The Political Economy of Giving: Legitimacy, Welfare, and the Influence of Foreign NGOs in China

Since the death of Mao and the rise of reformers in China, the world has eagerly awaited the results of changes sweeping through the developing nation. Deng Xiaoping and his successors have promised reform, which has come in the form of market liberalization. Now, after 20 years of reform, the Chinese people have seen a boom of economic prosperity. Their nation has joined the WTO and taken a central role in the world economy. Reform has also reduced political oversight of people’s daily lives and allowed the economy and society to exist in a less regulated environment. That being said, liberalization has also had dramatic effects on the delivery of social welfare, a major component of the socialist system, which is still the official goal of market development. To relieve enterprises of the burden of welfare delivery and allow the market to flourish through capitalist initiatives, the Party / state was obliged to reduce taxation on state owned enterprises in hopes of freeing capital with which the enterprises could invest. However, this both put more pressure on the government to deliver resources and reduced the state budget with which to do so. As the government’s share of national GDP dwindled, the state began accessing bank capital to finance welfare programs. Doing so has in turn depleted bank resources and left the nation in dire need of foreign capital donation. It was in this landscape that foreign non-government organizations (NGO’s) emerged; delivering both efficient and equitable changes to existing welfare delivery systems and much needed foreign capital. The Chinese Communist Party’s dependency on performance legitimacy through the social contract system directly led to escalating financial problems. NGOs, in pursuing their own goals, have enhanced the delivery of welfare in China and, in turn, helped to maintain the legitimacy of Party / state rule