Opinion

Charity challenge for China's superrich

(China Daily)
Updated: 2010-09-22 11:07

Bill Gates and Warren Buffett have invited China's superrich to their "The Giving Pledge" dinner in Beijing later this month. But will the American philanthropists' call make rich Chinese open their wallets to charity?

The answer to date is "no", because the number of rich people who have accepted their invitation can be counted on fingers.

Gates and Buffett launched their "The Giving Pledge" project in the United States in June to convince billionaires to donate 50 percent or more of their wealth to a good cause.

China's superrich, however, face an embarrassing situation. The number of the superrich in the country has grown with every passing year, possibly at the fastest rate in the world. China today has 875,000 multi-millionaires, 55,000 of who are billionaires, the highest number of billionaires after the United States. And yet charity remains in the primary stage.

Donations in China reached a record high of 107 billion yuan ($15.74 billion) in 2008, which was equal to 0.36 percent of the country's GDP, after the Sichuan earthquake.

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People in China began playing in money only recently. Before the reform and opening-up, the Chinese had had a history of scarcity. So, China's nouveaux riches may find it difficult to part with even part of their money. They could be thinking that the greatest benefit they can bestow on society is to consolidate their business empires, employ more people and pay taxes.

But change is coming. The country's top 100 philanthropists have donated 22.9 billion yuan, on average 6 percent of their wealth, to charity since 2005.

High-profile donations encourage more people to loosen their purse strings for charity. And China's entrepreneurs have started playing a more active role in tackling some of the big issues, especially education, healthcare and poverty alleviation.

But the government still has to clear hurdles to instill the true charity spirit among its superrich. Poor tax incentives and the problems associated with setting up a charity organization on the mainland are just two of them. Such problems have prompted many wealthy Chinese to set up foundations in Hong Kong.

It's important that the government promotes charity awareness among the people and creates easier channels for donation. It's important, too, that it improves fund management to win over more people for charitable causes.

But the good thing is that grassroots charity organizations are becoming more active. Many work on projects with the government. But more measures are needed to shift the government-dominated pattern of charity organizations. This should open more channels for companies and individuals to play an active role in charity.

A law on charity will go a long way in making things work smoothly. A draft charity law is already under the consideration of the State Council. Once passed, it could help the country clear many hurdles on the road to charity.