China Power

China’s Philanthropy Boom

Even while its billionaire class grows, China is also marking a drastic increase in volumes of charitable giving.

By Dmitriy Frolovskiy for
China’s Philanthropy Boom
Credit: Pixabay

China’s economic model is undergoing a structural shift by reorienting toward services and domestic consumption; its business class is not standing still either. Philanthropy is becoming a new trend among the country’s rich, while reflecting a profound change in perceptions of Beijing’s place in the world.

In early December, major Chinese and international outlets discussed the world’s largest education ceremony. A cohort of high-ranked guests, including Princess Laurentien of the Netherlands, Gordon Brown, former prime minister of the United Kingdom, and others, flew to Hong Kong where Dr. Charles Chen Yidan, the cofounder of China’s biggest internet company, Tencent, held the second Yidan Prize Summit.

After becoming one of the richest men in China, Chen stepped down as Tencent’s chief administrative officer in 2013 and devoted his career to promoting education. That gesture established him as the champion of modern Chinese philanthropists. With the endowment of $320 million and prize money of $3.8 million, the Yidan Prize is touted as the biggest of its kind for education research and development.

Increasing donations have turned into a trend among the new rich in China. The number of billionaires in China now totals 373, accounting for almost one in five of the global 2,158. Even while its billionaire class grows, China is also marking a drastic increase in volumes of charitable giving. Between 2010 and 2016, donations from the top 100 philanthropists more than tripled, reaching $4.6 billion, while the number of registered foundations surged to 5,545, a 430 percent increase over a decade.

Three years ago, the National People’s Congress (NPC) enacted the Charity Law, which played a key role in boosting charities. In the past, philanthropic activities were limited by requirements that initial foundations be set up in cash, and have their earnings taxed similarly to for-profit enterprises. The new framework, however, resembled the one used in the United States and removed a number of restrictions. It eased registration procedures and introduced improved tax incentives, as well as expanded the definition of “charitable activities.”

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By making it easier for charities to register and raise funds, the framework greased the wheels for foundations. Now, the Chinese super wealthy are diving into a competition with each other by expanding the volumes and areas for charitable support: from encouraging conservation and combating climate change to supporting early childhood education.

With regulations adding more structure, attitudes toward charities have also changed. Similar to traditional for-profit enterprises, foundations now rely on specialized management teams that operate under strict guidelines in a traditional corporate fashion. For instance, the Chen Yidan Foundation focuses on education; hence it employs people with professional research and financial expertise, and extensive corporate backgrounds.

The internet has further made donating much easier for the public. China is both the fastest growing e-commerce market and home to the world’s biggest number of internet users. Such technologies not only accelerated the emergence of successful technocrat-businesspeople, they likewise boosted online donations. The AI You Foundation has received the China Charity Award twice and is widely treated as the country’s major platform to promote venture philanthropy and impact investments, while also merging IT and charity. Other popular platforms in the field include Tencent Online Donation platform and Sina Micro-Philanthropy.

After benefiting greatly from the decades of openness and free trade, Chinese businesspeople now tend to perceive the world more as an interconnected body, in which they can leave impacts and long-term legacies by fixing problematic areas. This also marks a step aside from the Marxist-centered worldview, while placing greater emphasis on traditional Chinese values.

The concept of philanthropy — that people should assist to those who are less fortunate — is prevalent throughout the text of the Analects of Confucius. Philanthropy was also emphasized in the late Ming and Qing dynasties, as well as the Zhou dynasty, when Buddhist monasteries were supplying aid to orphans and others in need.

The spread of donations in China, however, is still lagging behind the United States. The majority of Chinese super rich have made their fortunes by capitalizing on shifting economic patterns caused by technology. Most of them are “new money” and unlike their American counterparts are still comparably young, being in their 40s and 30s. Therefore, it is only now that the culture of philanthropy is deviating from a resemblance to for-profit enterprises that are meant to deliver benefits, be that political or reputational.

The shift not only affects people in the mainland, but also throughout the Chinese diasporas. A report produced by Global Chinese Philanthropy Initiative claims that the number of Chinese-American foundations has surged and volumes increased fivefold to $500 million throughout recent years. Similarly to China, most of the funds go to higher education, with many wanting to give back to their respective alma maters.

This tectonic shift marks profound changes in the mindset of China’s wealthy. Although predominantly first-generation wealth holders, the Chinese new rich are now starting following a path widely practiced across developed countries where wealth has been accumulating for generations. The growing popularity of philanthropy in China is a trend that is very likely set to stay.

Dmitriy Frolovskiy is a political analyst and independent journalist. He is a consultant on policy and strategy, and has written about foreign policy.