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Executive Perspectives

EXECUTIVE PERSPECTIVE: Philanthropy: the “golden key” to unlock China’s next chapter of modernization?

Having just spent time with 200 Chinese philanthropists, public leaders and social entrepreneurs at UBS’s Philanthropy Forum Asia, we are struck by the explosive growth potential for philanthropy in China.

Philanthropy has enjoyed a new lease of life since the opening up of the Chinese economy at the end of the 20th century.  Compared with the booming ‘industry’ of giving in the United States, it is far less institutionalised, but the potential is dizzying when you consider the pace of wealth creation, coupled with the unique tradition of ‘giving back’ that has deep roots in Chinese culture.

This promise is examined in a new study from Harvard University, supported by UBS. Values and Vision: Perspectives on Philanthropy in 21st Century China shines a light on China’s pathway to impact in philanthropy, based on interviews with more than 30 top Chinese philanthropists and other experts.

The rise of private wealth in China has certainly been well documented. China accounted for 80 out of 113 of Asia’s new billionaire entrepreneurs in 2015 and the number of wealthy individuals in China continues to rise as Asia creates a new billionaire every three days.

Information on philanthropy is less readily available, despite global media coverage of global trailblazers such as Jack Ma of the Alibaba Group and internet entrepreneur Chen Yidan, co-founder of Tencent. Reported philanthropic contributions are still relatively low in China as a percentage of GDP but they are growing rapidly. Between 2010 and 2016, donations from the top 100 philanthropists in mainland China more than tripled to USD4.6bn and, of the wealthiest 200, 46 now have foundations.

The study finds that much of this philanthropic activity stems from a deeply personal desire to contribute to the development of a harmonious society, an impulse with roots in the traditions of Confucianism, Buddhism and Daoism.  This is combined in many philanthropists with a sense of immense gratitude for the good-fortune of having benefited from China’s modernization to date.  For example, Lui Che Woo, the real estate, gambling and hospitality magnate, now 87, tells of witnessing the suffering caused by the Japanese invasion of Hong Kong. He ‘carried this in his heart’, he told the researchers, and always wanted to help others.

Given the role played by education in helping many of China’s successful business people rise from poverty, it is no surprise that most Chinese philanthropists currently focus their work in this area, particularly in poor and rural provinces.   As billionaire philanthropist Zhao Weiguo says: “I raised pigs and herded sheep for a living. I knew that only education could change my fate.” Some philanthropists address other areas such as health, poverty alleviation, arts and culture and the environment, but they tend to focus on a single issue much more than philanthropists from other regions of the world.

While the tradition of philanthropy in China is deep-rooted, the study also shows how it is more often a personal pursuit rather than a family affair, in comparison to other parts of the world or even other parts of Asia, perhaps because most philanthropists are ‘self-made’ first generation wealth holders.

New technologies are encouraging philanthropic activity in the country that is home to the largest number of internet users and the fastest growing e-commerce market.  Several internet platforms have sprung up, encouraging and supporting universal giving, spearheaded by Tencent whose donation program following the 2008 Sichuan earthquake laid the foundations for ongoing public fundraising drives. Wang Bing, billionaire investor and founder of the Ai You Foundation says he aims to make it ‘the Facebook of philanthropy’.

There is certainly a complex attitude to wealth and giving in China. While economic growth has lifted more than 800 million people out of poverty since 1978 and China achieved all of the UN Millennium Development Goals by 2015, public scepticism still confronts the wealthy and the motivations for philanthropy. As Wang Bing says: “Doing philanthropy in China, you need a very strong heart. There is much criticism, scepticism and suspicion.”

But an increasing number of philanthropic role models both at home and abroad, and a new focus on transparency through the 2016 Charity Law, are moving perceptions in the right direction.  Further policy changes and guidelines are needed to show how the law will be implemented but on balance the Harvard report found widespread optimism that philanthropy will grow and increase in impact.

Many of those interviewed believe that the sector will take off within as few as 10 years, as more wealth holders have time to devote more of their proven ingenuity and innovations to their philanthropy. Its impact on China’s future could well be vast.  Lui Che Woo may have echoed the sentiments of many when he described philanthropy as the “golden key” to unlock the gate of China’s next chapter of modernization.

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