China’s Third Sector: Is it Losing its Independence?

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This article addresses a long-standing but important debate over the independence of China’s NGOs. Going back to the early 1990s, China scholars have viewed Chinese NGOs as coopted by the state, unable and unwilling to play an assertive, independent role in speaking for and acting on behalf of marginalized groups. For these scholars, China’s NGOs did not approach a civil society in the Western sense. Rather they were “state-led”, “coopted”, or “embedded” into the state. That position is restated again in this article but in response to a changing environment. Whereas NGOs in the past were either a creation of the state (e.g. GONGOs) or weak and marginalized, NGOs are now gaining greater capacity and credibility, and beginning to collaborate with the government and business sectors. They are, in other words, beginning to join the mainstream. The question this article raises is whether this collaboration continues the “state-led”, “coopted” relationship of the past in which NGOs were dependents of the state, rather than independent actors. This article is worth reading alongside another article in this issue, “China’s Garbage Problem Prompts Soul Searching Among NGOs”, which takes NGOs to task for not speaking out on behalf of the groups they presume to represent.

“In reviewing the last 30 years, the development of China’s third sector cannot be described as ‘independent development’ or as ‘autonomous development.’ The third sector is still unable to take hold of its own destiny. It is becoming increasingly dependent.” This statement was made on February 26, 2011, by Professor Kang Xiaoguang at a press conference unveiling his new book, “An Observational Report of China’s Third Sector”. His words sent shockwaves through the crowd and triggered heated debate.

Professor Kang, the director of Renmin University’s Research Center on Nonprofit Organizations (中国人民大学非营利组织研究所), and Dr. Feng Li, the executive director of China Philanthropy Advisors (公域合力管理咨询有限责任公司), acted as chief editors for this report. The report is divided into four major sections: executive summary, main report, case study analysis, and a chronicle of important events.

Growing Dependence on the Government

“The third sector has played an important role in promoting economic and market development, providing public services, driving social innovation, and other activities that generally benefit government and business. However, in terms of those activities that oppose or limit the interests of government and enterprise – acting against market tyranny, participating in public policy making, restraining government power, and promoting the democratization of the political process – the role that the third sector is able to play is actually very slight” (p. 35 of the report).

“The current situation in China is that advocacy organizations cannot achieve protection. When the interests of marginalized groups come into direct conflict with the market and corporate interests, third sector organizations do not have the capacity to resist market tyranny on behalf of the interests of the marginalized” (p. 32). This statement in the report set off a debate within the current mainstream discourse.

According to the report, the strength of the third sector’s independence and autonomy is determined by the extent to which the state uses its power to interfere, and the extent to which an organization’s main resources come from a single source. The very title of the report “Dependent-Development of the Third Sector,” clearly reflects the authors’ conclusions. It is not difficult to understand why throughout the report the authors refused to use the term “civil society,” and instead use “the third sector,” to describe China’s non-profit sector.

The report states that the government uses subtle tactics such as ‘graduated controls’ and “functional substitution” policies ((Editor’s Note: Professor Kang develops the idea of “graduated controls” in an article he published in a 2008 issue of Modern China. He argues that the government exercises varying controls over social organizations, depending on their ability to challenge the Chinese government and the nature of the public goods they provide. I discuss his article at length in one of my blogs at In this way it cultivates “controllable” organizations, and replaces, reduces, or even eliminates third sector organizations that are “autonomous”, successfully coopting society. This creates an environment in which third sector organizations lack autonomy and cannot realize their watchdog function. For many years, under the influence of Western development agencies, the third sector has generally taken on ideas and values that are independent of government or business interests. Yet at the level of implementation, more often than not organizations are simply unable realize these ideas and values, hence a sort of functional and cognitive dissonance has appeared in China’s third sector.

The report offers an appraisal of the relaxations by government of NGO registration that are currently appearing in different areas across China, and of the large-scale shift towards government purchasing of NGOs’ services. On one hand, it approves of the measures in that they promote the separation between state and society, professionalism, and the standardization of NGO governance. On the other, the authors expressed concern that these measures would lessen the third sector’s independence.

In fact, as international funding has declined considerably in recent years, Chinese grassroots organizations have been going through a debate between “foreign milk” and “mother’s milk,” and their gaze has begun to settle on domestic funding ((Editor’s Note: the terms “foreign milk” and “mother’s milk” refer to international funding and domestic funding respectively.)).  But domestic funding does not necessarily benefit grassroots organizations. With the wave of government purchasing of NGO services, government-initiated groups have appeared, and organizations from within the government system have one after another gone through a process of “socialization.” Because of their relationships within the government system, and the natural trust they have from the government, when participating in competitive bidding, this type of organization may have changed its look but remains in a monopolistic position. This undoubtedly puts the squeeze on any grassroots organizations seeking to exhibit a more independent mission ((Editor’s Note: Here the author is referring to GONGOs who have in recent years tried to appear and act more like NGOs, and are able to secure government contracts because of their close connections with the government. NGOs, lacking those connections, will thus find it hard to compete with GONGOs in securing domestic funding.)).

Recently in Beijing, a group of disability grassroots organizations registered as businesses jointly signed a letter to the responsible government agency. The letter called for the agency to make it easier for them to register. Unlike the more relaxed policies of last year, this year’s plans for government procurement in the disabilities sector has excluded groups that were registered as businesses.Moreover, though everyone already knows the registration policy is opening up, the policy is not being implemented ((Editor’s Note: This paragraph raises yet another obstacles that more independent, grassroots NGOs face in getting domestic funding. Many grassroots NGOs cannot get the government support needed to register as legal nonprofits, so they end up registering as businesses. But as businesses, these NGOs are not eligible for government contracts.)).

In addition, some grassroots organizations, after gaining legal status and being incorporated into the system, soon afterwards face real pressures to compromise or even abandon their own values, reduce their advocacy function and orient themselves towards social service activities in order to ensure their survival. These organizations need more sophisticated strategies and tactics in order to properly resolve the anxiety created by this pressure. With all of this outside pressure, philanthropic organizations face the dilemma of becoming divided; even within a single NGO this sort of division can become unavoidable.

The Dual Nature of Business Influence

Companies also have the ability to influence the imbalance and division occurring in China’s third sector. Corporate-sponsored foundations have become involved in the philanthropic sector in a big way. The inter-sectoral cooperation they promote is blurring the lines between the three sectors, bringing charitable causes more into the mainstream, and prompting a movement for innovation and efficiency in the nonprofit sector. This trend should not be taken lightly. The report posits that the entry of corporate resources will reduce the dependence of the third sector on government and international funding. At the same time, government trust in business should loosen the institutional restrictions on China’s third sector.

But there is a flip side to every coin. Corporate influence can also weaken the independence of charitable organizations. Corporations bring their own business concepts and capitalist logic into the third sector. This creates a third sector that is more ‘rational’, that emphasizes cost-benefit analysis, and even at times puts more emphasis on profit. Corporate influence also reduces the willingness of the third sector to play its function as a watchdog, compromising the ability of NGOs to challenge businesses for engaging in inappropriate behavior. (p. 66)

“While government simply stands in the middle, and government-controlled trade union perform practically no real function, NGOs disappear without a trace.” Professor Kang in this way explains that Chinese NGOs, lacking independence and the ability to challenge powerful interests, have no way to take on the function of advocate or to represent different interests. In the case study section of the report, special emphasis was given to labor disputes and the silence of NGOs when workers engaged in collective action in 2010

The authors hold great hopes for the overall influence that corporate foundations might have on the third sector. They hope that they might genuinely be able to become a tool for society, to promote social welfare and progress.

The Controversy that Ensued

During the press conference, the issue of dependence created some controversy. The focus was on two areas: first, is the dependency of the third sector growing stronger? Second, should the third sector be dependent on others? In other words, is there any point in discussing this question?

Professor Shi Zengzhi, executive director of Beijing University’s Civil Society Research Center (北大公民社会研究中心) agrees with Kang’s judgment. She believes that while on the surface China’s civil society appears to be more independent, this so-called independence is rich in “Chinese characteristics.” She proposes that if we wish to understand and assess the inner dynamics of changes in the third sector, we can start by looking for answers within the maturation process of China’s netizens/citizens. Are the netizens (citizens on the internet) engaging in protest pursuing values or interests? Are they striving for the state to take responsibility or for their own personal rights? Does a community of citizens even exist? If protest and opposition are built on the foundations of personal interest, then a civil society does not exist. Director Shi has studied the internet and civil society for many years. She calls on everyone to pay attention to the value of new media; the development from a mainstream media to social media has the significance of technologically empowering people.

Professor Deng Guosheng, the director of Tsinghua University’s Center for Innovation and Social Responsibility (清华大学创新与社会责任研究), is more optimistic. He believes that those organizations with a government background have shown a clear trend towards institutionalization, and that grassroots organizations are becoming more independent. Thus he disagrees with the idea that over-dependence on government and enterprise is causing the third sector to lose its ability to challenge these sectors. He believes that positive inter-sector cooperation should be encouraged. Academics that view China’s third sector optimistically tend to cite the emergence of a plethora of NGOs and volunteer organizations in response to the 2008 earthquake in Wenzhou as an example proving the positive growth of civil society. (See pg. 51 of the article “The Lotus Blooms: The Influence of the Wenchuan Earthquake on Grassroots Organizations” in the Spring 2011 issue of CDB. The English version can be accessed at “An Emerging Civil Society: The Impact of the 2008 Sichuan Earthquake on Grassroots Civic Associations in China”)

Dependent or Independent? That is the Question

The environment in which its organizations exist and their sources of funding lead to the dependence of China’s third sector. But should the values and spirit of the third sector accept this dependence as part of its identity? Some of the academics present at this event were generally in consensus that the third sector should strengthen its independence. Yet, the secretary general of Tencent Foundation, Dou Ruigang, expressed a differing opinion.

Dou stressed that dependence is the natural state of the third sector. Its sources of funding already demonstrate dependence on the government or business, so exploring the independence of the third sector is meaningless. He gave further emphasis to “Chinese characteristics,” stating: “China’s foundation is built on relationships, like that between the lord and his ministers, or the relationship between father and son. It is certainly not antagonistic. We want to build an interdependent, intimate relationship. Internal conflict should be solved internally ((Editor’s Note: Chinese scholars have long asserted that civil society in China has “Chinese characteristics” which emphasizes the collaborative, interdependent relationship between the state and civil society and is perceived as distinct from the oppositional relationship between state and civil society in the West.))”. As soon as this comment was made, Jin Jinping, executive director of the Beijing University Center for Non-Profit Organization Law Research (北大非营利组织法研究中心), could not help but respond, “If we completely renounce our principles and our bottom line, then the development of the third sector has no meaning.”

Qiu Zhonghui, the secretary general for Nanjing’s Amity Foundation (南京爱德基金会) is a NGO practitioner. He emphasized that NGOs must keep their mission firmly in mind. If an organization is dependent, then it will be unable to maintain its values and achieve its goals. It is just these values and goals that are the primary difference between the third sector and the government and business sectors.

Li Guozhi, the chief representative of the UK’s Voluntary Service Overseas (China) (英国海外志愿服务社-中国) believes civil society is an important force in balancing and monitoring government and market failures. It is necessary to have a balancing force in society to control government and business interests. Take for example the field of environmental protection: the key is not the amount of corporate funding going into the philanthropic sector, but rather whether these enterprises assume a sense of social responsibility in their operations. If companies took care of everything from their end, then there would be no need for environmental NGOs to make a stand.

John Fitzgerald, the Ford Foundation’s chief representative in China, took the perspective of the relationship between the donor and grantee. He pointed out that in actual fact “foreign milk” and “mother’s milk” both have the potential to be problematic. The key lies in what demands the grantees make of their donors, or how grantees protect their autonomy. In addition, Mr Fitzgerald believes that the autonomy of a single NGO and that of civil society as a whole are different concepts altogether, as the latter includes cultural characteristics.

Using Stones from Other Hills (or Accepting Aid from Outside Sources)

While the independence of the third sector is undoubtedly related to funding sources, it is also linked to the system, culture, and level of civic awareness. The dependence of the third sector on government and enterprise for funding is certainly not something exclusive to China. In many Western countries, development funds from the government account for a significant proportion of NGO funding.. But this form of “dependence” is not absolute “dependence.” The relationship between the NGO and the government is not only determined by funding, but also by the protection of legal and civil rights for the organization. This allows these NGOs a certain amount of negotiating power, and the power to influence policy.

Li Guozhi has stated that in Western countries the third sector is able to both cooperate with the government and act as a watchdog, in some instances even shaping policy decisions and governance principles,  while maintaining its independence. For example, some of the British NGOs that receive government funding every few years will discuss the funding issue with government, renew funding agreements, accept government funds to undertake aid work and participate in debate and influence the direction of the government’s aid work. Though their funding comes from the government (proportions vary, but some NGOs receive over 50% of their funding from the government), one cannot say that they are dependent upon the government, because they still have a certain level of independence and supervision rights.

The relationship with the business sector is the same. For NGOs, thinking from a technical standpoint, working to diversify the sources of funding can, to a certain degree, protect the organization’s independence. Some “extreme” NGOs, such as Greenpeace, refuse to accept donations from the government or enterprises. Accepting small donations from diverse sources allows it to seek its own independent agenda according to its core values.

An examination of the development of business and markets shows that the idea of corporate social responsibility did not come about because of moral self-realization or the civic spirit of business owners, but largely because of pressure from citizen movements. Later the idea of philanthropic capitalism was introduced to the charity sector, substantially increasing the efficiency with which philanthropic resources were used. Finally, there has been the development of what Bill Gates promotes as “innovative capitalism,” which uses a philanthropic spirit to transform businesses and markets. (p. 64)

The report also attempts a comparative exploration of Chinese and Western culture and civic awareness, seeking to explain the causes behind the differences between the culture of charity in China and the West. The relationship between Western NGOs and their respective governments is largely an antagonistic one, in which associational and individual rights act as a check on the power exercised by the government. The reason the issue of the third sector’s dependence is particularly meaningful in China, is that “Chinese characteristics” are projected onto almost every sector, and the non-profit sector is no exception. However, while the relationship between China’s third sector and the government and business sectors generally does not follow the Western mold of an antagonistic relationship. This does not mean that the third sector should be nothing more than what Professor Kang has described as a “simple handyman,” in other words completely dependent service organizations ((Editor’s Note: Chinese scholars, and many Western scholars, generally see state-civil society relations in China in collaborative, rather than oppositional, terms due to the Chinese state’s dominance and ability to dictate the terms of the relationship. This perspective leads many, Professor Kang included, to question whether China does have a civil society, or whether China’s “civil society” has been coopted by the state in a “corporatist” arrangement.)).

In any case, the reality that China’s grassroots organizations must face is that “Chinese characteristics” have been tested by Western rights-based, individualistic values. In the face of the rising power of both government and business, China’s third sector has discovered that, even as they have spent many years seeking to gain greater independence, they ultimately have to deal with powerful “Chinese characteristics.” They cannot help but exist in the anxious middle-ground between independence in spirit and dependence in action. Professor Kang noted, “At the moment, there still does not appear to be an answer to the question of how domestic organizations can increase autonomy and maintain their ideals, values, and goals.”

He called attention to the glass-ceiling that is blocking the development of China’s third sector. This ceiling is reflected in institutional restrictions and cultural heritage. In reality, enterprise and government are neither the natural enemy nor are they natural allies of the third sector. In the dynamic environment of a system of checks and balances, society can only depend on a diversity of its voices in order to maintain vitality and health.

Faced with the ever-changing landscape of China’s philanthropy sector, Wang Zhenyao, the director of the Beijing Normal University One Foundation Philanthropy Research Institute (北师大壹基金公益研究院),noted that the big change in China’s philanthropy sector in 2010 was strengthening its service functions whilst at the same time reducing its “sensitivity.” Professor Kang offered a warning in response, “The current chief representative of the Ford Foundation, John Fitzgerald, has said, ‘reducing domestic NGOs dependence on international NGOs is remarkably important to the development of China’s third sector.’ This statement has profound significance. At the same time, China’s third sector must face the dual threat of the colonizing influence of government power, and corporate wealth.”

In Brief

This article addresses a long-standing but important debate over the independence of China’s NGOs. Going back to the early 1990s, China scholars have viewed Chinese NGOs as coopted by the state, unable and unwilling to play an assertive, independent role in speaking for and acting on behalf of marginalized groups
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