China's wealthy ponder whether to help others

By William Wan
Washington Post Staff Writer
Friday, September 17, 2010; A1

BEIJING - It began with an idea as simple as it was well-meaning. Fresh off a successful tour pushing philanthropy among the rich in the United States, Bill Gates and Warren Buffett proposed another trip - to visit newly minted billionaires in China and get them more involved in charitable giving.

But a curious thing began to happen.

Chinese businessmen - initially excited to meet the two American billionaires - started making discreet calls, inquiring whether they would be forced at the dinner to pledge their fortunes. A few even backed out, citing schedule conflicts. Once the Chinese media caught wind, accusations of miserly conduct began flying as well as breathless speculations about who exactly had been invited and who had declined.

The result has been much soul-searching among the wealthy in China about how best to help society and what responsibilities come with newfound wealth.

As in America's era of robber barons, new titans of industry are emerging every year in China. But in the United States, the industrial age also ushered in a generation of philanthropists - names such as Carnegie and Rockefeller that still resound today - and it is unclear whether the same is happening, or will happen, in China.

China now has one of the world's largest collection of billionaires, second this year only to the United States, according to Forbes.

But giving away that wealth has proved more difficult at times than earning it.

While the Chinese government has been eager to compete with the United States and the rest of the world in other fields, philanthropy is one sector in which it remains hesitant. China's leaders have not fully embraced the idea of handing over to individuals or groups the power to help the nation's people - a role traditionally reserved for the Communist Party.

"One thing holding back philanthropy may be the reluctance among the rich. But the other is the worry of the government," said Li Huafang, a researcher for the Shanghai Institute of Finance and Law. "They don't want other entities competing with them for the people's hearts. But if they continue holding back philanthropy, it may not win the people's hearts either."

Giving in China, of course, is nothing new. Generosity is built into aspects of the culture, as was evident in 2008 when annual donations soared to 15.7 billion after the Sichuan earthquake, with the majority coming from the Chinese public.

But the practice and infrastructure to support philanthropy are just emerging and, by many estimates, donations in China lag significantly behind the United States and other major countries.

The Gates-Buffett dinner, still over a week away, has sparked one of the widest-ranging discourses on philanthropy in years. The pair have recently convinced dozens of America's wealthiest men and women to donate at least half their fortunes to charity. But in China, the worries and debate were so fierce that Gates and Buffett - who have both pledged their fortunes to charity - issued an official letter this week to the state news agency Xinhua to clarify that the attendees will not be asked to donate anything. [Buffett and Gates's wife, Melinda, are Post Co. directors].

So far, only a handful of the roughly 50 invitees to the dinner have replied publicly.

One of the few, Zong Qing Hou - a beverage industry magnate and China's richest man, according to Forbes - said he won't attend because of a scheduling conflict, but added that he disagrees with the underlying principles. The rich in China can do more good, he explained to a Chinese newspaper, by creating jobs and enterprises that grow the economy than by donating to the poor.

No one in the country, however, has responded as publicly and loudly as Chen Guangbiao, a multimillionaire who has been one of China's most outspoken philanthropists.

Chen said he felt anger and shame after hearing from the Gates Foundation that many invitees called to make sure they would not have to donate. That same night, he said, he woke up at 1 a.m. and penned a 1,070-word letter on his company's website announcing his plan to leave his entire fortune - estimated at $440 million - to causes such as education and environmental protection groups.

The decision, he acknowledged, breaks with the Chinese tradition of leaving wealth for your descendants and also with Confucian values of first taking care of your family, and then your country. But he says his wife and children have been supportive.

"My parents left me nothing," said Chen, 42, in an interview at his vast Beijing apartment. "I made this fortune entirely on my own, so I have no fear for my son's future. He will find his way as well."

Chen grew up in Jiangsu province, in a family so poor that two siblings died from malnutrition, he said. At 10, he paid for his schooling by lugging two wooden barrels of water into town each day and selling cups for a fraction of a cent. As an adult, he made his fortune by recycling such materials as concrete and steel.

By Shanghai analyst Rupert Hoogewerf's calculation, the average age of China's new breed of millionaires is 39, at least 15 years younger than their foreign counterparts. "They are still in wealth-creation mode, focused more on expanding their own business, especially because the economy is growing so fast," said Hoogewerf, who tracks China's wealthy.

Some entrepreneurs also don't want to draw attention to their riches, lest they prompt questions. According to a Credit Suisse-sponsored report this month, China's wealthy may be hiding up to $1.4 trillion in corruption-tainted money.

In Chen's case, online commentators began questioning his motives and the purity of his money almost immediately. To explain the hesitation of his fellow tycoons, Chen quoted a Chinese proverb:

"The bird who sticks his head out always gets shot."

Chen's gung-ho enthusiasm for giving is viewed as somewhat eccentric. In an hourlong interview, he talked not only about giving his money to help society, but also his desire to end his life by taking sleeping pills before he gets old so as to avoid becoming a burden.

"I know some of these ideas are new in China and may seem strange," he said. But his attitude toward life, he explained, is the same as his view of money: Sooner or later, it will disappear and what matters most is the impact you leave on the world.

Chen said that more than 100 other entrepreneurs have contacted him, saying they will follow his example and bequeath their fortunes. One of them, whose name was provided by Chen, confirmed he was moved to commit his entire fortune.

"Chen's actions made me take a new look at the real value of wealth," said Li Xiaoshu, a private investor, who estimated his assets at $15 million. "If the rich in China share their wealth with the poor, maybe people in China will feel less resentment toward the rich."

Unlike Gates and Buffett, who have pledged much of their wealth to global efforts, philanthropists in China often focus their money on domestic causes, including education as well as help for China's vast rural poor.

Even if philanthropy becomes popular among China's rich, most experts believe a change in government regulation is necessary. China has no inheritance tax. Individuals can donate only cash, not stocks or securities. And private foundations are required to partner and register with a government ministry, which has hindered their creation.

Still, Chen said he believes Chinese can become world-class philanthropists, given the benefit of time.

"In the U.S. you had more than a hundred years to develop this idea," he said. "In China, people haven't even come into wealth until these past 20 years. Our speed has been very fast, and, who knows, in the next 10 years, we have the potential to become the best givers in the world."

Staff researcher Liu Liu contributed to this report.

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