WELFARE, END OF THE IRON RICE BOWL, CHARITIES AND NGOs IN CHINA

WELFARE IN CHINA AND THE IRON RICE BOWL

The "Iron Rice Bowl" was the name of the social security system in China that guaranteed everybody food, housing and social benefits. The benefits were especially good for people who worked for the state. The cradle-to-grave social security system of the state provided free education, low-rent housing, after school recreation; guaranteed lifetime jobs, pensions, worker's holiday camps, subsidized theaters and concerts, and free medical and dental care. Women were given a year's paid maternity leave, access to free day-care centers and free abortion on demand.

Factories and hospitals organize tours and trips and provided workers with homes, kindergartens, sports stadiums, holiday centers, summer camps for children, cultural centers, sports facilities, and rest and rehabilitation spas.

Work units are the main channel in Communist China for distributing social benefits and exerting social control. In the old days they worked out food rations and coupons and gave out fresh fish on national holidays.

End of the Iron Rice Bowl in China

The social security system ate up as much as 30 percent of the national budget. With the Deng reforms in the 1970s and 80s has come a gradual decline of the iron rice bowl. The government and the Communist Party have shed much of their responsibility for social welfare by eliminating benefits for those not employed by the state and steadily decreasing the number of state workers who receive benefits by closing down state industries.

Except for housing the iron rice benefits that remain are minimal. Some pensioners receive only $18 a month. Unemployed workers are lucky to get $25 a month. In the countryside, where people are especially dependent on government salaries and "iron rice bowl" benefits, villagers have become angry as their benefits shrink and their cost of living has increased. Protests and riots have broken out in many places.

Even today many people have held on to low-paying government jobs since the Deng reforms, not so much for the salaries but for the "iron rice bowl" benefits such as housing and health care

The withering of the socialist state has left many people with inadequate pension of health care. Chinese now have to pay a lot for things---like health care, housing and education’that used to cost very little. The loss of benefits is especially hard on people that lose their jobs or retire.

Fewer than 30 percent of urban dwellers have pensions and virtually none of the 700 million in the countryside have them. Payments to the poor only reach a fraction of those who are eligible. See Elderly

A properly funded pension system is desperately needed. There is no safety net in rural areas. One is starting to be set up in the cities, An effort to replace the iron rice bowl system with a system based on individual responsibility paid through payroll taxes hasn’t amounted to much. The government's biggest problem is figuring out ways to finance a social security system.

Demand for insurance is increasing as the government has cut welfare and health benefits. In many cases, temples for local gods have become centers of welfare activity. The Black Dragon Temple in Shaanxi, for example, sponsors deforestation and irrigation projects, builds schools and provides assistance for the poor, all services the government has traditionally been responsible for providing. .

Efforts to Create a Social Safety Net

China is in the midst of trying to weave together a social safety net that includes pensions and medical insurance for over 830 million farmers, expands unemployment insurance and directs cash payments, known as didao , to the poorest of the poor. In 2009 the Chinese put $9 billion into the dibao system, a 70 percent increase from the previous year.

The Washington Post described one man, a 90-year-old veteran of the 1940s civil war and Korean War, who started receiving a pension---a payment of $8 a month---in January 2010, which was in addition to the $7.37 monthly welfare payment he gets for being exceptionally poor. He said it wasn’t much but was enough to keep him supplied with cigarettes and the occasional drink.

One of the main reason that China is setting up the safety net is to aid the economy by getting people to spend rather than save. When one doesn’t have a safety net to rely on when they become old or sick, they tend to sock away money for the future. Tang Jun, a sociology researcher at the China Academy of Social Science, told the Washington Post, “When a person has no medical insurance, unemployment insurance or endowment insurance, how can that person dare spend all their money?...The Chinese people are a nationality that likes saving money...Ordinary people will only feel relieved about consuming if they don’t have to worry about not having money when they get old and not having money to go to the hospital.”

In Socialist Insecurity: Pensions and the Politics of Uneven Development in China (Cornell University Press, 2010), Mark W. Frazier of the University of Oklahoma shows how fragmentation in the state has facilitated rapid increases in pension spending for urban Chinese workers but has also aligned political interests in such a way that expanding other benefits to the Chinese labor force will be difficult to achieve.

See Elderly

NGOs in China

In early 2010 there were signs that the Chinese government was losing its patience with some of the activities of independent non-profit groups, charities and NGOs, subjecting some of them to tax investigations and restrictions on donations. In February, Oxfam was accused of trying to “infiltrate the mainland” with its internship program to train young people in social work at Chinese universities; 2) In March, the Women’s Law Studies and Legal Aid Center, which had won praise for its 15-year battle against domestic abuse and workplace discrimination, lost its sponsorship from Peking University because, it organizers think, its receives overseas funding and took up a controversial “black jail” case. 3) In May, the Aizhixing Institute of Health Education, an organization founded by harassed AIDS activist Wan Yanai, was investigated by tax authorities, with group members saying they felt that this was the first step to being shut down, [Source: Keith Richburg, Washington Post, May 2010]

In August 2009, two more public-spirited NGOs, Yirenping and Aizhixing, received unannounced inspections from the State Administration of Industry and Commerce.

An “Institute of Civil Society” has quietly opened at the local Sun Yat-sen University.

Non-Governmental Organisations in China: The Rise of Dependent Autonomy (Routledge 2008) by Yiyi Lu is a research fellow at the University of Nottingham’s China Policy Institute and an associate fellow at the U.K.-based Chatham House.

Charity in China

Charitable donations by individuals and businesses in China amount to 0.09 percent of GDP, compared to 2 percent in the United States. The outpouring of volunteerism and charity after the Sichuan earthquake provided evidence that maybe Chinese are more will willing to be charitable. Donations in China soared to $15.7 billion in 2008, three times the level of the previous year. About $11 billion went to relief efforts for the Sichuan earthquake.

There are three main kinds of charities in China: 1) Gongos, government-run non-governmental organizations, staffed by civil servants; 2) local and international NGOs, which need sponsors and have to register with authorities; and 3) an estimated 300,000 grassroots organizations that are unregistered or set up as commercial enterprises. Many corporations stay clear of the latter because donations can not be deducted from taxes.

See Jack Ma, Alibaba, the Sichuan Earthquake and the Rich and Wealthy,

Businessman with Connections to the Chinese Red Cross Resigns Over Mistress Scandal

Edward Wong wrote in the New York Times, “A businessman on the board of a company with ties to the Red Cross Society of China has resigned after a nationwide scandal centered on his girlfriend raised questions about corruption in that and other state-run charities, according to an Internet post on Monday by a colleague of the businessman. The businessman, Wang Jun, left the China Red Cross Bo’ai Asset Management Ltd. Corp., a for-profit company, days after Chinese Internet users accused his girlfriend, Guo Meimei, 20, of using charity money to finance a lavish lifestyle, including purchases of a Maserati, a Lamborghini and Hermès handbags. [Source: Edward Wong, New York Times July 4, 2011]

The scandal started on June 21, when questions were raised about photographs flaunting her lifestyle that Ms. Guo had uploaded to her microblog, where she also identified her job as “commercial general manager” at the Red Cross. The scrutiny prompted widespread condemnation and a police investigation of Ms. Guo. Chinese netizens spent days trying to figure out how she had amassed her wealth. Finally, the chief executive of the Bo’ai Asset Management company, Weng Tao, said on his microblog that Ms. Guo was not a manager at Bo’ai or at the Red Cross, and that her luxury items had been gifts from Mr. Wang. He said that Mr. Wang had resigned on June 26. Mr. Weng said he did not initially know of Mr. Wang’s relationship with Ms. Guo, which apparently began this winter.

The company is tied to the Red Cross of the Commercial Sector, itself a shadowy group that is linked to the Red Cross Society of China, a large government organization that is the biggest charity in the country and is a member of the International Federation of Red Cross Societies. Mr. Weng said his company makes a small profit but focuses on social welfare. It sells advertising on the sides of cars, he said in an interview with Beijing News. Mr. Weng did not give details about the social welfare work done by the company.

The outrage over Ms. Guo has led many Chinese to discuss common accusations of corruption in the Red Cross, which the government favors over private foundations and charities. The government places the Red Cross at the forefront of charity drives during times of disaster, and it is one of the very few charity groups generally allowed to solicit public donations. The National Audit Office reported financial irregularities at the Red Cross on June 26, including that it had overpaid an equipment procurement contract by $650,000. In April, a $1,500 restaurant bill paid for by employees of the Shanghai branch of the Red Cross drew widespread criticism after a photograph of the bill was posted on the Internet.

On Monday, Chinese netizens added to their discussion of the Guo scandal new questions about so-called social welfare housing that is being built in at least three cities by the general Red Cross or the Red Cross of the Commercial Sector. Some people have criticized the homes as too opulent, and have asked whether they are in fact luxury units meant to be rented or sold for an enormous profit.

Guo Meimei Baby, Senior Executive at the Chinese Red Cross

Edward Wong wrote in the New York Times, “Guo Meimei, 20, who claimed to hold a senior position at the Red Cross Society of China, posted evidence of lavish living on her blog. One showed her wearing sunglasses and leaning on the hood of a white Maserati. Another revealed her closetful of Hermès handbags. Yet a third showed her sipping a drink in a business-class cabin on an airline flight. [Source: Edward Wong, New York Times July 3, 2011]

None of it was outrageous by the standards of China’s nouveau riche. What ignited a firestorm was the fact that the woman, Guo Meimei, 20, appeared to hold a senior position at the Red Cross Society of China, a government organization that is the country’s largest charity. Under the name “Guo Meimei Baby,” she had boasted on her microblog that her title was “commercial general manager” at the Red Cross, a claim that had apparently been verified by Sina, the Internet company hosting the microblog.

At the same time, she posted photos and entries detailing her jet-set life, writing of the orange Lamborghini she drove in the south (her “little bull”) and the white Maserati she had in Beijing (her “little horse”).

Guo Meimei Baby and Her Impact on Philanthropy in China

Edward Wong wrote in the New York Times, “Some people fear the scandal and the accompanying increase in suspicions of corruption in charities could deal a major blow to philanthropy here, even as some officials increasingly rely on nonprofit groups to help cope with growing social needs like health care and education. “People have had doubts for a very long time,” said Jia Xijin, director of the Nongovernmental Organization Research Center at Tsinghua University in Beijing. “The issue is public trust or accountability of charities, the accountability of philanthropy organizations in China.” [Source: Edward Wong, New York Times July 3, 2011]

Philanthropy is only beginning to develop here. As more and more Chinese enter the middle and upper classes “Forbes this year listed 115 billionaires in China, up from 64 last year “some are looking to do good through charity donations. The Sichuan earthquake in 2008 led to a rise in civic consciousness, and the next year the government recorded $8 billion in donations.

Flashy philanthropists have emerged, like the recycling magnate Chen Guangbiao. Some say many Chinese are reluctant to donate their wealth for fear that the money will end up in a corrupt organization. That fear is mostly rooted in the government’s insistence on controlling charity work and promoting its own vast organizations, while setting limits on the activities of private foundations.: State-endorsed charities like the Chinese Red Cross have wide latitude in soliciting donations from the public, and are designated by the government to be focal points of charity collection during times of disaster, when people are looking for any outlet to help the needy.

Feng Lun, a real estate mogul who started a charitable foundation under his company, the Vantone Group, said in an interview that the state-run organizations “don’t have transparency and aren’t efficient enough,” largely because they lack managers with professional experience running charities.

Mistrust of the Red Cross in China

Edward Wong wrote in the New York Times, “Large state-run charities, especially the Red Cross, are suspect in the eyes of many Chinese... Official figures published in February 2009 showed that the Red Cross collected more than $735 million in donations after the Sichuan earthquake, even though some prominent people, like the real estate tycoon Wang Shi, advised against giving to the group. [Source: Edward Wong, New York Times July 3, 2011]

Many Chinese do not trust the Red Cross because of its special legal status “it is one of 25 large organizations that register with an office that answers to both the Communist Party and the State Council, China’s cabinet. Virtually all other nonprofit groups in the country are supposed to register with the Ministry of Civil Affairs, which counts 420,000 such entities on its rolls. “They get public financial support, their staff is paid by the government and their function is to serve as an agency of the government,” Ms. Jia said.

The group also has affiliated organizations that are not legally registered at all “one example that has emerged during the Guo Meimei scandal is a shadowy group called the Red Cross of the Commercial Sector, about which there is little information. In general, only the Red Cross and a smaller government organization, the Chinese Charity Federation, can ask for public donations, Ms. Jia said. During times of crisis, like the Sichuan and Yushu earthquakes, the government might allow other groups to raise money, but officials always put the Red Cross on the front lines of charity drives.

The Guo Meimei scandal erupted late June 2011, when someone on the Chinese Internet pointed out the photographs that Ms. Guo had been posting and the Red Cross job title on her microblog, a Sina Weibo account. Her blog had been marked with a “V,” meaning her identity had been verified by Sina, even though she had claimed earlier she was an actress.

Internet users quickly began condemning Ms. Guo. She first defended herself by saying her group was a commercial operation separate from the Red Cross. As public pressure grew, the Red Cross and Ms. Guo said they had nothing to do with each other. Internet users soon pointed out the existence of the murky group called the Red Cross of the Commercial Sector, which has ties to the Red Cross.

The Red Cross reported Ms. Guo to the police. Two days later, Ms. Guo apologized online for her “stupid and ignorant behavior” and “made-up identity.” Paparazzi-style photographs showed her arriving in the Beijing airport from Shenzhen, where she also lives, and rushing off in a private sedan. A few days later the Beijing News reported that the police had begun an investigation.

Although Chinese newspapers have been running articles and editorials about the controversy, censors last week deleted some of the original microblog posts that accuse the Red Cross of corruption. That scramble to censor underscores the delicate nature of the scandal. “This is just the beginning of the unveiling of the problems of state-run nonprofit organizations and charities,” Mr. Feng said. “I think this can be a positive force to push Chinese civil society to promote more transparency.”

Image Sources: Nolls China website http://www.paulnoll.com/China/index.html ; Landsberger Posters http://www.iisg.nl/~landsberger/

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated April 2012


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