With China accounting for 64 of the 937 wealthiest people on the latest Forbes global rich list, and the country battling an ever-widening wealth gap, the issue of charity has begun to loom large over the world’s second-largest economy. Do those who’ve profited from the country’s rise feel a responsibility to help those left behind? Is the government, which has retreated from many social services, doing enough to encourage others to step in and help?

One organization with extensive experience navigating China’s uncertain nonprofit landscape is cleft-lip and cleft-palate medical charity Operation Smile. Founded in 1982, the organization first came to China in 1991. In that time, it has provided free surgeries to more than 20,000 Chinese children and has plans to run 26 additional medical missions, each serving between 100 and 300 children around the country this year.

Operation Smile co-founders Dr. Bill Magee and his wife Kathy recently arrived in Beijing to launch a youth conference at a local university, part of the organization’s continuing celebration of its 20^th anniversary in China. Dr. Magee spoke with The Wall Street Journal about the state of charity in China and the challenges foreign nonprofits still face in the country. Edited excerpts:

Operation Smile has been in China for two decades now. What’s changed in terms of operating a charity in China over that time?

The first time I came into Shanghai in 1991, I took about a five-hour car ride into Hangzhou, and at the West Lake at that time there was only one hotel. You take a look at Hangzhou today and it’s a massive, major city—and it’s modern. Shanghai now has one of the largest and possibly best surgery hospitals in the world. So the medical infrastructure is phenomenal, and yet the reality is, just like in Brazil and a number of other significant countries like India, you have a massive area that’s still impoverished.

The challenge is how do you deliver care side-by-side with the people in the country? So it’s been exciting to get on board, not only the medical community, but the business community. Marriott, for instance, has adopted us as the charity for Beijing for next year, which has been very helpful.

How much of your China funding comes from multinationals in China such as Marriott and how much from Chinese businesses themselves?

It mostly starts with the multinationals, to be honest with you. And that’s understandable because the multinationals are deeply embedded in the need for corporate responsibility. I think those same needs will develop within Chinese companies. They’re just not as far along with it as the multinationals are right now.

What about individual donations? There’s been a lot of discussion, ever since the Bill Gates and Warren Buffet charity tour came to China last year, around the culture and logistics of giving in China as Chinese people get wealthier. What’s been your experience with that?

It’s interesting. We’re still struggling with this, like everybody else, because the status of nonprofits in China makes it difficult to get the appropriate licenses so people can donate to you. But if you take Vietnam, where we’ve been for 22 years, you can really see the maturation of that process. I think it’s just a matter of time. If you look at where nonprofits were in the U.S. 10, 20 years ago—the progress since then has been phenomenal.

My best guess is that as this country continues to mature and progress, with as successful as they’re becoming, they’re going to grow in the same way. People with affluence will have to share some of it with people who don’t have it. The people here want to help. They just don’t know how to right now. The laws have to change a little, and the recognition of it has to change—the celebration of people who give has to change.

As a charity in China, you’re required to work with the Ministry of Civil Affairs. How does that affect what you do vs. in other places?

We can’t promote ourselves to raise money, but we have do a charity hospital in Hangzhou, which is I think the first completely free charity hospital in China. Because that was licensed by the Chinese, we’re allowed to receive money there.

China can be tough. We can’t bring in consumables (like sutures and gauze), for instance. We have to purchase them here. Normally we get things donated in the U.S. and bring them in, but we’re not allowed to do that. It costs us about $20,000 to do that.

How optimistic are you that the rules will loosen up to allow you to be more active here?

Over the past 20 years, there’s definitely been some loosening. It’s hard to predict the pace of that. And I think if were to ask government officials ‘What’s the pace? What’s the plan?’ I doubt you’d ever get a clear answer.

Things happen, and you just have to stay on top of it. It’s not one of those things where you go in and demand that change occur over night. I think what you have to do is show, really respectfully, that you can be trusted and that you’re there, not for an ulterior motive, but for just the right reasons. Because we’re not a religious or political organization, it’s a little bit easier to show that to people in a very dramatic way.

– Josh Chin. Follow him on Twitter @joshchin

Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment.

One demographic consequence of the “one child” policy is that China is now one of the most rapidly aging countries in the world.

China is also the second largest trading nation in the world and the largest exporter and second largest importer of goods.
The PRC government’s decision to permit China to be used by multinational corporations as an export platform has made the country a major competitor to other Asian export-led economies, such as South Korea, Singapore, and Malaysia.

Available energy is insufficient to run at fully installed industrial capacity, and the transport system is inadequate to move sufficient quantities of such critical items as coal.

Its mineral resources are probably among the richest in the world but are only partially developed.

A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.

Over the years, large subsidies were built into the price structure, and these subsidies grew substantially in the late 1970s and 1980s.

On top of this, foreign direct investment (FDI) this year was set to “surpass $100 billion”, compared to $90 billion last year, ministry officials predicted.

According to the ministry, China’s ODI grew by 1.1 percent from a year earlier to $56.53 billion, which includes investment of $47.8 billion in non-financial sectors worldwide, up 14.2 percent year-on-year.

It also aims to sell more than 15 million of the most fuel-efficient vehicles in the world each year by then.

In large part as a result of economic liberalization policies, the GDP quadrupled between 1978 and 1998, and foreign investment soared during the 1990s.

Despite initial gains in farmers’ incomes in the early 1980s, taxes and fees have increasingly made farming an unprofitable occupation, and because the state owns all land farmers have at times been easily evicted when croplands are sought by developers.

In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets.

Sheep, cattle, and goats are the most common types of livestock.

Growing domestic demand beginning in the mid-1990s, however, has forced the nation to import increasing quantities of petroleum.

There are large deposits of uranium in the northwest, especially in Xinjiang; there are also mines in Jiangxi and Guangdong provs.

China also has extensive hydroelectric energy potential, notably in Yunnan, W Sichuan, and E Tibet, although hydroelectric power accounts for only 5% of the country’s total energy production.

In the northeast (Manchuria) are large cities and rail centers, notably Shenyang (Mukden), Harbin, and Changchun.

See the rest here:
China’s Charity Challenge: ‘People Want to Help, They Just Don’t Know How’