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Better Charity Laws, Incentives Needed

Chinese People's Political Consultative Conference (CPPCC) member Wang Xianzhang said at the ongoing session of the top advisory body that the country is in urgent need of an improved charity system.

"Currently, 60 million Chinese people are disabled and 30 million are living under poverty line, plus a large number of people are at risk from natural disasters. All these people are badly in need of financial, material and medical aid and other related support. We should dynamically build charities to arouse societal concern and provide substantial help for the disadvantaged groups."

As the general manager and Communist Party secretary of China Life Insurance (Group) Company, the country's largest life insurer, Wang is intimately familiar with China's need for social aid and compensation systems.

The development of charities was first incorporated into the social welfare net last September at the Fourth Plenary Session of the Communist Party's 16th National Congress. The decision indicated that charities have become an important part of building a harmonious socialist society.

However, Wang indicated that successfully operating charitable organizations requires far more than recognizing the need for them.

"In 2002 there were more than 100 charitable organizations [in China], which raised a combined 5 billion yuan (US$603 million). This only accounts for 0.05 percent of that year's GDP. In the US, by comparison, in 1996 there were 1.2 million tax-free charitable organizations raising a total sum of US$150.7 billion, which accounted for 2 percent of its GDP."

Wang attributed the weakness of China's charities to shortcomings in existing management systems, such as insufficient transparency in fund management. The country lacks such fundamentals as substantive laws and regulations, as well as necessary services and facilities.

In other countries, noted Wang, citizens are inculcated with the ethos of charitable social contribution throughout their lives. This is lacking in China. "The All-China Charity Federation reports that of the donations it receives, 80 percent are from overseas countries while only 20 percent are from domestic contributors," he said.

Wang suggested that special laws relating to charities be created as soon as possible. They should specify the nature and mission of charitable organizations and provide basic guidelines for their operations and management.

Moreover, the registration and licensing system should be made more convenient to encourage the formation of more organizations. A comprehensive system covering asset management, supervision, performance assessment and disclosure must be established.

Finally, said Wang, a comprehensive and uniform taxation system is needed to cultivate the development of charities.

(China.org.cn by Wind Gu, March 9, 2005)


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