Entrepreneur Wang Xiang, 58, used to keep a low profile in social activities, but he is seen actively lobbying the country's legislature to improve donation policies at China's annual legislative session this year.

"I hope the legislature would consider revising tax and donation rules so that China's charity undertakings will be greatly boosted," said Wang, board chairman of the Jiangxi-based Beingsong Group.

Statistics showed that some 100,000 Chinese companies, merely one percent of the country's total ten million registered firms, have had a history of making charity donations.

Total personal donations accounted for 0.01 percent of China's Gross Domestic Product (GDP). While in the United States, average individual donation in 2003 reached 828.7 dollars.

It's unfair to call the enterprises and the majority public that have never engaged in donations parsimonious, Wang said.

"They may be reluctant to donate for fear of exposing wealth, but the country lacks enough incentives to stimulate them to do so," Wang said.

According to China's tax law, corporate donations can be exempted from income tax only when the amount is within three percent of its annual revenue. The ratio is 30 percent for individuals.

"Under such a policy, I'd rather to pay tax, since the income tax usually accounts for less than two percent of a company's annual avenue," Zhang Lei, chief executive officer of a Beijing-based private company, said.

Despite "unfavorable" tax policies, experts say that China's charity organizations also need to improve transparency and simplify donation procedures.

China has approximately 280,000 non-governmental registered charity organizations.

"Compared with western charity organizations, China's charity agencies are slow to tell the public how they get the money and where the money has been used," said Huang Daifang, a deputy to the National People's Congress, China's parliament.

Statistics showed that the income of China's urban residents is three times that of farmers. The richest ten percent of the population owned 40 percent of residential properties, while the bottom ten percent owned just two percent of the total properties.

It is estimated that by the end of 2004, about five billion yuan (617 million U.S. dollars) had been donated to China's charitable organizations, accounting for 0.05 percent of the country's GDP. In comparison, it was 2.17 percent in the United States.

Sources with the Ministry of Civil Affairs said the ministry is negotiating with taxation and financial departments to set up a new tax reduction system in line with international practice.

Huang said people's understanding of donation and charity is regarded as an important means to help the poor in western countries. "They could also be used in China to help bridge the widening wealth gap," said Huang, president of the Tellhow Sci-tech Co. Ltd.

Editor: Donald