March 31, 2012; Source: China Daily

Was this a shot across the bow of American NGOs? The China Charity and Donation Center reported last week that there are about 1,000 U.S. NGOs in China, but only 23 had received the license from the Ministry of Civil Affairs, as of the end of 2009, that would allow them to operate legally in China. China Daily gives both a light and a heavy warning to unregistered NGOs. The light touch comment is that by failing to register, “NGOs cannot enjoy tax cuts or raise funds from the public in China.” The more heavy-handed passage read, “Without a license, these organizations risk being banned from operating in China.”

It isn’t clear how reliable the information might be, given that the vast majority of the American NGOs haven’t registered, but the China Charity and Donation Center says that 44 percent of the revenues supporting these NGOs come from foundations, 24 percent comes from the general public, and 16 percent comes from the U.S. government. The NGOs reportedly dedicated their expenditures to higher education institutes (31 percent), scientific institutes (30 percent), the Chinese government (21 percent), and grassroots organizations (8 percent).

Another China Daily article indicated that U.S. NGOs have given $3.18 billion in China since the late 1970s, but with 82 percent going to government-controlled universities, scientific institutes, and the government itself, and only 17 percent going to nonprofits. Despite the opening up of the Chinese economy, most of it is still government controlled, and that applies to charity and philanthropy. China’s Ministry of Civil Affairs reports that 60 percent of donations made by Chinese citizens in China in 2010 went to government-controlled entities.

Tensions between China and the West have been on the rise lately, particularly in light of the unexplained, alleged poisoning death of British citizen Neil Heyward, which looks like the stuff of a John LeCarre thriller (in part because China claims that Heyward died of “excessive alcohol consumption” though his associates claim he was nearly a teetotaler). Also, while the Chinese government is normally not all that critical of U.S. companies with manufacturing operations in China operating in near-sweatshop conditions, recently the Chinese government didn’t seem to protest the Fair Labor Association audit of working conditions at manufacturing plants run by Apple and its top manufacturing partner, Foxconn, which unearthed multiple labor violations including extremely long hours and unpaid overtime at three plants. It sounds to us like China is poking and prodding its U.S. partners, both corporate and nonprofit, as a counter to the criticism it has been receiving in the U.S. press and more broadly in the West.—Rick Cohen