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R 240840Z MAR 06
FM AMCONSUL GUANGZHOU
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UNCLAS SECTION 01 OF 03 GUANGZHOU 007743 
 
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SIPDIS 
 
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STATE PASS USTR FOR STRATFORD 
USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: PHUM ECON KPAO OPRC OIIP PGOV CH
SUBJECT:  Heart of Gold:  Searching for Business 
Philanthropy in Support of Civil Society 
 
Ref:  A) Guangzhou 4104, B) 05 Guangzhou 24118 (both notal) 
 
(U) This document is sensitive but unclassified.  Please 
protect accordingly.  Not for release outside U.S. 
Government channels.  Not for internet publication. 
 
¶1. (SBU) Summary:  Bereft of any significant private sector 
contributions, a strong and broad civil society sector has 
not developed to any extent resembling the pace of the 
enormous economic growth that has taken place in south 
China.  There are signs that many private businesses may 
want to be independent contributors to non-governmental 
organizations (NGOs), inspired in part by exemplary 
philanthropy from the Chinese diaspora, including 
neighboring Hong Kong.  The overweening desire of the 
authorities to monopolize all societal sectors, the 
strength of existing government affiliated civil groups, 
and the relative newness of the concept of business 
philanthropy have served to blunt this development.  Still, 
as south China enterprises get increasingly sophisticated 
and come to view themselves as having stakes broader than 
just their bottom line and as diaspora and foreign 
practices increasingly become familiar, a strong 
financially supported civil sector could come into play, 
particularly as governmental authorities come to realize 
that dealing with environmental degradation, social 
inequality, and public health challenges will over-stretch 
their capabilities and the desire to spread social burdens 
beyond government jurisdiction expands.  U.S. public 
diplomacy directed at Chinese business audiences could help 
reinforce this transformation.  End Summary. 
 
I Want to Live 
-------------- 
¶2.  (SBU) In this, part of Consulate Guangzhou's very 
occasional series on the existential question of whether 
south China has a modern economy (see ref B), we deal with 
the nexus between the development of business values and 
the advancement of human rights and civil society.  Alexis 
de Tocqueville identified the public activities of 
"intermediate associations" -- business and civil 
organizations -- as essential elements of the fabric of 
freedom and liberal democracy found in the United States. 
This model of civic organizations able to generate their 
own resources sometimes through the empowering philanthropy 
of business people in order to perform a huge number of 
public functions in addition to and as an independent 
counterweight to governmental power has been the hallmark 
of the most successful free and open societies in the 
world.  But it is precisely this model and its fabric that 
are missing in south China, particularly ironic given that 
Guangdong is the most prosperous province in the nation and 
has a growing dynamic private sector even while local and 
regional NGOs and wannabe NGOs struggle for existence. 
 
¶3.  (SBU) The reluctance of the Chinese authorities to 
permit the development of any social organizations that 
might potentially constitute a challenge to their political 
monopoly is, of course, a chief reason, but there are also 
many ancillary reasons for the weakness of the non- 
government civil sector and in particular why south Chinese 
enterprises have not broadly and strongly supported the 
development of independent civil associations.  For 
example, the Chinese government's own civil society 
capabilities, while perhaps less well funded than in the 
past, remain quite strong, and government NGOs (or GONGOs) 
such as the Chinese Woman's Federation provide ample 
support for women's programs in China while the Disabled 
People's Federation continues to provide an impressive 
array of social services (see septel). 
 
¶4.  (SBU) On the business sector side of the equation, many 
of south China's most prominent firms continue to be state- 
owned enterprises (SOEs) and "reformed" SOEs which have 
"marketized" themselves as shareholder companies.  SOEs 
already have social safety net responsibilities for their 
employees and their families (we just visited the Guangzhou 
Railway Group, for example, and it has 130,000 workers of 
whom only 90,000 are "front line" with the company 
 
GUANGZHOU 00007743  002 OF 003 
 
 
supporting them, retirees, and their families).  Meanwhile 
the "reformed" SOEs sometimes have legacy safety net 
obligations and/or want to avoid the controversy that might 
be involved if they engage in broader charitable and 
philanthropic work even as former employees curtailed as a 
result of SOE "marketization" remain non-beneficiaries of 
their transformation.  This by and large explains the non- 
involvement of these companies in independent philanthropy. 
For their part, all private enterprises in south China have 
comparatively short histories and their first emphasis has 
been on surviving and, hopefully, thriving.  This does not 
leave that much room for philanthropy as yet. 
 
I Want to Give 
-------------- 
¶5.  (SBU) But the concept of business contributing to 
social good outside of government channels is one deeply 
rooted in Chinese culture, as the long history of 
benevolent associations -- sometimes clan or locality based 
-- and religious organizations can attest.  So it is not 
surprising that despite the decades of communist rule, 
there is still a fairly strong sense of the concept of 
social beneficence outside of service to or from the 
government.  Since 2004, there has also been legislation 
permitting the establishment of foundations in the names of 
individuals or legal entities, including companies, and 
there has been a respectable record of charitable giving, 
mostly to GONGOs or to "safe" recipients such as schools, 
including at the university level, which are governmental 
entities by and large. 
 
I Cross the Ocean 
----------------- 
¶6.  (SBU) The giving of "safe" contributions to schools and 
universities has had an added impetus provided by 
philanthropic activity by the Chinese diaspora particularly 
in south China because it is the source of a large 
proportion of overseas Chinese.  The Jimei school complex 
in Xiamen, for example, stands testimony to the generosity 
of Tan Kahkee (Chen Jiageng), who became rich in then 
Malaya and who also made massive contributions to the 
founding of Xiamen University.  Although the school was 
nationalized in the wake of the communist takeover, the 
school and its history are manifested in its distinctive 
buildings at a prominent site on the mainland side of the 
causeway linking to Xiamen Island.   Similarly and more 
recently, the late third generation Thai-Chinese tycoon Guo 
Fengyuan funded the creation of the Tanfuyuan complex in 
Chaozhou, featuring a replica of the "Palace to Receive 
Thai Tribute," a Buddhist temple complex, and a Confucian- 
inspired school aimed at teaching the Chaozhou dialect to 
Thai-Chinese students (interestingly, the complex also 
features a hagiographic inscription for Mr. Guo signed by 
Chiang Kai-shek and another signed by Chiang Weigo, one of 
the few instances in which these Kuomintang political and 
military leaders are portrayed in a positive light in an 
institution on the mainland). 
 
It's Such a Fine Line 
--------------------- 
¶7.  (SBU) Like their Chinese counterparts, many overseas 
Chinese are donating directly to universities, but unlike 
the mainlanders some of the diaspora donations are 
explicitly "empowering" in nature and not just 
"charitable."  For example, the Chinese-American Wu family, 
founders of the Maxim's restaurant chain and the franchise 
owner for Starbuck's in south China, have given to Lingnan 
College, which was involuntarily absorbed into Zhongshan 
University after all schools were nationalized by the 
communists.  The Wu family grant not only requires the 
continuing separate existence of Lingnan but also partially 
endows the Executive MBA program offered by Lingnan's 
Business School in conjunction with the University of 
Minnesota's Carlson School of Management.  The latter has 
an explicit curriculum emphasis on business ethics and the 
social and legal responsibility. 
 
¶8.  (SBU) The contributions of the Li Kashing Foundation to 
Shantou University is based on explicit "empowerment" 
 
GUANGZHOU 00007743  003 OF 003 
 
 
conditions.  As explained by Eric Chow, employed both by 
Shantou University and the Foundation, Shantou is run on a 
"credit" system in which students, who are chosen not by 
test scores but by their application letters with an 
emphasis on less well off families, have elective courses 
and can change majors unlike Chinese schools which impose a 
fixed four year curriculum on their students in pre-set 
majors.  Moreover, because the students and graduates of 
Shantou University are beneficiaries of beneficence, they 
are expected to act in a similarly socially responsible 
manner in the spirit of Li Kashing's contribution.  This 
"social duty requirement" is not limited to the business 
majors at Shantou but extends to the more prominent medical 
and law schools as well. 
 
¶9.  (SBU) It is not surprising that "empowerment" type 
philanthropy is directed mostly at universities because 
they are generally the most progressive and open 
institutions in China -- with Zhongshan University, for 
example, hosting an Institute for Civil Society which 
provides an "incubator" and a degree of "cover" for NGO 
development.  Moreover, the universities provide an easy, 
clearly legal vehicle for this type of philanthropy. 
 
Comment:  And I'm Getting Old 
----------------------------- 
¶10.  (SBU) The prospects for getting "empowerment 
philanthropy" beyond the university are good.  The high 
repute of the "Nanfengchuang" ("South Wind Window") 
magazine -- Guangzhou's most "progressive" periodical -- 
even among business leaders suggests that there is a large 
appeal and appetite for the illustrative stories of people 
and organizations doing public good independent of 
government control.  Rockefeller Brothers Fund President 
Stephen Heintz commented to us that he, too, is finding 
that business people are very much interested in civil 
society (the Fund is legal in China and has just recently 
decided to focus all of its China efforts in the south). 
As noted above, EMBA and other foreign-affiliated 
university programs and the almost iconic example of Li 
Kashing are having an effect as well.  U.S. public 
diplomacy programs would be a useful supplement to this, 
and this Consulate is partnering with the American Chamber 
of Commerce Guangdong's Corporate Social Responsibility 
committee to develop the theme of "empowering 
philanthropy." 
 
¶11.  (SBU) The growing inability of the government to 
provide all social services also gives room for "empowering 
philanthropy" to grow.  For example, the public health 
system in China has deteriorated badly and it is very much 
a Hobbesian world for anybody with serious medical problems 
but lacking the resources to pay.  Consequently, the 
government is increasingly looking to a private sector 
based health insurance system to "replace" the public 
health system.  Environmental degradation, catastrophic 
insurance, tuberculosis, HIV, and other health challenges 
are all problems that increasingly need non-governmental 
involvement to buttress the efforts of the authorities. 
 
¶12.  (SBU) And in the coming years as the founders of those 
south China enterprises today that thrive into the future 
get older, they probably will also, as past Chinese tycoons 
did and current diaspora Chinese do, begin to see their 
legacies less as a mound of gold than as the respect and 
gratitude of common people empowered and lifted up by their 
beneficence. 
 
DONG