Kang Xiaoguang and Wang Shaoguang on China's Third Sector

Kang Xiaoguang and Wang Shaoguang, “The Development and Future of the Third Sector in China”[1]
 
Introduction and Translation by David Ownby
 
Introduction
 
The text translated here, originally published in 2011, may strike some readers as dated, but I nonetheless find it interesting for a number of reasons.  First is the topic addressed:  the “Third Sector.”  As the authors explain, the “Third Sector” describes the space between public/state and private/market, occupied by non-governmental, non-profit, often voluntary organizations.  How such organizations function and what they are called varies enormously throughout the world, and part of what the authors attempt to do here is to bring a bit of analytical order to the topic so that people can talk about China’s Third Sector without immediately falling into confusion.  The point of the text is not solely intellectual, however:  the authors insist that China’s Third Sector is a lively, flourishing part of Chinese society, a response to the failure both of central planning and neoliberal market excess.  The Third Sector, in short, is one of the ways China is (or was) creating a healthy civil society.
 
The second interesting thing about the text is the pairing of the two authors, Kang Xiaoguang (b. 1963), and Wang Shaoguang (b. 1954), because Kang is a prominent Mainland New Confucian, and Wang is an equally prominent member of China’s New Left.  While New Confucians occasionally draw on New Left arguments (both have strains of authoritarianism), the kind of collaboration we see in this text is rare, particularly since they are not talking about the state, but rather about society, and both agree on the importance of the Third Sector, arguing that it is essentially to the health of Chinese politics and the Chinese economy.
 
Kang Xiaoguang, currently Professor of Public Management at Renmin University in Beijing, has been an extremely active public intellectual, particularly in the 1990s and 2000s, arguing essentially that Maoism had destroyed Chinese culture and that reform and opening had been highjacked by a mafia-like collusion between the Party-State and private business.  Liberal democracy is a false promise, Kang insists, and the only solution to China’s crisis is a return to Confucianism.  At times, Kang suggested that Confucianism become China’s state religion; on other occasions, he has linked Confucianism to an administrative corporatism at the hands of a benign state.
 
At the same time, Kang has engaged in considerable social activism.  Between September 1994 and September 1995, he served as Deputy County Chief in charge of scientific and technological affairs in Mashan County, Guangxi. His goal in spending a year in a poor village in a disadvantaged province was to immerse himself in the details of rural poverty so as to find practical solutions, and his work resulted in a number of influential publications in the 1990s, one of which was co-authored with Wang Shaoguang, surely the origin of the collaborative text translated here.  In addition, he worked with China’s Project Hope (part of the Chinese Youth Development Foundation) for some years in an effort to build Chinese civil society, as well as attempting to rebuild base-level Confucian organizations at the grassroots level. 

When the Falun Gong affair erupted in China in 1999, Kang had the courage to offer a half-hearted defense of the group, arguing that while some of their methods were suspect, the group at least offered responses to the social needs of the people.  Instead of suppressing Falun Gong, the state should encourage better vehicles, healthier organizations; a healthy spiritual market will produce healthier spiritual products.  In short, Kang championed Confucian values as vitally necessary to the reconstruction of a moral consensus in China, but wanted to see Chinese society rebuild itself from the bottom up on the basis of these values.
 
Wang Shaoguang (b. 1954) is Emeritus Professor of Government and Administration at the Chinese University of Hong Kong, and a Schwarzman Scholar at Tsinghua University in Beijing.  He did his doctorate at Cornell and taught for several years in the United States before moving to the Chinese University of Hong Kong, where he spent most of his very productive career.  A prominent member of China’s New Left, Wang’s research agenda has from the outset been directly engaged with China’s reform and opening, arguing for the development of “state capacity” and against the ravages of untrammeled free markets in dozens of well-researched, empirically rich studies (click here for a bibliography of Wang’s work available in English).
 
Even if much of Wang’s scholarship aimed at making China’s government more effective, he by no means ignores society.  He published a book (in Chinese) on the Third Sector in comparative perspective in 2000, and in the text translated here talks about continuing this research.  Much of his work illustrates that Wang fully understands that a healthy society contributes to state capacity in any number of ways.
 
In any event, as this 2018 piece on China File argues, Xi Jinping’s approach to civil society has been to make China’s government services more functional and “user-friendly,” thus reducing the role of the Third Sector.  Xi seems to have targeted particularly foreign organizations, but there is surely less space for domestic initiatives as well.  Whether this trend continues will depend, among other things, on who Xi’s eventual successor may be. 
 
Favorite Quotes
 
“My intuition tells me that China's reform has entered a ‘new period’ or ‘new stage’ in which the social sphere has become the main object of reform, and that without profound changes in the social sphere, neither market-oriented reform in the economic realm nor democracy-building in the political realm will be able to develop further. In other words, reform in the social sphere has become the ‘bottleneck’ of China's reform. This is why it has become one of the most urgent ‘tasks of the day’ for Chinese academics to leave Ivory Tower discussions behind, to study the development of the Third Sector in China, and to promote it through their studies. I feel that the time has come to go beyond the binary framework of economic-political analysis and to observe, analyze, and think about China's reform and development using the triangular framework of economic-social-political analysis. We cannot solely consider the relationship between the state and the economy, but must also pay attention to the relationship between state and society. At present, there is no need to dwell on the issue of political reform; in fact, once the economic and social reforms are completed, the political reforms will take care of themselves.”
 
“The first decade or so of reform was a process of dispelling the myth of government. With the gradual establishment of a market economy, people slowly realized that the market is not omnipotent and the market myth should also be discarded. However, discarding the myth of the market does not mean returning to the past. In some areas, government intervention is necessary, but how government intervenes needs to be changed; in other areas, even if the market cannot solve the problem, there is no need to invite the government back in, and this is where non-profit organizations can be useful.”
 
“But such organizations provide training opportunities for people to learn how to live together as equals, trust each other, and deal with differences of opinion in a democratic way in their daily work. One of the by-products of non-governmental/non-profit organizations is that they provide people with ‘social capital,’ to use the now fashionable term in European and American academia. And social capital is said to be a prerequisite for the healthy functioning of a democracy. China is a country that lacks a democratic tradition. Only by learning how to live in a democratic way, starting with the small, the trivial, the insignificant, can a democratic tradition be gradually cultivated, thus laying a solid foundation for the democratization of the entire political system.”
 
“Some people used to think that the relationship between government and non-government/non-profit organizations was an adversarial one. This view was held both by those who sided with the government and those who sided with non-governmental/non-profit organizations. The former see the latter as a potential threat to their authority and will only be satisfied when they are rid of them. The latter see the former as a threat to their own existence and development, and focus their efforts on fighting to expand their autonomy. It now appears that this view of the government's relationship with these organizations as a zero-sum game is completely wrong. The practice of foreign countries and China itself has proven that private non-governmental/non-profit organizations can partner with the government. Of course, to form a partnership, both sides must trust each other, tolerate each other, and not treat each other with hostility. Otherwise, it will be a lose-lose situation, as my colleague pointed out. We do not have to see the Third Sector as a realm where the government controls the citizens, nor do we have to see it as a battlefield where the citizens confront the government. Of course, if we see things this way, they may indeed come to pass. But I believe that in China, the Third Sector will certainly become a field of cooperation between the state and citizens.”

Links to other texts on this site
 
For other texts related to the theme of democracy, click here.
 
Translation
 
Defining the Concept of the Third Sector 
 
Kang:  How to define the Third Sector? We might say that “benevolent people see it as benevolent, and intelligent people see it as intelligent.”  While some people say that it is meaningless to define the Third Sector as a left-over category (the sum of all social organizations other than government agencies and for-profit institutions), I still think it is the simplest and most workable way. In fact, neither sociology nor political science can provide a precise theoretical basis for the Third Sector, and only economics can. Economics draws on the concepts of private goods and public goods to fix the boundaries of each of the three sectors.
 
Wang:  In the past, in China and elsewhere, people used to divide social organizations into two:  the "public sector" (including government and other public institutions) and the "non-public sector."
 
According to this division, for-profit businesses and non-profit organizations belong to the same non-public sector. But people have noted that in terms of behavior patterns and social functions, for-profit businesses are very different from social organizations that are not for-profit. Grouping them both into the the non-public sector obscures the differences between them. In fact, grass-roots nonprofit organizations often devote themselves to things that governments and private enterprises "don't want to do, don't do well, or don't do often.”  This makes it necessary to separate them from the first two, which led to the idea of the Third Sector. 

Thus in general, the Third Sector refers to social organizations situated between government and private enterprise.   But is this left-over definition, as you suggested, the “simplest and most workable way?”  Not necessarily.  Families, lineage groups, and criminal gangs are also social organizations situated between government and private enterprise, but they don't seem to be included in the Third Sector. Thus, a more precise definition is necessary. In fact, the term Third Sector is not a universally accepted term. It is most used in the United States, but only by experts in the field.

When I told my colleagues at Yale that I was studying the Third Sector almost everyone asked me what it was. You know, Yale established one of the world's first centers for research on nonprofits. If scholars there don't know what the Third Sector is, you can imagine how widely the term is known in the United States. Some people in the United States find the term Third Sector too fuzzy and prefer terms like "tax-exempt sector," "independent sector" or "nonprofit sector.”

Outside of the United States, the term is even less well known. In the United Kingdom and its former colonies (e.g., India), the "voluntary sector" is more common; in European countries, the "philanthropic sector" is preferred. France always wants to be different, so "social economy" is the term used there. In Third World and former socialist countries, the more familiar terms are things like"civil society" or "non-governmental organizations.”
 
These concepts cover the institutional space between government and private enterprise, but each emphasizes a different aspect. For example, the "tax-exempt sector" emphasizes the tax exemptions granted to these organizations by the tax laws of the country. However, tax exemptions are not available in all countries for similar organizations. For example, in China and many other countries, non-profit organizations do not enjoy tax exemptions. So it makes no sense to use the term "tax-exempt organization" in these countries.
 
The term "independent sector" emphasizes the independence of these organizations from government and private enterprise. In fact, however, in most countries around the world, these organizations are not as independent as one might imagine. Their dependence on government and private enterprise, at least in terms of funding, is significant. To call them an "independent sector" is a misnomer.
 
The "nonprofit sector" emphasizes that these organizations do not exist to make a profit. But the fact that they do not exist to make a profit is not the same as saying that they cannot be profitable. In fact, the income of nonprofit organizations often exceeds their expenses; in other words, they are profitable. Especially in Chinese, "nonprofit 非盈利" and "non-profitable 非营利" are pronounced in exactly the same way--feiyingli—which can easily give rise to confusion.
 
Calling them the "philanthropic sector" emphasizes that these organizations are funded by private philanthropic donations. But private philanthropic contributions are not the only source of funding for these organizations, or even their primary source of funding. So this is another misnomer.
 
The term "voluntary sector" is a British term that emphasizes the fact that the operation and management of these organizations is largely dependent on the time, energy, and money invested by volunteers, but in many countries the activities of these organizations are not primarily carried out by volunteers, but by paid employees.
 
Literally, the term "non-governmental organzation" is misleading, because all private institutions, including the millions of private businesses active in the market economy, are also NGOs. However, those who use this term do not intend to stretch its meaning that far. The term NGO is now mostly used in the literature on Third World countries, but its meaning has undergone several major changes.

At first it referred exclusively to international NGOs recognized by the League of Nations or the United Nations. Later on, organizations in developed countries whose purpose is to promote the development of the Third World were also included. Now it is mainly used to describe organizations in developing countries whose mission is to promote economic and social development. In any case, NGO is a much narrower concept than Third Sector. The former is only a small part of the latter.
 
The term "social economy" is mainly used in France and Belgium, although in recent years it has also become popular in other EU countries. In contrast to the term "NGO," this concept is broader than the term "Third Sector," as it includes a number of business-type organizations, such as mutual insurance companies, savings banks, cooperatives, agricultural marketing organizations, etc.
 
The term "civil society" is one of the most used and overused concepts in Chinese and Western literature in recent years. In English, the “civil” of civil society, can be translated into Chinese as both "citizen 公民的" and "civilized 文明的;" “society ” in English can be translated either as “society 社会” or a “social group 社团.”

Thus, civil society can be used to describe both a specific, non-commercial organization based on volunteerism, and a general term for all such organizations. In addition, there are many other ways to understand this term. This is because it has a longer history than all of the above terms, as Hegel, Marx, Tocqueville, Gramsci, and Havel have all used it, but in different ways. A concept with so much ambiguity is difficult to use as an analytical tool.
 
It is thus clear that all these terms are not ideal and can be misunderstood. Compared with them, the term "Third Sector" is more neutral and can avoid misunderstandings arising from the interpretation of the term. But the problem with it is that it is difficult to understand its meaning from the word alone.
 
This makes it necessary to give the term a more precise meaning. It should be clear that what we are really interested in is not "the sum of all social organizations other than government agencies and for-profit institutions," because this institutional space is too broad and complex to be studied as a whole. What we are interested in is only some specific parts of this space. So what exactly do we mean by Third Sector organizations? Roughly speaking, it is organizations with the following five characteristics:
 
Grass-Roots/Private 民间性: this means institutionally independent from the government, neither part of it nor subject to it. This does not mean, of course, that they receive no government funding at all, or that no government officials participate in any of their activities. The key here is that Third Sector organizations must be grass-roots/private in nature.
 
Non-profit: Non-profit means that the profits of the organization cannot be distributed to the owners and managers. It is possible for a Third Sector organization to earn profits, but the profits must serve the basic mission of the organization and not go into the pockets of the owners and managers. Being non-profit is the biggest difference between Third Sector organizations and other private organizations.
 
Organizational: Organizational means that there are internal rules and regulations, people in charge, and regular activities. Between the government and the market there are many informal, ad hoc, and discretionary groups, which cannot be considered part of the Third Sector.
 
Autonomous: Autonomy means that each organization governs itself and is subject neither to the government nor to private enterprise, nor to other Third Sector organizations.
 
Voluntary: Voluntary means that participation in the activities of these organizations is on a voluntary basis and is not mandatory. This is not the same as saying that all or most of the organization's income comes from voluntary contributions; nor is it the same as saying that all or most of the staff are volunteers. To participate on a voluntary basis is considered sufficient to satisfy this condition.
 
As for my colleague’s claim that only economics is capable of providing a rich theoretical basis for the division of the three sectors, I am afraid that may not be the case. It is impossible to define the three sectors precisely in terms of private and public goods. Some goods provided by the government for its citizens in modern societies (e.g., national education, universal health care) are now regarded as public goods, but centuries, even decades ago, they were regarded as private goods. In other countries, they are still seen as private goods today.

Therefore, it is difficult to say that the public sector can be separated from the non-public sector on the basis of a distinction between public goods and private goods. Moreover, the Third Sector provides both public and private goods (e.g., private non-profit health care, child care, educational institutions, etc.). Hence it is impossible to provide a solid theoretical basis for the division of the three sectors using a purely economic approach.
 
The Development of the Third Sector and the Importance of Researching It
 
Kang:  Reforms since 1978 have ushered in the most profound and extensive period of change in China’s history. To date, the blueprint for reform in the economic sphere has been the clearest, and the general direction of reform in the political sphere is relatively clear; the exception is the social sphere, where the vision of reform is still in a state of confusion. Yet human practice has shown time and again that neither the market economy nor democracy can function effectively without the support of a sound civil society.

My intuition tells me that China's reform has entered a "new period" or "new stage" in which the social sphere has become the main object of reform, and that without profound changes in the social sphere, neither market-oriented reform in the economic realm nor democracy-building in the political realm will be able to develop further. In other words, reform in the social sphere has become the "bottleneck" of China's reform. This is why it has become one of the most urgent "tasks of the day" for Chinese academics to leave Ivory Tower discussions behind, to study the development of the Third Sector in China, and to promote it through their studies.

I feel that the time has come to go beyond the binary framework of economic-political analysis and to observe, analyze, and think about China's reform and development using the triangular framework of economic-social-political analysis. We cannot solely consider the relationship between the state and the economy, but must also pay attention to the relationship between state and society. At present, there is no need to dwell on the issue of political reform; in fact, once the economic and social reforms are completed, the political reforms will take care of themselves. 
 
Wang:  I don't quite agree that the direction of reform in the economic and political fields is now clear. Yes, people see marketization in the economic field and democracy-building in the political field as the direction of reform, which suggests that there might be some kind of consensus. In fact, this consensus is only in terms of nomenclature. But people have different views, or even completely opposite understandings of what marketization and democratization mean. Therefore, the fact that we use the same terminology does not mean we have reached a consensus. Sartre used to talk about the "tyranny of words", and it will not do for us to be satisfied with a “consensus in word only.”

On the other hand, I do not think it is possible to separate economic, political and social reforms. “Economic", "political" and "social" are concepts that help us to understand the world and are tools of analysis. In the real world there are no boundaries separating them. What we called "economic" reforms must contain elements of "social" and "political" reforms. By the same token, in order to transform "society", our focal point should clearly be on the "economic" and "political" spheres.
 
I think what my colleague is really saying is that Chinese policy makers and scholars in the past neglected what we call the Third Sector, and that the development of the Third Sector is of great importance to China today. This is clearly true. Not only have Chinese policymakers and scholars ignored the Third Sector, but so have policymakers and scholars in other countries. However, this situation is changing. Perhaps the signs of change will become more apparent in the coming years.

Why has the Third Sector been neglected in the past? The answer can be found by looking back at post-war history. The first decades of the postwar period were a history of confrontation between two camps. The socialist countries emphasized the role of government, while the capitalist countries liked to boast about their "free market economy."  Although there were examples of market reforms in the socialist camp and several variants of the welfare state in the capitalist camp, the debate between the two camps and within each camp was over which role should be greater, that of the government, or that of the market.   In this type of context, it seems to me difficult to avoid ignoring the existence and importance of the Third Sector. By the end of the 1970s and the beginning of the 1980s, the shortcomings of the traditional central planning system had become obvious, and socialist countries then embarked on the path of general reform.

After the myth of government had been destroyed, people turned their attention to the market. At the same time, the welfare state also ran into difficulties and the capitalist countries entered a period of adjustment, an adjustment that also focused on the relationship between the government and the market. But it was soon recognized that it might not be wise to turn over all the space ceded by the government to for-profit enterprises, because there are some things that the private sector "does not want to do, does not do well, or does not do often." Thus, attention gradually turned to the Third Sector.
 
By the 1990s, capitalist experiments had been underway for some time in Eastern Europe and the former Soviet Union, where socialist regimes had collapsed. China, Vietnam, and other countries that remained loyal to the socialist path had also accumulated a great deal of experience with market reforms. They similarly began to realize over time that some things that government could not do, private enterprises could not do either.  As a result, all kinds of grass-roots non-profit organizations emerged.

As the myth of government and the myth of the market continue to lose their luster in the future, interest in the Third Sector should grow. One might say that the discoverty of the Third Sector is a byproduct of the myth of government and the myth of the market having been punctured by reality. This is exactly what happened here in China. The first decade or so of reform was a process of dispelling the myth of government. With the gradual establishment of a market economy, people slowly realized that the market is not omnipotent and the market myth should also be discarded.

However, discarding the myth of the market does not mean returning to the past. In some areas, government intervention is necessary, but how government intervenes needs to be changed; in other areas, even if the market cannot solve the problem, there is no need to invite the government back in, and this is where non-profit organizations can be useful.
 
In contemporary China, the importance of the Third Sector has not been fully recognized by policy makers and scholars. Yet the development of the Third Sector may have special significance for contemporary Chinese society. I will mention here only two aspects of its potential. One is its potential in social security and social services. The previous labor insurance system had two characteristics:  the groups receiving labor insurance benefits accounted for only a small percentage of the total population, and the state paid the entirety of the benefits for this small number of people.

Such a system is no longer suitable in today's market economy. The social security system and social service system to be established in the future must be oriented to a larger social group, and perhaps even take the direction of universal coverage of all citizens. But it is neither possible nor necessary for the state to do this alone. In some European countries, social security and social services are mainly financed by the government in the form of taxes and social security contributions, but the concrete delivery of these services is not necessarily performed by government agencies, and not even mainly by government agencies, but by non-profit civil society organizations.

In the Netherlands, for example, nearly ninety percent of the funding for private nonprofit organizations is government-subsidized, and in turn, these organizations play a pivotal role in the Dutch social security and social service system. When I first started working in Hong Kong, I found the situation there to be similar. Services for single mothers, people with disabilities, widows and orphans, and other socially disadvantaged groups are often provided by private non-profit organizations, which are often funded by the government. Building a social security and social services system is one of the major tasks facing China today, and the Third Sector has much to offer.
 
Another huge potential of the Third Sector is to help solve the employment problems that have plagued us for years. In 1995, an American economist (Jeremy Rifkin) wrote a book entitled The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era, which quickly made bestseller lists around the world, and I have heard that there is a Chinese translation as well.

The author claims that due to technological advances, humanity is entering a new phase of history. Traditional jobs will gradually decrease in number, and new jobs will come not mainly from agriculture, manufacturing, or even services, but from the Third Sector. The book brought the term "Third Sector" to the mass media for the first time, illustrating its huge potential. China is currently facing unprecedented employment pressures. The real unemployment rate in urban areas is over eight percent, and one third of the rural labor force is surplus.

The employment elasticity of China's economic growth has been declining sharply since the 1990s. If we follow traditional thinking, China's employment problem is almost insoluble. To my mind, the development of the Third Sector makes me think of Song poet Lu You’s 陆游 (1125-1209) poem about discovering a village when he thought himself lost among the mountains and rivers.[2]  The Third Section could be that village.  
 
At present, some cities in China (such as Shanghai and Tianjin) have conducted fruitful experiments in community services. On the one hand, community service improves people's quality of life, and on the other, it solves the problem of re-employment of a large number of laid-off people, and killing two birds with one stone is a very good thing. Many of the organizations providing community services are non-profit organizations.

At present, the phenomenon of "no one is doing what should be done and people that should be working do not have jobs" exists everywhere in China, which shows that the existing system has brought about a huge waste of human resources and a loss of efficiency. By changing the policy orientation from pursuing economic growth to improving the quality of life for all people in a participatory manner, China may be able to create a new path in economic and life development. Non-government/non-profit social services will be the key vehicle for the new model.
 
The characteristic of non-governmental/non-profit organizations is that they are less subject to government intervention and less subject to pressure to make a profit. People join on a voluntary basis and come together for causes of common interest. These causes may not seem very meaningful to outsiders, and involve things such as providing help to the disabled, calling for ecological improvements in the cities where they live, organizing diabetics themselves to discuss how to cope with their worsening condition, forming a trade association of professionals, or even getting together to regularly share their reading experiences, etc. But such organizations provide training opportunities for people to learn how to live together as equals, trust each other, and deal with differences of opinion in a democratic way in their daily work.

One of the by-products of non-governmental/non-profit organizations is that they provide people with "social capital," to use the now fashionable term in European and American academia. And social capital is said to be a prerequisite for the healthy functioning of a democracy. China is a country that lacks a democratic tradition. Only by learning how to live in a democratic way, starting with the small, the trivial, the insignificant, can a democratic tradition be gradually cultivated, thus laying a solid foundation for the democratization of the entire political system. From the above discussion, we can see that the development of the Third Sector is not only a "social" reform, but also a profound "economic" reform and a "political" reform. However, I do not want to mythologize the Third Sector either.

At the beginning of this century, the recognition that government could play a very important role in economic and social development led to the creation of myths about government. In the last two decades, the myth of government has been criticized while the myth of the market has been created, both consciously and unconsciously. Both myths have left us with profound lessons. We must not fall for myth of the Third Sector just after we have gotten over the first two myths.
 
People think of for-profit businesses as profit-oriented and uncaring; they think of government as red tape and inefficiency. In many people's minds, the image of nonprofit/non-governmental organizations is very pure. They see them as symbols of love, justice, and efficiency, a way to achieve mutual aid, participation, autonomy—the vanguard of social change. We do not deny that many nonprofit/NGOs do possess some of these characteristics, but not all nonprofit/NGOs possess all of these characteristics.

A Harvard professor (Theda Skocpol) recently published an article entitled "Associations Without Membership," in which she found that many associations in the United States have now become professional corporate organizations. If they have members at all, they simply pay dues or make contributions to the association on a regular basis. Most or all of the society's staff are not volunteers, but paid employees. It is impossible for a group to generate "social capital" without the participation of its members.
 
Nor should we overestimate the efficiency of nonprofits, because, after all, nonprofit organizations are still organizations. Any organization—as long as it is small—can seem flexible and efficient. Nonprofits are considered flexible and efficient precisely because they are, in general, much smaller than government agencies and corporations. As nonprofits grow in size, their internal structures become increasingly complex. The bureaucracy, red tape, unresponsiveness, and finger-pointing for which people denounce government agencies can also be found in nonprofits. Nonprofits are not immune to these organizational pathologies because they are not for profit. In fact, in some countries, nonprofits are even more inefficient than government agencies.
 
The problems mentioned above are still only problems of foreign non-profit organizations. But if we idealize the Third Sector in order to promote it, if we fail to be alert to its possible problems, or if we wait until the problems arise before dealing with them, the cost of such behavoir will be too high. This is by no means a responsible attitude. The Third Sector is a complement to the other two sectors (government and market), not a substitute them. It is not a panacea, nor can it be. Only when the government, the market and the Third Sector are organically integrated can all three give full play to their strengths.

That said, it is important to note that there is a popular perception in the literature on NGOs/non-profits that their relationship with government is adversarial, and thus the most important indicator of their healthy development is their degree of independence. Of course, non-governmental/non-profit organizations are not healthy when they are completely dependent on the government and do not have any autonomy.

However, a large number of empirical studies prove that NGOs/non-profit organizations are in partnership with the government in a significant number of countries, and not in an adversarial relationship. These organizations rely to a considerable extent on government funding, and the government in turn relies on these organizations to provide social services.

In the case of China, the relationship between the government and nongovernmental/non-profit organizations has yet to be sorted out. In general, the government is not yet comfortable with such organizations, and some organizations are suspicious of the government. However, the successes that have been achieved show that a partnership between the two parties can be very beneficial to both each other and to society, suggesting that the sum result is greater that its parts.
 
The Current State, Characteristics, and Functions of the Chinese Third Sector
 
Kang:  A Third Sector that meets Western standards does not yet exist in China. One of the characteristics of China's Third Sector is its "diversity.” The range extends from top-down, to bottom-up, as well as imported; autonomous and dependent; legal and illegal; large and small; etc. Another characteristic of the Chinese Third Sector is its "duality" or "half-government, half-grassroots."
 
In terms of state-society relations, we no longer have the traditional "single actor" structure of a centralized system, but neither are we following it the standard pluralist or corporatist model. A triangular structure is gradually emerging. We seem to be in a phase of transition from state corporatism to social cooperativism, or a modified state corporatist system.
 
Wang:  What is the "Western standard"?  My worry is that when Chinese say "Western standard," they are really only talking about the US. According to the American standard, not only is China’s Third Sector not up to snuff, but the same could be said about the Third Sector in France, Germany, Sweden, India, Brazil, and South Africa. The only country in the world that comes close to the U.S. standard is the United Kingdom.

In both countries, the relationship between the Third Sector and the government may not be as strong as elsewhere, and there is a strong sense of autonomy for non-governmental/non-profit organizations, but that is not to say that there is no relationship between the two. In fact, even in these two countries, a significant chunk of the funding for Third Sector operations comes from the government. It is common for the government to pay and for nonprofits to do the work, but it is just not as common as in other countries.
 
My colleague just noted that diversity is a characteristic of the Third Sector in China. In fact, all countries (including the United States and the United Kingdom) have a diverse Third Sector, where NGOs/non-profit organizations are both top-down and bottom-up, autonomous and dependent, legal and illegal, and large and small. Therefore, it cannot be said that diversity is the characteristic of China's Third Sector.

As for the "duality" or "half-government and half-grassroots", it is similar to other countries. There is a common myth about the Third Sector, namely that such organizations are independent of government and for-profit enterprises. The terms "nonprofit," "NGO," and "Third Sector" all imply that they are independent. In reality, the boundaries between the three so-called "sectors" are not clear. The activities of many nonprofit organizations are no different from those of for-profit businesses. For example, nonprofit health clubs in the United States operate in essentially the same way as for-profit gyms. The relationship between government and nonprofit/NGOs is even closer, as in most countries the latter simply cannot survive without the financial support of the former. The situation is even more complicated in Third World countries and countries in transition, where NGOs may be at arm's length from their own governments, but receive stipends from foreign governments.

People generally think that taking government money undermines the autonomy of the nonprofit/NGO; they forget that private or corporate donations often have strings attached as well. If independence means leaving it up to the organization to decide its own mission, a truly independent organization should be free from both government control and the influence of corporations and other civil society organizations, as well as from manipulation by foreign civil and official agencies. In the real world, such fully independent non-profit/non-governmental organizations are hard to find even if you look hard for them.
 
I recently wrote an article entitled "Money and Autonomy," which looks exclusively at the sources of funding for NGOs/NPOs in various countries and their impact on organizational autonomy. It concludes that there is hardly a country where NGOs/non-profits exist on voluntary contributions from the public. In terms of funding sources, there are three models. The Third Sector in one group of countries relies mainly on the income they generate, as in the United States. This massive engagement in income-generating activities has increasingly blurred the distinction between nonprofit and for-profit organizations.

A new book on this issue, edited by Burton A. Weisbrod, came out in the United States in 1998, and its title parodies Shakespeare's Hamlet by asking the question :  To Profit or Not to Profit. The Third Sector in another category of countries is mainly funded by government grants. Most developed Western countries fall into this category. Because of their heavy dependence on government, nonprofit organizations are more or less, directly or indirectly, subject to the influence of government preferences. There is another category of countries whose Third Sector relies mainly on contributions from international organizations, foreign governments or foreign NGOs. The vast majority of Third World countries fall into this category.

Non-governmental/non-profit organizations in these countries welcome outside contributions, but independent scholarly assessments suggest that they often wind up being constrained by them. In this way, it is true to the saying from Chinese TV dramas, "Money can’t do everything, but without money you can't do anything.” There is a Western proverb, "He who pays the piper calls the tune," which means the same thing. An African proverb is even more graphic: "If your hand is in someone’s pocket, you have to follow them." I am not here to discuss whether it is better to have more or less autonomy. What I am trying to say is that the autonomy of non-governmental/non-profit organizations in other countries must not be exaggerated. In this way, we can really understand what the characteristics of the Third Sector in China really are.
 
Contributing Factors
 
Kang:  The Liberal scholar Qin Hui opposes the idea of "cultural determinism," but your comparative study illustrates the profound influence of political culture or cultural tradition. In Japan, even with a multi-party system, elections, freedom of association, freedom of speech, and high levels of income and education, government control over associations remains strong and deep.
 
The development of NGOs in China since reform and opening has been first and foremost a response to the failure of planning and centralization. To put it more precisely, it is a functionalist response to failures of planning, centralization, markets, and democracy. For example, the change of the industry management model, the change of the community management system, and the change of the social security system.
 
Wang:  We mentioned above that while the Third Sector has commonalities across countries, each national form also has its own characteristics. There is nothing strange about this.  Countries have any number of large and small differences on other matters.  What would be strange is if there were no differences. Of course, this does not explain why the differences exist. I don't think any one factor can explain the differences between countries in the Third Sector. Culture may be an important factor.

In the process of writing the book Diversity and Unity: An International Comparative Study of the Third Sector 多元与统一：第三部门国际比较研究, my impression was that there seemed to be some commonalities in the Third Sector in East Asia, but I really could not put my finger on them, and can’t name them for you.  That’s where things still stand, and I have not put things in order any further.  In the next stage, I plan to conduct a more in-depth comparative study of the Third Sector in East Asia, in order to identify their commonalities and explain the reasons that they came to be. If the Third Sector in East Asia does have some commonalities, this would seem to argue for that the importance of cultural factors.
 
But I would never argue that cultural factors are the only variables that affect the similarities and differences in the Third Sector across countries. No matter how much commonality there is in the Third Sector in East Asia, there must still be huge differences. The differences cannot be explained by a common culture. This makes it necessary to test whether there are other variables that are also important. In the concluding section of my book I point out that the nature of the political regime, the legal system, the degree of decentralization, the degree of economic development, the degree of social heterogeneity, and religious traditions may also be important variables.

But this is not yet a rigorous argument. A rigorous argument would require more, and more systematic, data support. Unfortunately, research on the Third Sector has only just begun in countries around the world, and systematic, high-quality data are not yet available. I am afraid that it is not possible to solve the mystery of the differences and similarities of the Third Sector in different countries overnight.
 
The emergence and rapid development of the Third Sector in China has only happened in the last decade or so. My impression is that that the outside world has had little influence on this. It is only in the last two years that the outside world has realized that China has unobtrusively given birth to some 200,000 social groups and 800,000 private non-enterprise units 民办非企业单位. Those involved in the creation of these organizations were clearly not inspired to action by any outside source.

Thus, to explain the development of the Third Sector in China, one should look primarily at the internal causes. I agree with my colleague that the development of the Third Sector in China is first and foremost a product of a failure of planning and a failure of centralization. Seven or eight years ago, China was basically a "single sector system.” Markets did not exist, and there were no formal civil society organizations (although informal civil society groups always existed). Beginning in 1978, the Chinese government recognized that unifying everything would stifle social creativity and introduced a series of "unbundling" and "decentralization" reforms.

Twenty years later, the government has given up a huge chunk of space. The market and the for-profit entities active in it have filled part of this institutional space, but as for the other part, either for-profit organizations do not want to fill it because they are not profitable, or people do not want it to be filled by profit-oriented, for-profit organizations. It is this space that China's nonprofit organizations occupy. So, it can also be said that the development of the Third Sector is a response to market failure.
 
Kang:  It seems to have been Qin Hui's idea that the way to see through modernization is to look at the the relationship—and the changes in this relationship—between the big community, the little community and the individual. In particular, he attributes the changes since reform and opening to the individual and the little community uniting against the big community to fight for individual rights. I cannot accept Qin's assertion.

It is an indisputable fact that China's reform has been a "government-led reform." Under this reform model, the revival of individual rights is the result of the autonomous choice of the big community. The big community actively and consciously liberated the individual who had been constrained by it. In this process, the big community liberated the individual by destroying the little communities (such as the People's Communes and the work unit system, which turned out to be the tools used by the big community to constrain the individual), and there is no question whatsoever of the individual joining with the small community to fight to take their rights from the big community. The question is why did the big community take the initiative and consciously free the individual from their constraints? This is the question I must answer!
 
In an era of world history, the global competition of systems led to a crisis of legitimacy. In order to escape from the crisis, China implemented limited democratization and pursued a legitimacy based on political performance. To develop the economy for the sake of this legitimacy, market-oriented reforms were introduced to promote economic development. Market-oriented reforms led to changes in the social sphere; a breakthrough led to to adaptive change. In this process, individuals were liberated and individual rights were realized.
 
Wang:  In his early writings, the political scientist Zou Dang (邹谠 Tsou Tang, 1918-1999) once used the term “zones of indifference” to refer to areas that the government did not think it needed to regulate. I can't remember the context in which Mr. Zou used the term, but I have found it so useful that I have often cited it. No matter how strong a government's desire to control society, for any number of reasons there will be things that it does and things that it does not do.   Even what Zou Dang called a “totalistic 全能主义” political regime will also have zones of indifference. 

Reform in China meant that the government decide to broaden the zones of indifference on its own initiative.  Therefore, my colleague’s statement that "the revival of individual rights is the result of the autonomous choice of the big community" is more in line with historical reality. Is there anything to the idea that individuals and the small community joining together to fight for their rights from the larger community? Of course there was. But this came later. So it would seem that the expansion of individual rights and the development of the Third Sector were both the result of the government's initiative to liberalize the zones of indifference and the result of the struggle of individuals and the small community for more space.

It is as inconsistent with China's reality to see the government as fully enlightened as it is to see it as an enemy of freedom. The Chinese government's approach has strong overtones of corporatism 合作主义, and if other political forces work properly, the idea that China can move from totalism to state corporatism and finally to societal corporatism is entirely possible.
 
Future Trends, Analysis, and Predictions
 
Kang:  In China, is the Third Sector a realm of state-citizen cooperation, a front for citizens against the government, or a tool for the government to control citizens? Will the transition from state corporatism lead to social corporatism 社会法团主义or social cooperativism 社会合作主义? Social cooperativism goes hand in hand with a multi-party system, elections, freedom of speech and association, and is a model for government-association relations in modern democratic societies. It is prevalent in European countries as well as in Asian countries.

Associations that cooperate with the government can exist like fish in water, associations that are independent of the government and even anti-government associations can exist, as long as freedom of association is assured. In fact, cooperativism encompasses all the democratic elements of pluralism. Both governments and associations must learn the art of cooperation and coexistence. To be clear, they both need one another, and neither can defeat the other. Rather than seeing both lose, they should complement each other and benefit from each other in a win-win, happy finish.
 
Wang:  This last statement by my colleague is important. Some people used to think that the relationship between government and non-government/non-profit organizations was an adversarial one. This view was held both by those who sided with the government and those who sided with non-governmental/non-profit organizations. The former see the latter as a potential threat to their authority and will only be satisfied when they are rid of them. The latter see the former as a threat to their own existence and development, and focus their efforts on fighting to expand their autonomy.

It now appears that this view of the government's relationship with these organizations as a zero-sum game is completely wrong. The practice of foreign countries and China itself has proven that private non-governmental/non-profit organizations can partner with the government. Of course, to form a partnership, both sides must trust each other, tolerate each other, and not treat each other with hostility. Otherwise, it will be a lose-lose situation, as my colleague pointed out. We do not have to see the Third Sector as a realm where the government controls the citizens, nor do we have to see it as a battlefield where the citizens confront the government. Of course, if we see things this way, they may indeed come to pass. But I believe that in China, the Third Sector will certainly become a field of cooperation between the state and citizens.
 
Notes

[1] 康晓光 and 王绍光, “第三部门在中国的发展及未来,” originally posted on The Observer website 观察者网 on November 24, 2011, posted to the Aisixiang site on May 21, 2015. 

[2] “Mountains multiply, streams double back—I doubt there’s even a road; willows cluster darkly, blossoms shine—another village ahead.”