Publication: China Brief Volume: 2 Issue: 8

By Arnold Zeitlin

Despite furious efforts of the Chinese leadership to control it, the internet–assisted by a free-wheeling Hong Kong news media–serves as a formidable obstacle to suppressing news and information in China.

A recent crackdown on news coverage at the end of March revealed clear evidence of this when a wealthy, allegedly nongovernmental charity in China called Project Hope became the object of controversy. A whistleblowing employee of the charity charged its managers had made unauthorized loans and that they had speculated with donations for unauthorized stock market and other commercial investments. The charity helps poor children stay in school. The dirty details came from Liu Yang, the former deputy head of accounting at the China Youth Development Foundation, which oversees Project Hope. She quit her job after nine years in 1998.

At a secretive news conference with both foreign and Chinese journals at a Guangzhou hotel, Liu Yang said that she had fled Beijing after receiving threatening telephone calls once she had blown the whistle. Liu, her lawyer and a Gansu Province officer of Project Hope met reporters in Guangzhou after turning the story and documents over to the Hong Kong press when no one would print them in China. The hotel kept the occasion low key. A journalist who attended said that the hotel signs discreetly pointed to “the event,” rather than to a news conference. Chinese reporters from as far as Chengdu in Sichuan province attended.


But apparently not a single Chinese newspaper touched Liu’s story. Some Chinese reporters keep detailed diaries of the stories they can’t use in the hope that someday they can print them. The news conference was Liu’s first public appearance in China after she went public with her charges and documentation to the Hong Kong press. She gave her documents to the English-language daily South China Morning Post and to Ming Pao Daily News, a Chinese-language paper once known as the New York Times of Hong Kong.

The Post, controlled by the Malaysian Chinese family of tycoon Robert Kwok, who has extensive business interests in China and is unwilling to rile the Chinese leadership, never ran the initial story of her accusations. The decision not to publish was made on the advice of lawyers who vetted the documents. But once the story broke into print elsewhere, Ming Pao began covering it. SCMP followed, with frequent stories about the controversy by its correspondents in Guangzhou and in Shezhen.

The Apple Daily, another Chinese Hong Kong newspaper with a reputation for free-wheeling reporting, apparently rejected the story. In June 2000, its sister magazine, Next, had lost an HK$3.7 million (US$447,000) libel suite for a January 1994 story on alleged misuse of funds by Project Hope. The decision against publishing serves as an indicator of how libel and defamation suits can control news coverage.

Ming Pao’s lawyer, who also writes editorials for the newspaper, gave the go-ahead. The paper published the report of Liu’s allegation that the foundation had misused some US$12 million. Ming Pao had a special interest in the charity. In the past, the daily had campaigned for donations to Project Hope, collecting millions of Hong Kong dollars on its behalf. According to Beijing’s People’s Daily, the mouthpiece of the Chinese Communist Party, about a third of donations to project hope come from Hong Kong, Macau, Taiwan and Overseas Chinese. The charity has collected more than US$200 million over the years.

The official Chinese press mentioned Liu’s story for the first time the night of her Guangzhou news conference, but only in the context of official denials of her charges. Although the charity is supposed to be a nongovernment organization, its patron, the China Youth Development Foundation, is a subsidiary of the Communist Youth League.

The weekly Southern Weekend in Guangzhou–as close as any newspaper in China can get to a crusading, investigating publication–prepared a four-page expose on the controversy. Editors evidently debated for some time before deciding to publish. The night of the Liu news conference, they began printing the weekend edition of the weekly paper, the Liu story on page one. The same evening, the China Youth Development Foundation issued a statement calling charges against Project Hope “a terrorist attack on the China Youth Development Foundation by vicious criminals.”


The newspaper, Beijing Youth Daily, which has morphed from a mouthpiece of the Youth League into one of the most widely read general newspapers in Beijing, carried an interview with Tu Meng, an official of the foundation defending the investments and loans. He denied wrongdoing and claimed that the investments made more money than they lost. He said Liu and another former employee, Yi Xiao, conducted a “terror attack” on Project Hope. The English website of People’s Daily carried a lengthy report on the foundation’s denial.

This report mentioned the charges in the Ming Pao article. People’s Daily and other official accounts added that Yi Xiao, was sentenced in 1997 to death with a two-year reprieve for “graft involving a large sum of money.” In 1999, People’s Daily reported that Yi’s sentence was reduced to twenty years. Although he was allowed to leave prison last year due to ill health, Yi is now, according to the official press, back in jail.

Project Hope head Xu Yongguang also told Clara Li, the Shenzhen correspondent of the South China Morning Post, that he had invested unallocated donations. The reporter quoted a 1994 audit report that noted that, at the end of 1994, the foundation had invested nearly all its “donations pending allocation”—some RMB105 million of RMB107 million (approximately US$13 million). Xu denied wrongdoing. The Post noted that the Bank of China in 1990 had barred charities from profitmaking activity.

Then the Chinese Propaganda Ministry issued instructions banning further reporting about the scandal, signaling that the government was determined to stand behind Project Hope. The South China Morning Post quoted Liu as saying that a senior government official told her that her accusations “caused alarm among members of the Standing Committee of the Politburo.” A 1999 report on the U.S.-based website of the Education Policy Analysis Archives, written by University of Illinois researcher, Samuel C. Wang, illustrates the support Project Hope receives from Beijing.

According to Wang, Deng Xiaoping wrote in ceremonial caligraphy in 1990 the title of Project Hope, donated twice for a total of US$1,200 and urged his family to donate. President and Party Secretary General Jiang Zemin and Li Peng, then the premier, followed with donations. Wang reported that every government employee donated at least once to Project Hope. The state news and information media campaigned on behalf of Project Hope. In a 1997 survey from a State Science and Technology Evaluation Center, reported Wang, 98 percent of Beijing respondents knew about Project Hope. And interested in ingratiating themselves in China for business purposes, major foreign corporations, like Coca Cola, Motorola and Philips donated to the charity, said Wang.


Although widely known in China, Project Hope was not the original user of the name. The original was founded in 1959 in the United States in support of a refitted U.S. Navy hospital ship christened the U.S. Hope to provide medical care for the poor in port stops in dozens of countries. When the ship retired in 1974, Project Hope became land-based. The Chinese Ministry of Health invited the charity in 1983 to start medical training programs in China; in 1997, it opened a 250-bed children’s hospital in Shanghai.

In a letter to the South China Morning Post in April, Christine Marr, the senior executive director in Hong Kong of the U.S.-based Project Hope, wrote, “Project Hope Hong Kong Foundation is not connected with Chinese Project Hope…. It is unfortunate that the Chinese Project Hope chose to use the same name. This has caused confusion.” A U.S. Project Hope vice president, Jack Bode, said, “Project Hope in China is NOT this Project Hope. They are a Chinese charity that has used our name in their country…. We have no connection with the Chinese Project Hope at all … none. This confusion surfaces periodically.” Said a Hong Kong journalist: “One has to wonder if people in China who make donations are aware to which Project Hope they are giving.”

The southern weekend editors stopped the presses, replated with another page one story and destroyed an estimated 300,000 copies already printed. But they also put the entire story on the Southern Weekend website… for a short time. Long enough for people to download it and send it all over the country. Coincidentally, the Hong Kong media also played a role in getting out another story, the target of a hushup in Taipei, about a slush fund in Taiwan long used to support its friends in the United States.

Internet technology triumphed. The Hong Kong news media (often maligned, sometimes with good reason, for self-censorship) played a key role in getting out the Project Hope story. “When I first read the banned story on the web site,” said a Chinese journalist, referring to the Southern Weekend story, “I could not help my anger…. Now the Chinese malfeasants are forced to realize the power of the media again.”

Arnold Zeitlin, a former correspondent and executive with The Associated Press and United Press International, was director for three years of the Freedom Forum Asian Center in Hong Kong until it closed last December 31.