How China’s Overseas NGO Law was Conceived

 

China’s Overseas NGO Management Law, which came into effect in 2017, has proved to be a game-changer for the country’s multi-faceted community of international NGOs. The law includes many provisions, but the most crucial one states that any overseas NGO that intends to operate in China must either register a representative office with the Ministry of Public Security, or apply to conduct a temporary activity lasting no longer than one year. In order to register an office, NGOs have to first find a government entity willing to act as their “supervisory unit”. This represents a clear break with the past, when overseas NGOs in China were allowed to register with the Ministry of Civil Affairs, but generally remained unregistered and operated in a legal limbo, unrecognized but tolerated.

The process of drawing up the law was quite protracted: the first announcement that the Overseas NGO Law was being deliberated upon was made in December 2014, while the final version was published in April 2016, and implemented in January 2017. The law went through two draft versions before being finally passed. As is customary in the Chinese legislative process, the second draft was made public in order to solicit comments and feedback from the sector and the public. The legislators did indeed receive many reactions, including a couple of initiatives set up with the very purpose of providing recommendations for changes, and the evidence suggests that this process of feedback led to a final version of the law that was more favourable to overseas NGOs than might otherwise have been the case.

 

Background

 

The presence of international NGOs in China can be dated back to the Reform and Opening Up policy under Deng Xiaoping. During the Maoist period (1949-1978), foreign organizations of this kind were not allowed to work within the country. In the eighties, international development agencies like the World Bank and the UNDP started to operate in China. The first international NGO to officially open an office in China was the Ford Foundation in 1988. It was agreed to put it under the supervision of the prestigious Chinese Academy of Social Sciences, and it received tax-exempt status. Another turning point came with the Fourth UN World Conference on Women, held in 1995 in Beijing. It is widely recognized that this event had a large impact on Chinese civil society. Many NGOs took part in the conference, and it allowed the concept of non-governmental organizations to become better known within China. Over the next few years the number of both international and Chinese NGOs operating within the country saw a decided upturn (1).

For a long while the government did not set any clear rules regarding the legal status of foreign NGOs in the country. Towards the end of the eighties the Ministry of Civil Affairs developed its own guidelines, according to which overseas NGOs should be left alone as long as they did not threaten social stability or national security. The first regulations directed at a subset of ONGOs were the Interim Provisions on Administration of Foreign Chambers of Commerce in China, published in 1989. Since the government appreciated the role of Chambers of Commerce in encouraging foreign companies to do business in China, it was seen as necessary to provide them with a facilitating legal environment. The regulation allowed Chambers of Commerce to register with what later became the Ministry of Commerce, without any need to find a Supervisory Unit within the government, as NGOs usually needed to do in order to register with the authorities.

Apart from chambers of commerce, no regulations relevant to other types of international NGOs were issued until 2004. That year saw the release of the Regulations on the Management of Foundations, issued by the Ministry of Civil Affairs, the body generally tasked with the management of “social organizations” (as nonprofits are referred to in China). The Regulations specifically mention the registration of overseas foundations, setting down the requirements for them to officially register a representative office in China. It should be noted that the definition of foundations adopted here was a flexible one, which in practice seemed to include most operational NGOs as well as foundations properly defined, and indeed organizations generally considered to be NGOs in other countries also managed to register under these regulations.

The Regulations required that overseas NGOs and foundations should first find a Professional Supervisory Unit (PSU), usually a government entity that worked in a related field, to act as their sponsor before they could register with the Ministry of Civil Affairs. This was in line with the “dual management system” in place at the time for Chinese NGOs. In practice, only very few overseas NGOs and foundations ever managed to register under this framework, mostly due to the fact that they were unable to find a PSU. By 2015, only 29 organizations had officially registered a representative office. This number included well-connected grant-making foundations like the Bill and Melinda Gates Foundation and the Li Ka Shing Foundation, and well-known NGOs like the WWF and the World Economic Forum.

In 2009 another attempt was made to bring overseas NGOs into the scope of Chinese law making, albeit only at the provincial level. In December of that year, Yunnan’s provincial government issued the Yunnan Province Provisional Regulations Standardizing the Activities of Foreign NGOs, which required all foreign NGOs in the province to “file documents” (备案) with the local civil affairs department. The NGOs were supposed to report on all of their projects, local partners and funding. This model was generally considered to be quite successful, and by December 2010 140 NGOs had registered under this system (2). It should be noted that Yunnan has long been one of the Chinese provinces with the liveliest presence of overseas NGOs, and these regulations were probably meant as a pilot program that could later be expanded nationally.

 

The Law’s Conception

 

The first sign that a new law was being prepared came in December 2014. On the 22nd of December, according to a report by China’s official news agency Xinhua, Vice-minister of Public Security Yang Huanning introduced the first draft of the law to the standing committee of the National People’s Congress. This heralded the fact that in future it would be the Ministry of Public Security, rather than the Ministry of Civil Affairs, that would take over the management of foreign NGOs. The vice-minister’s words sounded reassuring enough, mentioning the important role that foreign NGOs have played in China, and the necessity to strengthen supervision and management in order to allow them to carry out their activities legally.

While the law’s first draft was never officially made public, leaked versions quickly circulated. The draft made it clear that there would only be two ways for overseas NGOs to operate in China: register a representative office or apply to conduct temporary activities, both of which would require finding a PSU within the government. There were also lengthy passages detailing the steps to be taken against those who violate the law.

The second draft was published in early May 2015. This time the draft was released online, and the public was invited to provide feedback and comments. This form of public consultation is a customary procedure in Chinese lawmaking. The second draft turned out to be quite similar to the leaked versions of the first draft. It reiterated that ONGOs could only conduct activities in China by registering a representative office or applying for temporary activities after finding a PSU. It also included an article stating that “when performing their supervision and management responsibilities”, the public security authorities have the legal right to make on-site inspections in the offices of overseas NGOs, question individuals related to an investigation, access and copy documents and close down or seize venues and property related to an investigation.

The legislative authorities quickly received comments and feedback from numerous sources, including academics, foreign NGOs, foreign governments and businesses. Various initiatives were created to provide feedback on the draft. The authorities gave the public a month of time to give their feedback, after which the drafting of the final version began.

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The Overseas NGO Management Law was passed on April 28th 2016 by the 12th session of the Standing Committee of the National People’s Congress, with the provision that it would go into effect on the 1st of January 2017. The final version of the law contained a number of significant changes compared to the second draft. The most important change was that it would no longer be necessary for Overseas NGOs to find a PSU in order to conduct a temporary activity. This certainly represents a major improvement from the perspective of ONGOs. Finding a PSU is an onerous task, and it is unlikely that many ONGOs would have been willing or able to do so just for the purpose of carrying out temporary activities.

There were also a number of other relatively substantial changes. Overseas NGOs are no longer limited to a single representative office, as they were in the second draft. Many ONGOs have taken advantage of this since the law was passed, registering multiple representative offices. A good example of this is Oxfam, which in the first year of the law’s implementation set up four representative offices in Beijing, Gansu, Guangdong and Yunnan. Another change was that a phrase in Article 13 of the second draft, claiming that the representative office of an ONGO “does not have the status of a legal person”, was dropped in the final version of the law. This statement had generated some confusion and concern, since only legal persons have the right to sign contracts and bear legal responsibilities in China.

 

How feedback from the NGO sector helped shape the legislative process

 

As can be seen, the changes that were made to the final version of the law compared to the second draft were generally positive, at least from the perspective of the overseas NGOs that constitute the target of the legislation. It can be assumed that these changes were driven by the feedback and criticism that the second draft received after being opened up for public consultation.

This was in fact not the first time that the draft of a law relevant to NGOs was publicized in order to evaluate the reaction and receive feedback. Another very good example are the amendments to China’s Environmental Protection Law, which were adopted by the Standing Committee of the National People’s Congress in 2014 and went into effect in 2015 (the original Environmental Protection Law dates back to 1989). The amendments are particularly important in that they allow environmental organizations to initiate public interest litigations against polluters. The legislative process was unusually drawn out, with the new version of the law going through four revisions before it was finalized. The second and third drafts were made public to solicit feedback. This resulted in wide-ranging recommendations from environmental organizations and activists and led to significant changes.

The final draft of the amended Environmental Protection Law is generally considered to be quite favourable to the interests of environmental NGOs (2), especially on the contentious issue of public interest litigations. The second draft of the law stipulated that only the All-China Environmental Federation – a government-organized NGO – should be allowed to conduct public interest litigations on environmental issues. After negative feedback from environmentalists and NGOs, the third draft expanded this right to all registered environmental NGOs that had been active for five years and enjoyed “good standing”. It was left unclear how “good standing” would be determined, however, meaning that in practice the authorities would be able to decide which organizations met this criteria.

After a further backlash, the final draft dropped the requirement that the organizations should enjoy “good standing”, substituting it with a requirement that they should not have committed any illegal offences (3). Since the amended law was enforced, numerous environmental NGOs have taken advantage of the legislation to carry out environmental litigations, with some success (4). It can thus be seen how environmental organizations were given a channel to interact with the authorities in the form of providing feedback on the drafts of the amendment, and how they successfully used this opportunity to push for a wider right to start environmental litigations.

In the case of the Overseas NGO Law, a number of initiatives and focus groups were set up to provide feedback on the law’s second draft. This provides another interesting example of how civil society actors can collectively attempt to influence the content of legislation relevant to them. One notable effort was led by Professor Anthony J. Spires, from the University of Melbourne. Prof. Spires set up a focus group including various non-profits based in Hong Kong, and scholars and officials from the Mainland. Based on the focus group’s discussion, a final document was produced with specific questions and suggestions regarding 12 aspects of the law, as well as some further general suggestions (for an English translation of the document, see here).

It is interesting to look at the extent to which the recommendations made by the focus group organized by Professor Spires are reflected in the final draft of the law. Let us look at some of the specific recommendations made by the focus group. The first one concerns the definition of ONGOs provided in article 2 of the second draft, which does not specify whether foundations would be included or not. The focus group asked whether the definition of overseas NGOs would include foundations, and if so, would the provisions contained in the Regulation for the Management of Foundations still apply. The final draft of the law specifies quite clearly that overseas NGOs refers to “non-profit, nongovernmental social organizations such as foundations, social groups and think tanks that have been lawfully established outside of Mainland China”.

Regarding the working areas of overseas NGOs listed in article 3 of the second draft, the focus group asked whether the fields of poverty alleviation, disaster relief, public health, gender equality, NGO capacity-building and public policy research, which were not mentioned in the draft, should also be included. The final draft of the law included a mention of poverty alleviation and disaster relief.

The focus group further expressed concern about the fact that the draft law only allowed overseas NGOs to establish one representative office in China, while expressly forbidding them from establishing branch offices. In the final version of the law, the requirement to only establish one office was abandoned, although branch offices are still forbidden. Concern was also expressed about the provision in article 13, stating that an ONGOs’ representative office “does not have the status of a legal person”, since this would prevent it from signing agreements to bid on projects or work with Chinese partners. In the final version of the law, this provision was lifted.

Various other concerns and suggestions raised by the focus group were not however met. The focus group took issue with article 6 of the second draft of the law, which claimed that ONGOs cannot “conduct activities” in China before they have registered or obtained a temporary activity permit. It was pointed out that preparatory activities like carrying out a needs assessment and searching for partners, which normally need to be done before officially starting a project, might also be considered illegal. It was suggested that “activities” be defined more clearly, for instance by being changed to “project activities”. This suggestion was however not taken up, and the final version of the law still talks about “activities” in general.

Furthermore, the focus group suggested that it was unrealistic to ask ONGOs to submit their work plans for the coming year by November 30th, since the board of trustees will usually approve an organization’s annual plan in March or April. It was thus suggested that it should be allowed for them to present their annual plans later, for example in April. In the final draft of the law the date was pushed forward by one month, until December 30, still considerably earlier than what had been suggested by the focus group.

Another effort to provide feedback on the Overseas NGO Law came from “For NGO” (Shanghai’s Legal Centre for NGO, 上海复恩社会组织法律研究与服务中心). For NGO also produced a document in which it proposed 11 specific revisions to the draft (for an English translation, see here). As with the previous case, some of the recommendations made were reflected in the final version of the law, and some were not. The recommendations related to the specifics of hiring staff and developing membership were the ones that were eventually accepted.

In particular, For NGO recommended the lifting of the restrictions contained in article 32 of the draft, which stated that overseas NGOs could only hire staff or volunteers through foreign affairs service units, or other government-designated units, and would not be allowed to recruit volunteers directly. It was pointed out that these restrictions would reduce the efficiency of overseas NGOs and increase human costs, and would also be difficult to implement in emergencies. In the final version of the law, these restrictions were indeed not present.

The Shanghai-based organization also recommended a change in the wording of article 33, which claimed that overseas NGOs should not “develop, or covertly develop, membership within Mainland China”. It was recommended that the words “covertly develop”, be deleted, since this was a vague term under which anyone associated with overseas NGOs’ activities could be identified as a “covert member”. In the law’s final draft, the words “covertly develop” were taken out.

Furthermore, For NGO proposed a revision of article 35 of the draft, which stated that foreign personnel in overseas NGOs should not exceed 50% of total staff. It was pointed out that foreign shareholders can recruit for their companies established in Mainland China without any restriction. The restriction on the proportion of foreign staff is also nowhere to be found in the final version.

For NGO also made some bolder recommendations however, which rather unsurprisingly went unheeded. In particular, it was recommended that the management of overseas NGOs remain with the Civil Affairs departments, rather than being transferred to the Public Security departments. It was also suggested that unregistered organizations wanting to carry out temporary activities in Mainland China should not need to obtain a temporary activity permit, but simply abide by the relevant laws and regulations. Other recommendations for revisions to the wording of the articles and the registration procedures also found no support.

 


 

The Overseas NGO Law’s second draft received feedback and suggestions from numerous sources, and it is impossible to determine exactly whose feedback caught the lawmakers’ attention. However, the recommendations provided by Prof. Spire’s group and For NGO remain two of the most notable organized attempts to provide feedback from the NGO sector, and it can definitely be assumed that their suggestions were taken into account, and contributed to the drafting of the law.

After three years, it is clear that the Overseas NGO Management Law marked the beginning of a new round of adaption and negotiation on the part of China’s international NGOs and their local partners. It is probable that without the opening up of the law’s draft to public comment, and the efforts from within the sector to provide feedback, the law’s final provisions would have been more restrictive, to the point of making the continued work of overseas NGOs in the country very tough indeed.

 

Notes

1 Shieh, Shawn & Knutson, Signe (2012), Special Report: the Roles and Challenges of International NGOs in China’s Development, China Development Brief

2 Hsu, Carolyn & Teets, Jessica (2016) Is China’s new Overseas NGO Management Law sounding the death knell for civil society?: Maybe not, The Asia Pacific Journal 14(4): 1–14.

3 Kerr, Michelle & Logan, Kate (2014) New Environmental Law Targets China’s Local Officials, Chinadialogue, 28/04/2014

4 Zhang, Qing and Mayer, Benoit (2017), Public Interest Environmental Litigation Under China’s Environmental Protection Law (December 20, 2017). (2017) 1:2 Chinese Journal of Environmental Law; The Chinese University of Hong Kong Faculty of Law Research Paper No. 2017-26.

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