On September 8, the Charities Aid Foundation released the first-ever “World Giving Index” (WGI). The Index ranks 153 countries according to answers interviewees gave to three questions: amount of money donated, amount of time volunteered, and whether or not those interviewed “helped a stranger” in the month preceding the interviews. While one may well question the reliability of the rankings and should not draw any sweeping conclusions from them, one of the most striking outcomes was China’s extremely low ranking: China came in 147th out of 153 countries surveyed. Perhaps even more significantly, only 11 percent of those interviewed in China said they had made any financial donations to charity. This percentage is anywhere from 5 to 7 times less than the top 50 countries ranked in the index.

According to official Chinese sources, in 2009, 121 of China’s biggest philanthropists donated a combined total of $272 million to charity. This figure is less than the amounts donated by any number of individual family foundations in the U.S. – and that excludes the Bill and Melinda Gates Foundation.

This is particularly noteworthy considering China now has 477,000 millionaires (in U.S. dollars), trailing only the U.S., Germany, and Japan, and second only to the U.S. in total number of billionaires.

So does this mean rich Chinese are cheap? If Hong Kong (which, after all, is a Special Administrative Region of China) is anything to go by, the answer is a resounding no. The WGI ranks Hong Kong 18th on its 153-country index. But in terms of making cash donations to charity, the figure is 70 percent for Hong Kong – as high a percentage as the number-one ranked country, Australia, and one of the highest among all of the countries surveyed.

Hong Kong’s wealthiest tycoon and one of the world’s richest men, Mr. Li Ka-shing, has contributed some $678 million in the last two years through his own foundation. Two-thirds of his giving has gone to mainland China recipients, about 20 percent to Hong Kong causes, and the balance to other international efforts. He is now putting one-third of his total assets into his foundation.

But at his company’s annual general meeting last month, when Mr. Li was asked whether or not he would be attending a dinner in Beijing on September 29, hosted by Bill Gates and Warren Buffett, Mr. Li basically dodged the question. Early this week, Messrs Gates and Buffett embarked on their Giving Pledge campaign in China. They invited about 40 of China’s wealthiest to the private dinner, which has been highly publicized, although the hosts had tried to assure anonymity and privacy in the lead-up to the event. Apparently, a number of those invited, perhaps including Mr. Li himself, were shy in accepting the invitation. Some commentators have attributed this reluctance (if it is that) to a fear of being pressured into pledging, even though Bill Gates has publicly stated this is a learning visit to exchange ideas, not a fund-raising jaunt. Other observers have noted the absence of a developed philanthropic culture in China as inhibiting a more favorable response.

But clearly the Hong Kong experience and Mr. Li’s own example prove this is not the case. So what gives (pardon the pun)? The answer lies not just with the donors’ attitudes but with the entire giving environment in China.

Hong Kong probably has Asia’s most “philanthropy friendly” legal and regulatory regime. Charities applying for tax deductibility face a very straightforward and easy-to-understand process. Non-profit status is easily granted, and tax deductions for donors are generous and liberal. While the public accountability of charitable recipients may still leave something to be desired, Hong Kong is pretty far advanced in the use of transparent and innovative ways of giving. The Li Ka Shing Foundation itself has set a new standard for democratic philanthropy when it recently announced that one class of grants it makes to Hong Kong recipients will be awarded on the basis of public on-line voting. Whoever gets the most votes gets the grant (albeit with screens and controls in place).

By contrast, in mainland China the legal and regulatory environment for donors and charitable recipients alike is an unfinished agenda. There is not a relevant nor complete body of civil law to facilitate the establishment of foundations and charities, and there are no easily attainable tax breaks for donors. The existing regulations and rules are vague and far from enabling for non-profits and donors. Movie star Jet Li recently remarked that the lack of a clearly defined regulatory environment for foundations in China may be jeopardizing his own One Foundation.

In addition, there has been an element of the public that has been skeptical about the non-profit sector in China. That skepticism, unfortunately, has in too many cases been fueled by a prevailing lack of transparency in the sector. Finally, as China has evolved from a planned to a market economy, public perceptions are still blurred when it comes to the dividing line between charity and government.

So Bill Gates and Warren Buffett might be well advised to keep in mind this bigger picture in their efforts to improve philanthropy in China. Better still, maybe Li Ka-shing should invite them to a dinner in Hong Kong.

Allen Choate is The Asia Foundation’s vice president, responsible for the Partners in Asian Development initiative, based in Singapore. He can be reached at achoate@asiafound.org.

On Saturday, March 22nd, Taiwan’s 17 million voters will cast their ballots for a new president to succeed the incumbent Chen Shui-bian. All of the surveys show the KMT (Nationalist) party candidate, Taipei Mayor Ma Ying-jeou, far ahead of his opponent, Frank Hsieh, the DPP (Democratic Progressive Party) nominee, with a lead of around 20 points.

In 2000, after a half century of rule, the KMT lost control of the Taiwan government to the DPP. Ma’s large lead indicates the KMT is maintaining its positive momentum following its defeat of the DPP in the highly significant legislative elections in January. The KMT took 81 seats while the DPP was only able to secure 27, giving the KMT an absolute majority in the legislature. If Ma is elected, as the polls indicate, he will have a comfortable legislative majority to enact his policies.

The Nationalist Party’s resurgence revolves around the people’s concerns with the economy. Consistent with past elections, Taiwan’s relationship with mainland China is a central topic of the presidential race, but this year’s difference lies in how the cross-Straits question is being posed. The current debate centers on Taiwan’s trade and investment relations with mainland China, not the usual political and constitutional arguments over sovereignty, independence, and reunification.

By any objective standard, the widespread worries and dissatisfaction with Taiwan’s economy is puzzling. The island’s economy is healthy and growing. All normal macro-economic indicators are positive: the growth rate is respectable and increasing, exports are up, both offshore and domestic investment are increasing, the stock market — while spiky — is trending upward as well. The high technology sector, especially, is improving in quality and is profitable. So why the concern?

The Taiwanese people perceive their overall quality of life as unsatisfactory. While the economy may be vital and healthy, the general population’s income has stagnated over the past couple of years, inflation is rising, the inequality gap is seen as becoming unacceptably wide, and creeping unemployment is a concern for many. In addition, many feel that Taiwan’s anomalous international status is making it less competitive in the global marketplace and is increasingly limiting their business options.

In response, the KMT ticket of Ma Ying-jeou and Vincent Siew presents a platform of expanding and growing the island’s economy. The centerpiece of their economic plan is the development of a cross-Straits “free trade zone” – an eventual “common market.” Taiwan’s economy is inextricably linked to the mainland’s economy. The mainland is Taiwan’s largest export destination and is the recipient of close to half of Taiwan’s foreign investment. Ma’s proposal is to expand on this by negotiating with the mainland to reduce tariffs, allowing academic qualifications of selected mainland professionals to be recognized in Taiwan, lifting the current forty percent cap on mainland investment, and promoting tourism in Taiwan.

Taiwan (and international) business travelers particularly welcome Ma’s proposal to begin direct air links with the mainland as soon as possible. All shipping and air traffic between Taiwan and the mainland must transit through Hong Kong or other countries. A 90 minute flight from Taipei to Shanghai can therefore take up to six hours. Ma has promised to begin weekly direct charter flights by this summer, daily charter flights by the end of 2008, and regularly scheduled service by the end of 2009.

Similarly, Frank Hsieh and the DPP are pledging to moderate ties and improve economic relations with the mainland, but recently Hsieh has voiced loud opposition to the Ma-Siew proposal for a cross-Straits common market. The threat it poses to Taiwan’s present sovereignty is one feature of this opposition, but the DPP’s protectionist arguments against the cross-Straits free trade zone are almost identical to other universal challenges to Free Trade Agreements. The DPP claims that a cross-straits common market or free trade zone will result in major job losses and rising unemployment in Taiwan, that mainland investment will swamp the island and lead to mainland corporate takeovers of Taiwan companies, and that Taiwan’s farmers will be driven out of business by mainland agricultural imports.

The KMT’s response to these criticisms is that the common market idea will take decades to achieve. Investment and services will not be included in the initial agreements, and certain sectors, such as Taiwan’s agricultural sector, will not be immediately liberalized.

However, Hsieh’s attacks are resonating with some of Taiwan’s electorate concerned with the island’s economy. While Ma still has a substantial lead in the polls, it has dwindled in three months from 40 points to about 20 points today — and it seems to be narrowing daily as Hsieh hammers on the dangers of a cross-Straits free trade zone.

The current unrest in Tibet has made some in Taiwan more wary about moving too fast on closer cross-Straits economic ties. That tends to favor Frank Hsieh’s campaign, but Ma should maintain his lead for Saturday’s election. For the first time in Taiwan’s recent electoral history, the key issue is the economy. This is encouraging, as it signals a new era of more “normal” politics and a healthy and practical debate within Taiwan about its relations with the mainland.

Allen Choate is The Asia Foundation’s Vice President for Partners in Asian Development. He can be reached at achoate@asiafound.org.

While all eyes are focused on Taiwan’s Presidential election in March, the more imminent Taiwan legislative election may generate more emotional heat and have greater long-term significance for the island’s 23 million people. Next week, on January 12th, Taiwan’s voters will for the first time choose their legislative representatives using a new electoral system. Once elected, representatives will be serving in a downsized but strengthened legislative body. These systemic changes in Taiwan’s democratic institutions will have a significant, long-lasting impact on the behavior of Taiwan’s politicians and parties, hopefully for the better. But the omens are not good.

In 2005, Taiwan ratified a series of constitutional amendments that radically changed the method of electing legislators. Under the old electoral system, candidates were chosen through proportional representation in multi-member legislative districts. Under the new single-member district system, only one candidate receiving the most votes in each district will be elected.

The original objective for these electoral reforms was to pull candidates’ stances on issues toward the center. For a candidate to gain their party’s full support and be nominated for a single-member district, they would need to be attractive to a large swath of voters and not be polarizing. The rationale was that this would curb extreme political views while increasing party discipline and policy cohesiveness in the legislature. Under the new system, smaller political parties’ prospects for having their candidates elected would decrease as a large number of votes are required to be elected. To many, this would be a welcome change from the extremism and contentiousness of previous legislators chosen through the old multi-member district method.

Instead ” consistent with the axiom that the most important consequences are always the unintended ones ” with fewer seats available to contest for, the party primary battles for candidate nominations in late 2007 became fiercer. Realizing that the elected legislators will be in powerful positions in a strengthened institution, the parties chose to nominate only party-loyal candidates, not the more flexible, moderate candidates who might be able to collect more votes.

The new single-member district system has generated its own potential problems as well. The re-drawing of district lines last winter produced tough partisan debates, accusations of gerrymandering, and some murky compromises. For example, the parties finally agreed that every existing county or city would have at least one legislative representative, regardless of population size. Some observers believe that this dis-proportionality will favor the so-called “pan-blue” or Kuomintang Party (KMT), which controls the majority of local governments in Taiwan.

Complicating matters further, there are concerns that January 12 could bring confusion and tension at some polling stations since voters going to the polls will be handed a ballot with a total of four votes to cast: one for individual candidates, one for political parties, and one for each of two highly controversial referenda. One referendum, backed by the Democratic Progressive Party (DPP) calls for stripping the KMT Party of its vast assets which the DPP claims were stolen from the government. The second referendum, sponsored by the KMT, seeks to empower the legislature to launch corruption investigations against DPP officials. Voters will receive their ballots at two different tables ” one for the legislature and one for the referenda, and cast their votes in separate ballot boxes.

The downsizing and strengthening of the legislature, done through the 2005 constitutional amendments, are significant. The overall size of the legislature is cut in half, from 225 to 113 legislators. 296 candidates will be fighting for 73 of the 113 seats from the single member districts. Another 34 of the 113 seats will be determined by voters casting a second ballot for a political party. Fifty percent of each party’s list must be women ” one of the more radical electoral system changes engineered to promote gender equality. The remaining 6 seats are reserved for minorities.

The legislators elected January 12th will now be serving four-year instead of three-year terms, coinciding with the presidential term of office and providing more security to those elected. The 2005 constitutional revisions also abolished the National Assembly, which had elected the President and been responsible for constitutional reform, and severely curtailed the powers of the Control Yuan, a separate branch of government supervising executive branch officials and finances. In short, authority has been transferred and consolidated in the legislature.

What will be the impact of all of these changes on Taiwan politics and governance? Most analysts agree that the new smaller legislature, composed mainly of single-member district representatives serving longer terms with increased constitutional authority, will be a much more powerful body. Individual legislators’ powers will exponentially increase as only a handful of them will be required to make policy in committee meetings.

The new, stronger legislature can be considered good or bad news, depending on the outcomes of the January legislative election and the March Presidential election. Should the Taiwan electorate choose a president and a legislative majority from the same party, the president’s ability to move policies and programs through the legislature will improve dramatically, especially given the large number of nominated party loyalists. If the legislature and presidency are controlled by opposing parties, however, then the current state of “divided government” in Taiwan is likely to worsen considerably.

The election outcome has consequences for the entire Asia-Pacific region. The most divisive and high-profile issue in Taiwan politics is the island’s future relations with mainland China, and there currently is no “center” position in Taiwan on that question. The combination of fierce partisan disputes over the technical but critical issues of “one-stage vs. two-stage” voting and voting districts, rigid party loyalist candidates, and the promise of a stronger legislature do not auger well for the emergence of centrist politics.

Still, there is the possibility that the new governance and electoral structures just may drive leaders and voters to the center. The previous legislature’s structure and the former electoral process’ nature encouraged centrifugal political forces and weak accountability. The changes now are meant to increase the prospects for more mature politics and a more responsible legislative body ” changes that would be welcomed by Taiwan’s electorate and the rest of the world, as well.

Allen Choate is the Vice President for Partners in Asian Development at The Asia Foundation.