China’s billionaires not ready to give like Gates
Bill Gates and Warren Buffett have star power, but even they may struggle to persuade China’s billionaires that celebrity philanthropy is a must. Chinese billionaires feel insecure about their wealth, and trustworthy charities are lacking. Still, as China’s wealth gap widens, the super-rich should start thinking up ways to look more generous.
The Middle Kingdom is home to more dollar billionaires than anywhere except the United States, according to Forbes. But charitable giving accounted for only 0.1 percent of China’s GDP in 2009, versus 2 percent in the United States. Buffett and Gates are set to hold a banquet in China as part of their philanthropy-themed world tour, but some local moguls have reportedly kept a wary distance.
Chinese billionaires aren’t quite like their U.S. counterparts. Charity probably feels like a luxury for the first generation super-rich, most of whom are still building their wealth in China’s young, fast-growing economy. Many want to leave their empire to their children. Buffett, by contrast, has publicly worried about leaving his children too much.
Nor does China make philanthropy easy. China’s charities are mostly state-owned and not transparent. Some have been hit by corruption scandals. Project Hope, backed by the Communist Youth League, was accused by Hong Kong media in 1994 of mislaying $10 million in donations. The result of a National Audit Office investigation was never made public.
Buffett and Gates do have one lesson to teach China’s billionaires: generosity makes the rich more likeable. China’s growth has not reached everyone equally. Its wealth is more concentrated in the hands of than few than that of the United States, according to the World Bank. The ruling Communist Party might try to raise taxes, or dig for dirt in billionaires past dealings, if it senses public anger is rising.
Fortunately, China’s billionaires have one option many rich-country moguls don’t: they can keep investing at home, and get high returns doing so. That has the added advantage of directly creating jobs and raising incomes, even if it doesn’t get counted as traditional philanthropy. The rich should certainly be thinking of ways to win friends, but don’t expect them to start giving like Gates.