The local non-governmental organisation sector is mushrooming in China despite mixed signals from the Government. Analysts believe they will be a major force in helping to alleviate poverty, social welfare and protecting the environment. But it is hard to form a picture of how these organisations are faring because China has a unique definition of NGO. According to Wang Ming, director of Qinghua University's NGO Research Centre, there are about 136,000 social organisations and 700,000 non-profit organisations in China. The first category includes trade unions, or groups with a membership system. The latter encompasses all sorts of non-commercial organisations, including hospitals and museums. Most of these are government subsidiaries that act as intermediaries between the Government and different social sectors. Therefore, it is difficult to estimate how many 'true' NGOs - organisations initiated by people with a particular interest - there are. But what is known is that they are proliferating. Unlike in the West, most of these groups have to be registered under a government department or an academic institution as no organisation can be completely independent of the Government. But Professor Wang said most NGOs in China now enjoyed a large degree of autonomy because they did not rely on government funding. He said government subsidies accounted for only 20 per cent of NGO funding. The best-known mainland NGOs were spawned in Caohai, a wetland area in Guizhou province. In the early 1990s, the International Crane Foundation and Trickle Up introduced micro-credit loans to Caohai residents to preserve the wetland habitat for black-neck cranes. These loans gave rise to about a dozen local NGOs or self-help groups, making Caohai a showcase used by foreign agencies to demonstrate the potential of farmers when given enough incentives and help. Lu Xing, of the Yunnan Participatory Research and Action Network (PRA), who was a technical consultant for the Caohai project, said local organisations now played a role in fighting poverty. His network, for example, encourages local communities to make their own decisions about how to develop their resources, although they do not directly operate projects. 'It is more like a network to promote the approach. Our members all have their own poverty-alleviation projects in various forms,' Mr Lu said. Mr Lu himself is director of a local NGO that focuses on drinking water projects in Yunnan's poorest county, Nujiang. Much of the funding for these organisations comes from foreign charity agencies. In the case of the PRA network, US-based Ford Foundation is the main donor. 'I can see a trend that there will be more and more local NGOs in Kunming in the next few years. They are playing a more important role in poverty alleviation in Yunnan,' he said. Beijing, while eager to harness community resources to compensate for the withdrawal of the state in many areas of social welfare, is cautious about the NGO trend. In 1998, the State Council issued a regulation on the registration of mass organisations. In 1999, the National People's Congress legalised donations to social welfare organisations. But the beginning of what outsiders believed would be the dawn of civil society in China - or a 'third sector' to supplement the state and market - has had mixed fortunes. A law intended to give legal status to mainland NGOs was temporarily shelved about 18 months ago because of concern over the Falun Gong movement. An NGO worker said there were signs the restrictions might be lifted soon, but the Government faced a dilemma in how to involve society to provide social welfare while keeping a rein on mass organisations. Professor Wang said registration would remain a problem as long as the Government required NGOs to register under a government institute. 'For example, an environmental group might want to register under the Environmental Protection Bureau. But the bureau might not be willing to have the group under it,' he said. Funding is another problem. An example is a plan by Hong Kong charity group Oxfam to 'spin off' its office in Luquan, northwest of Kunming. Oxfam wants to turn the office into a mainland NGO, since it is now operating smoothly, and use its limited resources to help other needy areas. But the plan has been temporarily stalled, partly due to the lack of funding an independent office would have. NGO workers hope more funding will come from foreign governments and international agencies, such as the United Nations. Donations from these sources now go to the Government. While the funds are often earmarked for specific purposes, donors seldom raise objections about how the money is spent. Some international agencies are considering setting aside some of their donations for NGOs, which would be able to apply directly for funding. 'The amount forked out for NGOs remains small. But it is possible there will be conflicts of interests between the Chinese Government and these organisations,' a Hong Kong NGO worker said. Mr Lu believes a lack of funding will hinder the growth of the NGO sector in the immediate future. 'It is still difficult to earn a living simply by doing development [poverty alleviation] projects. It will still take some time for an independent NGO sector to come into being.'