Why China’s rich should do more to help the poor
Early last month, rumours were swirling that Xiao Gang, China’s top securities regulator, was under intense pressure to resign following the disastrous introduction and hasty rescinding of the circuit breaker mechanism which spooked the stock markets on the mainland and beyond.
The China Securities Regulatory Commission issued a curious and seemingly irrelevant statement that Xiao had personally taken charge of a task force on poverty alleviation and supervised a programme to help firms in poor regions seek stock market listings and debt financings and help poor peasants become shareholders.
While the announcement was the peculiar method preferred by mainland officials to dispel rumours of personnel changes, it was understandably met with great ridicule, not least because millions of investors who had lost a bundle in the stock market rout felt gravely insulted.
READ MORE: China’s final push to eradicate poverty will be difficult but not impossible if handled in a clean, transparent manner
But the message about Xiao’s new task was not just an improvised excuse to clear rumours about his job security.
In fact, it was a message of his pledging of support to President Xi Jinping’s (習近平) top concern, poverty alleviation.
Indeed, over the past few months, Xi has been talking about fighting poverty much more than other more immediate issues such as the economic slowdown or stock market meltdown.
In his last inspection tour before the Lunar New Year, he visited Jinggangshan, one of the country’s poorest areas where he called upon several poor households and vowed to help them out of poverty soon.
“Leave no one behind” has been the motto of the massive propaganda machine in its efforts to drum up support for poverty alleviation.
Official media are full of stories on how to help the poor following the announcement by the party leadership that it planned to lift the country’s remaining 77 million out of absolute poverty as part of its ambition to double China’s 2010 GDP and the per capita incomes of residents in both cities and rural areas by 2020.
This is no easy task as it means that the country needs to lift at least 15 million people out of poverty annually in the next five years at a time when the economy is slowing down.
Hence the urgency as government departments at all levels nationwide are setting up task forces to help the poor.
Over the past 35 years of reform and opening up, China has made a tremendous accomplishment in lifting nearly 600 million people out of poverty.
But along the way, China has also achieved the dubious honour of having one of the widest income gaps between haves and have-nots.
China’s previous policies that favoured urban over rural residents and coastal over inland regions had contributed to the growing divide between the rich and the poor, as exemplified by Deng Xiaoping’s (鄧小平) famous slogan of “let some people get rich first”.
In recent years, various data have shown that China is creating more millionaires than any other emerging economy.
According to one study, about one per cent of China’s households own one third of the nation’s wealth. The widening gap has become a key source of social instability.
To the great dismay of many people, China’s growing rich class has done little to help the poor, bucking the international trend.
Until recently, China’s super rich have often made headlines by forking out tens of millions of US dollars to snap up trophy overseas properties or Picasso paintings.
But in terms of charitable giving, the mainland ranks among the worst. In 2014, billionaire Bill Gates made a special visit to China where he met a group of the country’s richest businessmen, urging them to donate to the poor. His visit was well received but to illustrate the difficulty, many of the invited tycoons declined to show up.
To be fair, philanthropy is still a relatively new concept as most of China’s wealthy business elites accumulated their wealth in the past decade only. Their aversion to philanthropy also stems from the rigid government policies which frown upon NGOs and make it difficult for them to set up charitable foundations because of legal restrictions and lack of tax incentives.
Several infamous scandals involving misuse of funds at the government-run charities have also not helped.
But changes are on the way. Last month, China’s top legislature released a draft charity law to solicit public opinion. Given the law has been 10 years in the making, this signals that it could soon be approved.
According to the draft, the law will make it easier for businesses to set up charitable organisations without a government sponsor and will also offer greater tax deductions for charitable contributions.
Hopefully the passage of the law can come soon and help spur the development of philanthropy.
Interestingly, Xi’s continuing anti-corruption campaign and particularly his frowning on lavish spending have scared China’s wealthy elites to rein in their lifestyles.
But flaunting their wealth to make charitable contributions is most likely to help them win some brownie points with Xi.