"Charity in China has much room for improvement and the government should reduce tax on donations to encourage more giving from companies," said Tian Di, director of the managing committee of the Foundation's minors' ideological and moral education branch.

No more than 100,000 Chinese companies, a mere one percent of the country's 10 million registered firms, have had a history in making donations to charity, according to the National Developmentand Reform Commission.

"Given the low ratio of tax exemption, enterprises in China lack the economic incentive to donate," said Xu Yongguang, vice-chairman of China Charity Federation, at the China Charity Conference held last November in Beijing, when the Chinese government promised to provide a convenient and standardized service in donation-related tax reduction and exemption.

"China needs to create a credible, transparent and self-disciplined charity system with independent third-party evaluation which receives supervision from government, media and all of society," the newspaper quoted Tian as saying."People can be confident about where their donation goes if the charity organization has a high credibility."

Tian said China needs to build a culture of charitable donation to enhance the public's enthusiasm for giving money to those in need.

"People would be actively involved in charity if they consider making a donation," said Tian, adding that the public should be encouraged to donate more frequently.

It is estimated that by the end of 2004, about 5 billion yuan(617 million U.S. dollars) had been donated to China's charitable organizations, accounting for 0.05 percent of the gross domestic product. In comparison, it was 2.17 percent in the United States. Enditem