Recent scandals involving charity misspending and embezzlement have tarnished the image of Chinaâ€™s non-profit organizations (NPO). News of these controversies has spread like wildfire across Chinese microblogs and public philanthropy suffered a blow by alienating potential donors. For instance, China saw an immediate decline in blood donations following theÂ Guo Mei MeiÂ incident, in which the supposed general commercial manager of the Red Cross flaunted her lavish lifestyle on Weibo, a Chinese social networking site. TheÂ Red CrossÂ in China now reportedly faces a 30-40% shortage. With Chinese people increasingly wary of corruption,Â monetary contributionsÂ to charities have reportedly more than halved from June to August of this year. The consequences of these trends are grave, as Chinese citizens across the board have called for government reform in the countryâ€™s nascent third sectorâ€”and Beijing is feeling some pressure to respond.
The economic reforms spearheaded by the late Chinese patriarch, Deng Xiaoping, are largely credited with unleashing market forces that spurred Chinaâ€™s rapid growth. The â€œopening upâ€ policy contributed to a wide scaleÂ privatization campaign, leaving in its wake a debilitated social safety net. These trends, coupled with an upsurge of development-induced social problems, have opened space for Chinese NPOs to emerge at the forefront of the countryâ€™s public service sector. Under- resourced and overextended, Chinaâ€™s third sector has been a reoccurring topic in legislative debates in recent yearsâ€”both in the frontlines of grassroots initiatives and among many levels of government officials. The situation presents an interesting contradiction, wherein the Chinese government must face the need to address social problems while at the same time realizing that such a move could detract from its authority.
The landscape of the countryâ€™s third sector has changed significantly in recent years. This change is reflected in official government statistics that show theÂ numberÂ of registered organizations has shot up over 40% between 2005 and 2010 alone. This increase does not include unregistered organizations, which are blocked from formal proceedings by Chinaâ€™s dual-registration system and strict guidelines. Comparatively, the non-profit landscape was practicallyÂ barrenÂ under Maoâ€™s rule and these types of organizations did not emerge until the 1980â€™s. This surge coincides with the Chinese Communist Partyâ€™s (CCP)Â decisionÂ to defer social management responsibilities to NPOs as a means to promote Dengâ€™s economic policies and encourage market forces. The initial non-profits were directly under government jurisdiction but as social problems emerged at a faster rate than the Party could manage, the central government began to defer control and reform the system.
Approaches to reform have been multifaceted. The central government, citing the importance of preserving social order, has sought to revise the current bylaws underlining non-profit management. The central government has overseen the establishment ofÂ experimental sitesÂ in Wenzhou, Shanghai, and Shenzhen to test the prospect of transferring more government functions to non-profit organizations. The National Peopleâ€™s Congress and the CCP Central Committee have dedicated a section of the countryâ€™s next Five Year Plan (FYP) to charity management, ostensibly to address risingÂ public discontentÂ towards corruption in NPOs.
In Chapter 39 of theÂ 12th Five Year Plan, the central government called for the development of social organization through a streamlined application process, improved tax incentive laws, and policy support a la legal and regulatory protections. Before final approval in March 2011, the government disclosed theÂ FYP guidelinesÂ to the Chinese people through a series ofÂ public hearings, seeking e-mail feedback and leaving room open for revision. Consequently, a Charity Law, drafted by the Ministry of Civil Affairs (MoCA), which has been on the table since 2005, has resurfaced for consideration. In July 2011, the government reopened the draft as the â€œGuideline for the Development of Charity in Chinaâ€ and solicitedÂ public inputÂ to give direction to charity growth and expedite processes conducive to the 12th FYP. However, the draft has since seen little movement within the legislature.
Meanwhile, frustrated by government inaction, local and provincial governments have apparently taken matters into their hands. Respective authorities inÂ Jiangsu, Ningbo, Hunan, Beijing, and just recentlyÂ GuangdongÂ have each enacted their own set of regulations, facilitating registration processes and allowing for more accountability in non-profit management. These moves have been commended by officials higher up in the government. In late 2010, aÂ MoCA representativeÂ voiced his hopes that these developments will help guide those on a national scale.
The general consensus on the need for reform paints an interesting picture for future developments of the third sector. The timing of the FYP and its related reforms comes at a critical crossroad in Chinaâ€™s development. First, the 12th FYP coincides with a transition of power to its fifth-generation leadership that will take place in 2012. Chinese leaders seek a seamless power change, but they must address the growing challenges posed by increasing social unrest. By adhering to the tenets set by the FYP and by shapingÂ public interestsÂ through the charity law, the Party could mitigate discontent among the masses, while at the same time demonstrate responsible leadership. Moreover, promoting Chinaâ€™s international image should provide further incentive for the government to amend its non-profit regulations by legitimizing the new leaders through social progress. It should be noted, however, that certain types of non-profits within the sector, such as those dedicated to religion and human rights, will see little change in their directive.
These advancements in the third sector may also point to the prospect of more comprehensive reform throughout the country. Grassroots movements empower and educate citizens for involvement in the public sphere, which then calls for a more active and informed society, with its own functions and claims. Larger citizen involvement, enabled by a burgeoning nonprofit sector, could lead to a further decentralization of power. This would be in line with the CCPâ€™sÂ â€œbig society, small governmentâ€Â policy that seeks to create a network of social protections wherein citizens serve as intermediaries between the government and social organizations to sustain and promote a â€œharmonious societyâ€. In essence, nonprofit reform may equip the citizenry with the capacity to take on the Chinese governmentâ€™s social functions and become that â€œbig society.â€ The deciding factor, however, is largely dependent on the direction the central government takes from its current Catch-22: toward third sector reform at the cost of its relative power or the continuation of the status quo at the risk of social instability.