VZCZCXRO0215
RR RUEHCN RUEHGH
DE RUEHGH #0159/01 1200306
ZNR UUUUU ZZH
R 290306Z APR 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6833
INFO RUEHGZ/AMCONSUL GUANGZHOU 1182
RUEHSH/AMCONSUL SHENYANG 1209
RUEHCN/AMCONSUL CHENGDU 1211
RUEHHK/AMCONSUL HONG KONG 1342
RUEHIN/AIT TAIPEI 1021
RUEHGV/USMISSION GENEVA 0026
RUEHGH/AMCONSUL SHANGHAI 7383

UNCLAS SECTION 01 OF 02 SHANGHAI 000159 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE ALSO FOR EAP/CM, DRL 
 
E.O. 12958: N/A 
TAGS: PGOV SOCI PHUM CH
SUBJECT: THE EVE OF CIVIL SOCIETY'S ARRIVAL:  NPI PROMOTES 
ESTABLISHMENT OF NGOS IN SHANGHAI 
 
 
(U) This cable is sensitive but unclassified and for official 
use only.  Not for distribution outside of USG channels. 
 
¶1. (SBU) Summary.  According to Director of the Shanghai 
Pudong-based Non-Profit Incubator (NPI) Simon Lu, the Pudong 
District Government began to "outsource" some social services to 
local non-government organizations (NGOs) as a part of its 
comprehensive coordination pilot reform program approved by the 
Chinese State Council in late 2005.  Local government officials, 
including municipal level ones, have realized NGO can be a good 
supplement to their work and would like more NGOs to provide 
social services in Shanghai.  However, NGOs are unable to 
compete with government-operated NGOs (GONGOs) in getting 
charitable resources.  Though China in Lu's view is on the "eve 
of the arrival of civil society," Chinese NGOs should develop a 
"strategic development plan" - not only work closely with 
open-minded government officials, but also create alliances with 
local private enterprises to ensure they can conduct work in a 
stable fashion.  End summary. 
 
History and Work of NPI 
----------------------- 
¶2. (SBU) On April 15, Political Assistant visited the Non-Profit 
Incubator (NPI) headquartered in Shanghai's Pudong District and 
discussed the NPI's development and programs with NPI Director 
Simon Lu.  In late 2005, the Chinese State Council approved the 
Pudong District as a test bed for many types of government and 
administrative reforms.  The NPI was officially registered at 
Pudong District Civil Affairs Bureau in early 2006 and set up 
its office in April 2007.  Major donors to NPI include the Ford 
Foundation, the World Bank, Hong Kong Oxfam and the Chinese real 
estate company-affiliated Narada Foundation.  At present, NPI 
has 49 full-time staff members, including 37 people working at 
Pudong's Sanlin community, site of a huge new community social 
services center.  In addition, NPI hires part-time consultants 
from local offices of enterprises such as McKinsey and Company 
and Ogilvy and Mather and works with East China University of 
Science and Technology and Fudan University to encourage student 
volunteers to participate in NPI activities. 
 
¶3. (SBU) According to Lu, NPI provides offices and facilities, 
registration assistance and small grants for newly established 
small and medium size non-government organizations (NGOs).  More 
importantly, NPI helps these NGOs with their capacity building 
so that these organizations can carry out their programs more 
efficiently and communicate with local authorities more 
effectively.  NPI's training program covers a wide range of 
topics including strategic planning, fundraising, leadership 
development and financial supervision.  Up to now, the NPI has 
helped establish six NGOs in Shanghai and plans to complete 
registration and training for another eight NGOs in the upcoming 
year.  In this regard, NPI welcomes more opportunities for 
exchange programs and technical training with overseas NGOs, 
which would be more helpful than financial contributions, 
according to Lu. 
 
NPI's Programs and Relationship with Local Government 
--------------------------------------------- -------- 
¶4. (SBU) According to Lu, in follow up to the State 
Council-approved comprehensive coordination pilot reform program 
for Pudong, the Pudong District Government launched a new policy 
to support development of social organizations in 2006.  In an 
effort to build a service-oriented government, the policy not 
only provides tax benefits for these organizations, but also 
encourages local governments to seek opinions and purchase 
services from NGOs.  In 2007, NPI produced two research reports 
for the Pudong District Government.  One report sets up a 
standardized procedure for the government to purchase NGO's 
services.  The other report provides the Pudong District Finance 
Bureau with a framework with which to evaluate financial 
investments and a work performance evaluation system, both to 
support provision of services to the elderly in Pudong. Lu added 
the Shanghai Municipal Government is trying to "outsource" 
supply of some social services to local NGOs because government 
employees sometimes lack motivation and relevant experience.  In 
October 2007, the Pudong District Government sent bidding 
invitations to local NGOs on a community management project in 
Sanlin, where a 12,000 square meter World Expo Citizen Center 
was completed in 2006.  NPI won the tender and will begin to 
work there soon. 
 
¶5. (SBU) Lu asserted that NPI maintains good relations with the 
local government.  On March 5, an official delegation including 
Shanghai Vice Mayor Hu Yanzhao, who is in charge of the city's 
 
SHANGHAI 00000159  002 OF 002 
 
 
civil affairs, visited NPI.  During a discussion with NPI staff 
members, the officials stated that the Pudong District 
Government will promote NGO development from three aspects, 
namely, increasing government purchase of NGO services, 
encouraging NGOs to develop the capacity to provide a broader 
range of social services, and developing a recruitment system 
for NGO professionals. 
 
China's Future Charities Law 
---------------------------- 
¶6. (SBU) When asked what China's future Charities Law should 
address, Lu asserted the Law should emphasize equal competition 
for charity resources among NGOs and government-operated NGOs 
(GONGOs).  Lu said Shanghai has over 3,000 NGOs but only ten 
organizations are independent from the government - that is, in 
his view, nearly three thousand of the NGOs are in fact GONGOs. 
The GONGOs do not have the right to speak views different from 
established policies and are unable to bargain with the 
government.  Though the GONGOs are more reliable and often have 
influential executives, as a whole their insufficient attention 
to supervisory issues, especially in the financial area, has 
resulted in many problems.  In addition, most of China's policy 
makers do not understand the ability of NGOs to play a positive 
role in society.  Therefore, Lu suggested, China should not rush 
to pass an inadequate or immature Charities Law.  Regarding the 
future plan for NGO development in China, Lu said that China is 
on the "eve of the arrival of civil society."  Chinese NGOs 
should have "strategic development plans."  NGOs should 
establish close relationships with open-minded government 
officials, on the one hand; on the other hand, NGOs should 
create alliances with local private enterprises to ensure their 
ability to conduct work and promote their views of social 
service is stable and safe from top-down government changes of 
policies or acceptable points of views. 
JARRETT