Rudick, Schoenfeld Foundation
Ben Xu, China Children and Teenagers Fund
Bill Valentino, ex-CSR Manager for Bayer
Binghua, Beijing Normal University Philanthropy Research Center
Brett Rierson, CEO, UN World Food Program
Calvin Chin, Schoenfeld Foundation
Carma Elliot, Half the sky foundation
Carol Hamrin, Global China Center Scholar
Cecilia Zhang, LGT Venture Philanthropy
CI Yuan, BSR, Brooke Avory
Claire Pearson, Corporate Social Responsibility Manager, DLR Piper
Clayton Hurd, Haas Center for Public Service
CY Yeung, CSR Director Intel
Dale Rutstein, UNICEF
Daniel Foa, 51 Give
Ding Li, Non-Profit Incubator (NPI)
Duncan Frayne, Accion China
Elizabeth Walker, NonProfit Consultant
Elliott Donnelley, Co-Founder Phoenix Global Impact
Emily Chew, Partner, Equilibrium Partners
Emily Weaver, Beijing Normal University Philanthropy Research
Center
Fancy Hou UNDP, Public Private Partnerships
Flavin Fan, Students for International Free Enterprise (SIFE)
Grace Chiang, Social Venture Parnters
Guillaume Gauvain, Bethel Orphanage
Guorui Su, IJoin
He Jianyu, Tshinghua Professor
Henny Ngu, UNDP
Holly Chang, Golden Bridges
Huang Zhaojing, Youcheng
Ian Robinson, British Council
Ivy Yang, YSY Medicine Foundation
Jean Oi, Professor, Stanford
Jed Emerson, Executive Vice President, Impact Assets
Joern Geisselmann, UNDP
John Giszczak, Save the Children
John Shi, CEO Arreon Carbon

80
Judy Goldstein, Professor, Stanford

Karla Simon, Professor, Columbus School of Law
Kelly Lau, CSR Director, Nike
Kerry Brown, Chatham House
Kevin Lee, China Youthology
Li Jing, Vantone Foundation
Linxiu Zhang, Rural Education Action Programme (REAP)
Maaike Harrisen, Center for International Business Ethics (CIBE)
Mark Chen, co-founder of New Philanthropy Partners
Mark Mancall, Professor, Stanford
May Farid, Badi Foundation
Meixin Lee, Social Entrepreneur
Meng Zhao, Professor at Moscow School of Management Skolkovo
Michael Shiu, Global Business Council
Nancy Bowen, organizer of Clinton Global Initiative Asia
Patrick Schroeder, CANGO
Pei Bin, previously Ci Yuan, BSR, now Gates Foundation
Prof Fu Jun, Dean of School of Government, Beijing University
Rob John, Asia Venture Philanthropy Forum
Robin Zhang, Venture Avenue
Ryan Du, Philanthropy China Magazine
Scott Rozelle, Professor, Stanford
Shawn Shieh, China Development Brief
Songyan Chu, Chinese Academy of Governance
Tao Ze, China Foundation Center
Tom Lin, Advantage Ventures
Wang Xinsong, Professor, Beijing Normal University
Wei Wei, Right to Play
Xiao Han, LanShan Foundation
Xiao Han, LGT Venture Philanthropy
Xiaomin Yu, Professor Beijing Normal University
Xu Yongguang, chairman of the Narada Foundation
Xueguang Zhou, Professor, Stanford
Yang Peidan, China Youth Development Foundation
Zhang Xin, Soho Foundation
Zheng Wei, CSR Asia
81
Appendix 2
Number of social sector organizations in China
There is great debate regarding the scope of social organizations in China. Part
of the difficulty of judging the scope of the sector arises because it is hard to ensure the
accuracy of many of the statistics that exist regarding non-profits in China. Thomas Gold
suggests that, The Ministry of Civil Affairs reported 346,000 registered NGOs by the
end of 2006, an 8 percent increase over the previous year.141 The Chinese Ministry of
Civil Affairs outlined in its Blue Book that in 2008 China officially had 413,600
registered social entities. Statistics from the Ministry of Civil Affairs of the Peoples
Republic of China (PRC) demonstrated that by the end of 2010, the number of various
social organizations was 439,000. The number of foundations was 2,168, the number of
social groups reached 243,000, and the number of private non-enterprise units increased
to 195,000, especially private foundations.142
143

141 P.7,Gold, Thomas, China, Countries at the Crossroads, (New York, Freedom
House, 2007)
142 Peoples Daily calls for ending charity monopoly, Hauser Center,
http://hausercenter.org/chinanpo/2011/11/people%E2%80%99s-daily-calls-for-
ending-charity-monopoly/
143 Songyan Chu, Chinese Academy of Sciences, Growth of Registered Social
Organizations since 1988 in China

82
Appendix 3
Amount of donations in China
In 2008, total charitable donations in China were in the range of US $8.9 billion
and $US15.7 billion144. In terms of Corporate Philanthropy, in 2008, 20 enterprises
donated over 100 million RMB; 313 enterprises over 10 million RMB and total corporate
donations were over 12.1 billion RMB. In terms of Foundation Philanthropy, it was found
that 1,245 foundations had total capital exceeding 10 billion RMB. The top 100
philanthropists in Chinas total donations since 2004 added up to 15.7 billion RMB.145
This was a significant increase from the previous year and the highest amount in Chinese
history.146
Appendix 4

144 http://www.chinacsr.com/en/2009/09/21/6161-china-publishes-blue-book-forphilanthropy/
145
Philanthropists are hoping to break the mold in China By Cong Mu

p.152, The state of responsible competitiveness, 2009 by Alex MacGillivray, Gefei
Yin (China WTO Tribune), Kate Ives (Accountability) , Joshua Wickerham and Yi Shi
(Accountability)
146
83
Motivation for people to be involved with Chinese philanthropic organizations

Much of people and businesses motivation in giving seems to be tied up with
their nationalism and strong identity as Chinese. Often nationalism is used as an
inspiration for civic responsibility. For some, it is a natural consequence of ones
identification as Chinese that they want to give back to society. They are proud of the
success that has been made in China over recent years and they want more people to be
able to have access to this. Over the past thirty years, many people have been able to get
rich very quickly and now some have a wish to give back. Clare Pearson, Corporate
Social Responsibility Manager, DLA Piper UK LLP, argues in an interview that a huge
inspiration for people to give back is that they themselves have come from very
impoverished conditions and have witnessed a huge transformation in their own lifetimes.
There is an increasing number of high net worth individuals and businesses that are
considering their engagement with society. There are 2.7 million high net worth
individuals (HNWIs) in China with personal assets of more than 6 million Chinese yuan
(equivalent to US$950,000) and 63,500 ultra-high net worth individuals(UHNWIs) with
assets of more than 100 million Chinese Yuan (US$15.8 million).147 They want to help
other people to achieve the same type of growth that they have achieved in their lives.
She further suggests that people view their philanthropic initiatives in a similar way as
their business investments. If this were the case then one would hope to see a similar
emphasis placed on metrics and accountability in the philanthropic organizations as is
seen in business. Despite the different motivations for giving, the lack of transparency
and accountability often acts as an impediment to giving.
Appendix 5
Corporations philanthropic contributions:

147
Industrial Bank and Hurun Report, The Chinese Luxury Consumer White Paper 2012
http://www.hurun.net/usen/NewsShow.aspx?nid=188
84
Appendix 6
A large part of the reason that Chinese companies become more ethical is because of
societal pressure to do so. The following diagrams show the increase in stakeholder
pressure on companies in China.
85
Appendix 7
148
Appendix 8
Business for Social Responsibility (Project I undertook in May - July 2011)
The Beijing office of BSR is currently engaging in a three-year project, entitled Ciyuan
that has three main components.
i) The Foundation Development Initiative: This is designed to help Chinese foundations
gain expertise in the fields of governance, strategy, operations, and grant making. BSR is
working with the Cisco Foundation, the China Foundation Center, the Narada
Foundation, and dozens of other foundations to facilitate roundtable discussions, launch
demonstration pilot programs, and develop a practical toolkit.

148
Chinese media reports on philanthropy by key words (2005-2010)

http://www.google.com/imgres?um=1&hl=en&sa=N&biw=1024&bih=386&tbm=isch&tbnid=XVV6dfHb
3vsJAM:&imgrefurl=http://www.bnu1.org/research/profit/research%2520paper/-Transitions-Reform-andInnovation--Excerpt-from-the-2010-China-Phil/201104/06168.html&docid=ORh6WmlaCGAjeM&imgurl=http://www.bnu1.org/uploads/110407/_100U9347.jpg&w
=575&h=254&ei=N9aNTbtN6e0iQLjsICeCA&zoom=1&iact=hc&vpx=167&vpy=127&dur=809&hovh=149&hovw=338&tx=171&
ty=115&sig=115232627887159928316&page=1&tbnh=53&tbnw=120&start=0&ndsp=13&ved=1t:429,r:1
,s:0,i:72
86
ii) NGO Transparency Initiative: BSR has been working with the Ministry of Civil
Affairs, the China Charity Donation and Information Center, and a group of domestic
experts to develop a simple donation information disclosure standard for NGOs and
foundations to communicate financial performance and project impact. Caroline Neligan,
GuideStar Internationals director of partnerships and development, and a member
CiYuans International Advisory Board, has provided insight on global best practices for
encouraging nonprofits to share information about their organizations openly and
completely.
iii) Corporate-NGO Partnerships Initiative: BSR is developing resources to catalyze
partnerships between Chinese companies and various NGOs, including some GONGOs,
and pilot programs that will focus on specific issues that are relevant to both
organizations. These programs will then be replicated by other organizations.149 These
partnerships play an important role in ensuring that each of the organizations is
transparent. One example of a corporate-NGO Partnership that BSR has been supporting
is the Nike/China Youth Development Foundation Partnership.
Nike/China Youth Development Foundation (CYDF) Partnership:
Kelly Lau, Sustainable Business and Innovation Marketplace Director for Nike in
China, and a member of CiYuans Chinese Advisory Board, pointed out that NGOs like
CYDF lend expertise and credibility to Nikes program, as well as providing access to
community networks. The partnership aimed at enabling CYDF to learn from Nikes
approach while expanding its own impact in engaging and empowering youth. Through
CiYuan, BSRs role in the Nike-CYDF partnership was to bridge the gap between the
companys and the NGOs expectations and to build CYDFs skills in partnering with
companies evaluating results. There is clearly great potential in such partnerships. BSR
argue that, Such mutually beneficial partnerships create a strong civil society - a key

149
For more information, see: http://ciyuan.bsr.org/about_ciyuan/ciyuan_bsr
87
component of the social investment needed to complement China's meteoric economic

rise.150
I had the great privilege of working with BSR in Spring 2011 to help evaluate and
monitor the partnership between Nike and CYDF, which had been in operation for
approximately one year. It is a fascinating example of a large GONGO working with a
large international corporation. Nike has its own set of accountability mechanisms, with
which all its partners have to comply. It was therefore necessary for CYDF to buy in to
these accountability mechanisms. This case study highlighted the challenges encountered
by two organizations with different outlooks on timeline, strategy and accountability.
Although there were inevitable growing pains at the beginning of their joint venture, they
were and are both dedicated to the success of this endeavor and this will ultimately help
to facilitate its success.
Various issues prevented the smooth running of this partnership, which came to
light on evaluation. It is therefore important that a platform is created from the outset of
corporate-NGO partnerships whereby there is opportunity for frequent reflection and
review of the progress of the partnership. An issue arose in both organizations whereby
there was a discrepancy between the perspective of those involved in the project and the
perspective of the respective directors. In the case of CYDF, there was also the question
of the relationship between the central office in Beijing and the local partners in terms of
openness and accountability. For example, sometimes communication took place
between CYDF and Nike in Beijing but this was not directly communicated to the local
partners, leading to a difference of opinion amongst the organizations.
It took them a lot longer than planned to get the project up and running. This
could have been minimized if both sides had been more open about their other
commitments from the beginning. Each had their own outlook in terms of planning and
implementation and therefore there was a strong learning process that took place on the

150
http://ciyuan.bsr.org/future_of_philanthropy
88
part of both organizations as they began to work with one another. It was clear from
observing this partnership that for social sector organizations to promote transparency in
the wider community, it is important that partners also work on promoting transparency
amongst themselves. It became apparent that there was not a clear delineation of roles
and responsibilities within and between the organizations.
This case study highlights one of the criticisms of GONGOs. They are often not
required to be reflective, accountable or innovative. It is not necessarily within their
culture to have a clear timeline and strategy and therefore they often just respond to
circumstances as they arise rather than see how occurrences fit into an overall structure.
This is therefore an intrinsic difficulty of working with a large corporation that has a
stringent set of accountability metrics.
Appendix 9
151

151 http://yaleglobal.yale.edu/sites/default/files/images/2012/03/Grants2BIG.jpg

89
90
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21st Century China:

Does Civil Society Play a Role in

The Case for Reform in Social Sector

The Case for Transparency and

The Business Environment

Government and Civil Society

Accountability and Transparency

Also included are grassroots civil-society

informal and unregistered groups, or organizations registered as a business but

Chapter 2: The Case for Reform in

Chapter 2: The Case for Reform in Social Sector Organizations - A Historical

Li Xiaoxiao in Ding et al., 2007; 8-17

Zhang Ye, Brookings Institute, China's Emerging Civil Society,

Carol Lee Hamrin, Chinas Social Capital Deficit, http://www.globalchinacenter.org/analysis/chinesesociety-politics/chinas-social-capital-deficit.php

Appendix 7 shows the increase in media coverage of philanthropic causes.

GONGOs (Government Operated NGOs)

P.18, Thomas Gold, China, Countries at the Crossroads

See Appendix 2 and 3 for statistics on social sector organizations

Ye Zhang, Chinas Emerging Civil Society, http://www.oycf.org/Perspectives2/22_093003/2b.pdf

Zi Zhongyun, Crossing the New Threshold.

governmental organizations through a de facto unfair competition.21 Chen Jie suggests

Chen Jie, The NGO Community in China

Chen Jie, The NGO Community in China

NGOs (Non Governmental Organizations)

For more information on US donor giving, see Appendix 9

requirement to have a supervisory agency can be viewed as an enervating control

unpredictableThe restrictions on NGOs are clearly motivated by the CCP (Chinese

Anthony J. Spires, Contingent Symbiosis and Civil Society in an Authoritarian State:

Delivering care to the elderly or Tibet and other minority groups

Nonetheless, numerous NGOs, especially in the environmental field, operate very

P.7, Thomas Gold, China, Countries at the Crossroads

support of the government.

Examples of this are the China Youth Development

A model of contingent symbiosis

Cheng Yingqi, Scandals put a big dent in donations http://www.chinadaily.com.cn/china/201110/19/content_13928884.htm

P.2, Vivienne Shue, The political economy of compassion

Anthony J. Spires, Contingent Symbiosis and Civil Society in an Authoritarian State:

The Growth of Civil Society - Grassroots

Therefore, unless the social sector organizations cause a social

Statistics from Chinese Ministry of Civil Affairs, Bureau of Management of Nongovernmental

This interview took place between April and August, 2011

The officials are largely judged based on GDP so

ignored or suppressed by powerful interests or some local governments. Civil society

According to a report in Open

Wen Jiabao called for urgent political reform in his

Carol Lee Hamrin, Chinas social capital deficit http://www.globalchinacenter.org/analysis/chinesesociety-politics/chinas-social-capital-deficit.php

Su, In the Field of Social Organizations, a Constant Need for Reforms

Social media give voice to the disadvantaged

Chapter 3: The Case for

Chapter 3: The Case for Transparency and Accountability in Social Sector

Transparency in social sector organizations: a comparative perspective

transparency is a murky area. It may not be a question of dishonest dealings, it might be

For example, Guidestars mission is to revolutionize

philanthropy and nonprofit practice by providing information that advances transparency,

National Committee for Responsive Philanthropy, http://www.ncrp.org/campaigns-researchpolicy/accountability

National Council of Social Service, http://www.ncss.gov.sg/home/index.asp

P.2, Stoner-Weiss, Kathryn, Russia, Countries at the Crossroads

Hauser Center, Donors Kept in the Dark on Where Money Goes