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China’s moth-eaten social safety net: who will catch the poorest of the poor? Not corporations.

China’s moth-eaten social safety net: who will catch the poorest of the poor? Not corporations.

China is, without a doubt, on a fast track to ‘development’ with an astonishing US$3.2 trillion in foreign reserves. But inequality, particularly rural and urban, is extreme with an estimated 150 million people living below the United Nations poverty line of less than $US1 a day. China’s growing wealth has resulted in multiple international aid agencies (including Australia’s Agency for International Development) pulling out of China. So, who is going to pick up the slack and help support 150 million people living in extreme poverty?

I don’t want to over exaggerate the influence that aid agencies have had on combating poverty in China. The Chinese government has done a remarkable job of lifting millions of people out of poverty and they will not stop achieving this, but 150 million people still living in extreme poverty is a huge number. As with most issues in China, it is the scale that makes the issue so significant.

Since working in CSR in China, I have noticed a further shift towards engaging corporations to contribute to NGOs who work in poverty alleviation. This concerns me for two main reasons.

  1. CSR in China is currently not mature enough to significantly contribute to poverty alleviation and is still often used as a tool to improve companies guanxi 关系 (relationship) with governments.
  2. Unless there is a shift in the way we view capitalism, corporations will never view themselves as part of a social security system.

Corporations in China, both international and domestic, will not fund NGOs or GONGOs (Government Organised Non Government Organisations) to the extent that is needed to support the poorest of the poor. This is not to say that companies do not engage in successful community investment, they do, but it is by no means at the level necessary to significantly contribute to poverty alleviation. At this stage, corporations can do more to alleviate poverty by focusing on improving their internal supply chains and employee working conditions.

International aid agencies in China have worked with (and therefore supported) domestic NGOs. Civil society in China, or the lack of it, is a real problem. Civil society, including community organisations and NGOs, has the potential to play a huge role in poverty alleviation. However, local NGOs are getting little support and now that aid agencies are leaving the situation for some is dire. I have spoken to a number of NGOs in China who are desperate to engage companies under the guise of CSR to fund their organisations. One of these NGOs was supported by an international aid agency that has now, in an official capacity, pulled out of China. It is my feeling that unless you are an international NGO or a GONGO in China, you are going to struggle to get support under the guise of Corporate Social Responsibility.

So, who will provide enough support to domestic civil society that in turn support the most disadvantaged and poor?

Well, in my opinion, it will not be the CSR departments of local and international corporations. Ultimately, the responsibility lies with the government. The Chinese government has the money but still lacks the capacity and infrastructure to develop a social safety net that will support those living in extreme poverty. The issue around the government not supporting NGOs from a political perspective is also a contributing issue. The domestic philanthropy sector is rich (and making some progress) but riddled with challenges ranging from weak laws and regulations to outlandish corruption. China may get there in the end, but between now and then, the holes in the social security system are here to stay.

This is a cross-post with Emily’s own blog.

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Emily is an experienced project manager with practical and research experience in sustainable development and corporate social responsibility. She has worked in Australia, China, Laos, Thailand and Malaysia. Emily currently lives and works in China. The opinions Emily expresses on this blog are her own and do not reflect those of her employers or clients

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One thought on “China’s moth-eaten social safety net: who will catch the poorest of the poor? Not corporations.

  1. Mike


    This is really interesting and somewhat depressing. If the government is the one to lift people out of poverty, do you think that they have the expertise to do so? And if not, where can they get this expertise from? Do you see corporations being able to provide any of this expertise (as opposed to funding)?

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