but reaching out to foreign countries citizens are certainly within the duty of the diplomats. Who else can reach the people of other countries if not diplomats? Chinese media isn't government, they can make the voices of foreign citizens heard, yes, but diplomats must also reach out, after all they are part of policy makers.

I don't think it is due to lack of manpower, probably more because of self restraining. The Chinese gov is very cautious, too cautious for its own benefit. And yes, to cultivate NGOs, China probably need new agency. But I think it is a necessity, considering the US is using NGOs to attack China. China need its own friendly NGOs to defend China interest or at least to muddle things that will drown out the voices of US sponsored NGOs.