China: third sector is growing fast despite a difficult environment

Margaret Thatcher said that she couldn’t see society, only individuals. According to Howard Gardner, a psychologist at Harvard, ?we know what we see’. The same mistake could be made in China by those looking for third sector organisations as we know them in the UK or other western countries. If you go to China and don’t find any fellow third sector leader, it doesn’t mean that nothing similar exists, but that your research is biased.

Third sector in China
Unsure as to whether there was a third sector in China, I checked with a fellow European, Gary Hallsworth of the British Council who has worked with the Ministry of Civil Affairs since 2003 and who reassured me that my trip wasn’t a waste of time. He told me that ?The third sector in China operates within an unclear legal, administrative and ideological framework, but it does exist. In the west, we operate through a prerequisite set of normative values that underpin attitudes to the third sector. In China, the prerequisite comes from empirical evidence in the formulation of a normative stance. In my view that is what the Chinese Communist Party mean by scientific development. The British Council will continue to work within this framework and support the showcasing of UK and Chinese social innovations as we have been doing with organizations such as the Young Foundation and others, including ACEVO.?

Numerous meetings with Chinese people confirmed this definitively. ? Up to December 2006, there are 354,000 organisations registered at the system of the Ministry of Civil Affairs, the Ministry in charge of the third sector at all levels? Haoming Huang told me at a seminar with Chinese third sector leaders that he organised. He is the Chief Executive of the Chinese Association of NGOs – CANGO, an umbrella organisation which does capacity building for its 137 members – all Chinese organisations – founded in 1992 and supported by international donors. He spoke at the acevo international conference in London last year.

The Chinese third sector includes both government and citizen initiated not-for-profit organisations, especially in the field of social service provision, community development, vulnerable and marginalized social group protection and civic activism. Special interest groups, trade and professional associations are also mushrooming.

Every organisation should register with the Ministry of Civic Affairs, although many are not registered, but tolerated so long as they are useful to the local government. The registration requires an institutional patron to get the registration approved. They also have to report to both the patron and the Ministry of Civic Affairs. However, the board is independent and the government has no direct control, not even through funding, except for the quangos founded by the government. However many board members are still connected to the government in many other ways.

Independence
Ms Cheng Shuqin is not worried about government control. She is the Vice President of the China Children and Teenagers Fund (CCTF), the first charity created in China, in 1981. CCTF is one of those QUANGOs but is certified by Ernst & Young. Ms Shuqin looked pretty confident about CCTFs effectiveness when I met her in their impressive building – hosted by All-China Women’s Federation – together with Ben Xu, director of International relations, who speaks perfect English. They didn’t mention politics but we talked about the projects impacting millions of children and explored potential joint actions in the future. She commented when asked about government sensitivities about our potential collaborations: ?the government doesn’t really care about this as long as it contributes to social development!?

Dealing with government
Keeping good relations with government is crucial for every Chinese organisation. A government official who doesn’t want to be named stressed that the third sector has to collaborate with government and never challenge its legitimacy. In any case, it doesn’t have any real relevance. It’s still a marginal force. In China there isn’t any real intermediary between people and government. Government is in charge and the people expect government to take care of them.

NGOs are welcomed if they work with government on education, health, environment and culture, but should avoid politics, religion and employment policies. Nobody wants to experience what happened in former Soviet Union countries where NGOs challenged government and become a source of social instability. Every social force should contribute to build a ?Harmonious society’ ? the national mantra now. In particular, international NGOs are expected to work with government as the representative of Chinese people first of all and not develop independent networks with local Chinese organizations circumventing government. At the end of day, ?the government has brought 400 million Chinese out of starvation? the official noted. A real success in poverty eradication by any NGO’s standards!

Funding
Good relations with government are not the only problem for the sector in China. There are many other issues. As everywhere else in the world funding is a primary concern for organisations. Recently, tax incentives have been created for enterprises and individuals to donate. Haoming clarified: ?from 2008 enterprises can receive tax breaks if they donate up to 12% of their profits, while individuals can receive tax breaks for donating 30% of their income?. Naturally, you get your tax-breaks on your donation if the organisation has got an approval from the Ministry of Finance and The State Administration for Taxation.

This is very recent and pretty bureaucratic development but it could be a turning point for the development of the sector. So far Chinese organizations could only access funding from the Chinese government or international donors. In China there is a philanthropic tradition but it’s still very understated and discreet. China hasn’t developed a tradition of CSR as corporate strategy.

Ben Xu, clarified this new trend: ?More and more local businesses are donating. It is not a surprise any more when a company donates 20 million RMB (2’000? or 1,300£) at a time. Some have also started paying attention to the efficiency and quality of the programmes they fund?.

Third sector leaders
Although the environment for the third sector is challenging you can easily meet very dynamic and optimist leaders. Qinghua Song is one of them. She is the founder and president of Shining Stone Community Action. Founded in 2002 it promotes community participation and reform in eight province capitals across the country.

After inviting me for lunch to talk about third sector leaders in her country, she stressed her organization’s independence from government but added, ?having government and business people in the board is very useful for good relations with government and funding opportunities for the organization?.

Moreover, ?You need to work with local government and a have a good relationship if you want to be effective and have a long term impact?. There is a genuine interest in local government to learn from the sector and her organisation offers training for local officials with the recommendation of Ministry of Civil Affairs.

?Training is not service delivery. Government contracting out public service delivery to the sector is very limited and opportunities of growth for organizations are limited. Furthermore, the unclear legal framework doesn’t help at all?.

Ms Song stressed also the shortcomings of the sector: ?there is a dramatic lack of coordination and an impressive competition for the few opportunities?. Everyone uses their own personal relationships, while umbrella organizations like CANGO struggle to raise the voice of the sector in a coordinated way.

?Life is not easy. Chinese leaders are good at developing good ideas but the implementation is normally poor. Organisations start with strong charismatic founders but investments in the professional development of staff is pretty poor and board recruiting is a nightmare?.

Over the last 5 five years Ms Song has dealt with all of these issues by investing in young and enterprising staff and bringing in professional skills from abroad ? two German professionals work in her organsiation through a partnership with the German Agency of International Cooperation. She has put together a strategic mix of personalities from government, business, NGOs and academia in the board. Now she studies English and is joining acevo to expand her international network and improve her skill through cross-border peer-learning!

Dealing with Business
Beijing is no less trendy or dynamic than London these days. The buzz of activity is actually greater in Beijing; the Olympics have transformed the capital in a huge construction site and the sky is covered by thick yellow fog, except when the journalists are around. In that case Beijing can show one of the best show deepened in a blue sky: a sea of skyscrapers and in the distance the surrounding mountains contained by the Great Wall.

In such a dynamic environment you will find business people everywhere. They are hungry for profits but open to innovation and diversity. Business has to be careful and behave like anybody else. I had the opportunity to meet many of them ? westerners and Chinese. I was even asked to give a speech about CSR and the third sector at the European Chamber of Commerce.

CSR is the new buzzword and the time when companies could move their operations here just to cut costs and increase profits is over. Clare Person, CSR manager of DLA Piper stressed that multilateral corporations have to behave in China because of the risk to their reputations in their markets in the West. NGOs monitor them and are ready to denounce any infraction. However, there isn’t a proper CSR culture in the country so companies struggle to identify local partners and implement their CSR. Some companies like JP Morgan or Shell have started to invest in CSR but very few Chinese NGOs take advantage.

Media and New technologies
China is a very different environment to the west and foreigners here never cease to be surprised. Tam is the campaign director of Green Peace in Hong Kong and told me about Netizenship. It’s a form of active citizenship developed through community groups on the internet. In China it is very popular and a group of netizens have been able to expose and bring to justice a number of dishonest local administrators. Even internet has to be localized here!

International Chinese NGOs
The third sector in China hasn’t developed only nationally but also internationally. International NGOs such as Oxfam and WWF which have been in China since ?80s, but with its growing role in the international arena, China is developing its own international NGOs as well.

I was invited to a traditional dinner by Cui Jianjun, Secretary General of China NGO Network for International Exchanges. He started as interpreter at the UN and escorted Tony Blair when he went to China. He is a very enterprising leader and personally very committed: he has adopted two children from a minority community and supports an entire primary school from the same minority group in the south of the country. He’s very optimistic about the future of the sector and Chinese international NGOS. His organisation is the first group of Chinese organisations with an interest in international development. They started 2 years ago and they have already over 30 members including the UN Association of China and Red Cross Society of China.

I had the impression that Chinese NGOs are replicating their national model of cooperation and they look at the UN as a leading organisation. Mr Cui told me they work under the umbrella of the UN in line with its priorities such as the Millenium Development Goals. He proudly confirmed that his organisation is the regional coordinator for UN activities involving NGOs in China. Moreover, they promote the collaboration between international and national organisation working in Partnership with CANGO. Unfortunately, the exchanges with foreign international NGOs based in the country still seems very limited.

The first time I met Cui Jianjun was in Nairobi at the World Social Forum while he was promoting the new role of China in Africa, offering China as a new partner for development. Naturally western NGO leaders were scandalised while African activists welcomed his offer. They liked that a new player turns the aid industry from a western monopoly into a competitive market. They might gain between the two competitors. But some were sceptical about China’s good will, and couldn’t overlook the support China has offered to some African governments which suppress their own people.

China in Africa
During my trip I had the opportunity to resume the discussion. DLA Piper dedicated the August Forum to the role of China in Africa. The Forum is one the most interesting and glamorous happenings for the Chinese and the international community in Beijing. I was on the panel together with Mr Weizhong Xu, one of the top expert in African affairs at the prestigious China Institutes of Contemporary International Relations, and Mr. Mohammed Ahmed Awil, Ambassador of Somalia, in front of an audience of over 150 leaders from the international community: business, government and third sector. The debate was pretty intense. To summarise the discussion in one sentence I would say that the presence of China in Africa is growing impressively and is going to change the rules of the game dramatically for all players. This could create a new multilateral alliance for African development and Africans could benefit from a competitive market of aid and investments if they play smartly. Otherwise it could turn Africa into a new international battlefield for resources and domination.

The real key to understanding China for me was in the Park of the Emperor in the Forbidden City. The park is populated by couples of twisted trees. I didn’t understand until my Indian friend explained to me that those trees are the symbol of universal harmony as the union of parties. At the end of the park there was a gigantic sculpture made of stone and a sign in front of it. It says ?a single act of carelessness leads to eternal loss of beauty?. The same sign would just say ?Don’t touch!? in London.

In that garden I understood that China requires respect and if you want to understand its society you need to suspend your judgment, like a Socratic philosopher. It is truly misguided for westerners to publish another recipe for China after 2 weeks in the country, as so many do.

What’s next
We need to understand and collaborate with China because they have one of largest shares of our common world. Next year is definitively the good year to start a dialogue if you haven’t yet. China is ready for its global show: the Olympics.

Everybody is very excited and we would also like to contribute by organizing an international forum for third sector leaders in Beijing in October. We would like to create a platform for dialogue and exchange between westerners, African and Chinese leaders to understand each other and draft joint action points to tackle global challenges like sustainable development and social exclusion.

Western leaders can help their Chinese peers a lot to improve the legal framework for the sector, increase professional standards, develop a better partnership with government, business and international partners, and strengthen social innovation, social investments and creative communication.

Leaders in the West must accept that China will develop in its own way. If we look at the business sector the Chinese government transformed it from a potential threat into its best ally by including business leaders in the upper ranks of the communist party. I bet that something similar will happen with the third sector. This is the Chinese way. Paraphrasing a famous motto of Deng Xiao Ping, the pioneer of Chinese economic reform, I would say: ?what does matter if the third sector is black or white as long as it solves social problems!?

As Joshua Cooper Ramo has written in ?The Beijing Consensus?, one of the best essays I have read about this country: ?Nothing can be absorbed in China without localisation? China doesn’t want to copy the rest of the world. It wants, in Deng’s word, to combine Chinese ideas with Westerner learning… Chinese are striving to make the Chinese way of life?.