Tuesday, November 8, 2016

Civil society as a early warning system: what the U.S. elections, Occupy Central and Brexit (but not China) have in common

We live in a time when everywhere you look, you can spot a governance crisis around which is strewn the detritus of broken political institutions. In the U.S., we're almost at the end of a divisive, insanely expensive election campaign and the rise of Trump who has called the U.S. electoral system "rigged". In Hong Kong, we're seeing at this very moment the rejection of the Basic Law and "one country, two systems" by the younger generation who do not see themselves as part of China. In Europe, we've been witnessing Brexit and the rise of virulent nationalism throughout the European Union.

It may be tempting to hold civil society responsible for this state of affairs by pointing a trembling finger at the social forces seeking to divide us and undermine our institutions. But I would turn that causal relationship around and argue that those forces are more the symptom than the cause of the breakdown in our political institutions. In other words, we are made aware of our broken political institutions by citizens and citizen-initiated movements like white Americans without college degrees, the Tea Party, Occupy Central activists, and right-wing European extremists railing against immigration and terrorism. They serve as a kind of early warning system about the health of our polity. It is true these movements are sometimes manipulated by elites, and they are not always civil, but they are coming from citizens who feel they have been disenfranchised by the political system. If we are smart, we would do well to listen to their grievances and address them rather than dismiss them as the lunatic fringe or, in Hillary Clinton's unfortunate wording "basket of deplorables".

It's instructive (and maybe also comforting to those of us living in the U.S., Hong Kong and Europe) to use this same perspective to look at China where President Xi Jinping and others in the Chinese leadership have decided they can improve on and manage governance without a true civil society or independent media.  The current situation in China is truly more frightening than anything we are seeing in the U.S., Hong Kong and Europe because you realize there is no way for citizens who feel they are disenfranchised to voice their displeasure, or for the media to report about it. And therefore there is no way to truly know if China is headed for a governance or legitimacy crisis. 

The lesson? Rancor and upheaval may not be all that bad as long as we see it for what it is. Harmony and order may not be all that good unless we see it for what it isn't.

Thursday, November 3, 2016

Labor activist Meng Han sentenced today to one year 9 months in prison

November 3, 2016

The labor activist Meng Han was sentenced today by a Guangzhou court to one year and nine months in prison for "gathering crowds to disrupt public order" according to his lawyer. Meng pleaded guilty and said he would not appeal. Last December, he was arrested with his fellow staff members from the Panyu Workers Center, Zeng Feiyang and Zhu Xiaomei. As I wrote in an earlier post, Zeng and Zhu were tried earlier on September 26 and given a suspended sentence of four years and two years respectively for the same charge. There is reason to believe that Meng was given a harsher sentence because, unlike Zeng and Zhu, he had refused to write down his confession before the trial. Police reportedly visited Meng's parents two days ago to try to pressure them to persuade Meng to plead guilty. Meng also had another strike against him. He been detained for nine months on the same charge in 2014 when he had been a security guard who had staged a rooftop demonstration at the Guangzhou Chinese Medicine Hospital with 11 other guards to protest the management's refusal to discuss their grievances. Given that Meng has already been in detention for 10-11 months, it is expected that he will only have to stay in prison another 10-11 months to complete his sentence.

Monday, October 17, 2016

Draft Guidelines for the Overseas NGO Law Announced at Shanghai Forum

Last Friday, October 14, the Ministry of Public Security and the Shanghai Municipal Public Security Bureau held a forum in Shanghai for overseas NGOs to announce the draft “Guidelines for the Registration and Temporary Activities of Representative Offices of Overseas Non-governmental Organizations within the Territory of China (for comment)."

The draft Guidelines are meant to provide more detailed information on the Management Act on Activities of Overseas Non-governmental Organizations within the Territory of the People’s Republic of China[1] (hereafter the Overseas NGO Law) which goes into effect January 1, 2017. The Guidelines are divided into four sections: 1) the procedures and documents required for registering a representative office; 2) the procedures and documents required for filing a record for temporary activities; 3) additional issues; and 4) the required forms.

According to news sources[2], the head of the Overseas NGO Management Office, Hao Yunhong, presented the Guidelines and nine overseas NGOs were invited to present their comments on the draft. (It was not made clear if the draft would be limited to comments from only a small number of overseas NGOs or if there would be a more extensive public comment period.) Mr. Hao noted that the provincial Public Security Bureaus were responsible for registration of representative offices and filing records for temporary activities. The Ministry of Public Security in Beijing would not be directly involved in registration and filing records, but instead would be responsible for providing guidance and coordination for the provincial bureaus. The Shanghai Municipal Public Security Bureau’s Entry/Exit Administration has already set up booths, signs and equipment to receive overseas NGOs, and other provinces and cities are said to be in the process of preparing their own service stations.

Mr. Hao also revealed that the Overseas NGO management service information system and websites were being constructed. Once completed, these online platforms can be used by overseas NGOs to make reservations for registration or filing of records, online application and submission of relevant materials, and the posting of relevant documents. In addition, the Ministry of Public Security and relevant departments have set up a coordinating mechanism for supervision and management of ONGOs, and will be responsible for studying, coordinating and resolving major problems in facilitating the supervision, administration and services to overseas NGOs carrying out activities in mainland China.

Below are a few of my takeaways from reading over the draft Guidelines:

1) There's not that much in the way of additional details in these Guidelines, but mostly a repackaging of what has already been stated in the Overseas NGO Law to make the procedures easier to understand.

2) The “registration and management” department for overseas NGOs seeking to either register a representative office, or “file a record” for temporary activities, is to be the provincial Public Security Bureau where the rep office or activities (or more specifically the Chinese partners coordinating on these activities) are located. This led several overseas NGOs at the Shanghai forum to raise the question of what they should do if they have offices and/or activities in several provinces. Do they need to register in every one of those provinces? It seems one possible solution would be to allow overseas NGOs with offices or activities in multiple provinces to register or file a record at the national-level Ministry of Public Security. But Mr. Hao already made it clear that the Ministry of Public Security would not be directly involved in registration or filing records.

3) The Guidelines use the term “business administration department” (or BAD  - who says the Chinese public security don’t have a sense of humor?) to refer to what I have called the all-important “professional supervisory unit” (PSU).  Overseas NGOs seeking to register a representative office are required to have the approval of a BAD, generally a government or quasi-government agency, before they can even begin to register. In the past, it has been very difficult for overseas NGOs to get the approval of a BAD. The Ministry of Public Security has stated it will release a list of eligible BADs, but it is unclear whether the BADs on this list will be obligated to offer their services to an overseas NGO that approaches them.

4) In the section on Overseas NGOs filing a record for temporary activities, the Guidelines state: “In the case of Overseas NGO temporary activities, the Chinese partners shall apply for review and approval according to state regulations and file the required documents 15 days prior to the temporary activity at the provincial Public Security Bureau’s Administrative Office of Overseas NGO Affairs.” But like the Overseas NGO Law, these Guidelines remain vague on just what kind of approvals and documents need to be obtained and filed by the Chinese partner.

[1] This is the name of the Overseas NGO Law given in the English-language version of the draft Guidelines that were sent to me. It’s not clear why the translators chose to use Act instead of Law which is the more standard translation.
[2] http://news.xinhuanet.com/legal/2016-10/14/c_1119721678.htm http://www.thepaper.cn/newsDetail_forward_1543664

Friday, October 14, 2016

Guangzhou labor activists are given suspended sentences

The trial of three labor activists - Zeng Feiyang, Zhu Xiaomei and Tang Huanxing - is over. The verdict came the same day of the trial - September 26 - which was held in a courtroom on the outskirts of Guangzhou. Feiyang was sentenced to three years, with a suspension or reprieve of four years. If he commits an offense during those four years, then he will have to serve his prison sentence. This may very well mean he will not be able to get involved in the things he excels in during that period of time - labor organizing and collective bargaining. The same is true of Xiaomei and Huanxing who received a sentence of 1.5 years, with a suspension or reprieve of two years. The other activist still in detention, Meng Han, has yet to have his day in court. His case was sent back by local prosecutors to the police investigators for further review.

The sentences were bittersweet. They were lighter than expected, especially that of Zeng Feiyang who was the target of a high-level smear campaign conducted by state media organs soon after his arrest and not allowed to see his lawyer for six months. And the suspended sentences mean that they can now go home to be with their families. But the lighter sentences came with a cost. The plaintiffs had to admit they were guilty of "gathering a crowd to disturb social order" even though their efforts to organize workers to engage in collective bargaining had the opposite intention, which was to get workers to the bargaining table and find a peaceful, orderly way to resolve their dispute. And as already mentioned, their sentences mean they may have to abstain from the work that they excelled in, which was to organize and train workers on collective bargaining.

The politics of this case are interesting and there should be more analysis forthcoming. The impetus for the arrest of these activists appears to have come from the center, but local law enforcement were charged with carrying out the arrest, investigation and prosecution of this case. In the past, Guangzhou and Panyu law enforcement had cooperated with Feiyang on a number of occasions and knew him well. Did local law enforcement officials play a role in getting a lighter sentence for these plaintiffs and making the best of a difficult situation? Interestingly, while the media reports of the trial focused on Feiyang's closing statement in the trial concerning foreign funding and involvement, the court verdict made no mention of foreign funding and involvement. Instead, it offered a more narrow argument and set of evidence detailing how the plaintiffs were making efforts to encourage workers in the Lide factory to go on strike. In other words, it looked at the case from the perspective of social stability rather than national security in an effort to lower the sensitivity of the case and justify a lesser sentence for the plaintiffs.

Below are many of the media reports that came about soon after the sentencing was announced. 

English-language media reports





China court sentences trio for disturbing social order-http://www.china.org.cn/china/2016-09/26/content_39376176.htm




Chinese-language media reports





曾飞洋等聚众扰乱社会秩序案一审宣判 三被告认罪_财经网 - CAIJING.COM.CN


广东劳工NGO案今宣判 “首要分子”曾飞洋判三缓四_手机凤凰网






Sunday, September 25, 2016

Trial for Guangzhou Labor Activists Scheduled for September 26

Much of the recent news about Chinese civil society has centered around the trial of China’s rights defense lawyers such as Pu Zhiqiang, Zhou Shifeng, and most recently Xia Lin who was sentenced to 12 years in prison. All of them deserve a great deal of attention for the courageous and important work they do in taking on difficult cases.

In this post, I want to make sure that Chinese labor activists and workers are not neglected because they are some of the most active and potentially influential civil society actors in China. Worker strikes and protests are at historically high levels and worker self-organizing is taking place among Walmart China workers, teachers, and taxi drivers, among others.  In some cases, workers are assisted in their organizing efforts by activists working for independent labor NGOs in provinces like Guangdong.  Such is the case of the Guangzhou-based Panyu Workers Center which helped workers in dozens of factories organize and engage in collective bargaining with their employers. In doing so, they acted in the role of de facto trade unionists doing the job that China's official union, the All-China Federation of Trade Unions (ACFTU), should do but does not. In their most recent successful case, the Panyu Center helped workers in the Taiwanese-owned Lide Shoe Factory reach a collective agreement with management for economic compensation and unpaid overtime and social security totaling nearly 120 million yuan.

A number of the staff of the Panyu Center are now about to go on trial tomorrow (September 26, 2016) at the Panyu District Court on criminal charges of “gathering a crowd to disturb social order” which carries a maximum five-year prison sentence. The staff on trial are Zeng Feiyang, the director, and Zhu Xiaomei. They will be joined by another labor activist who is not on staff at the Panyu Center, Tang Huanxing. A third Panyu Center staff member, Meng Han, had his trial postponed when local prosecutors sent his case sent back to the police for further investigation.

This is a high-profile case that began on December 3, 2015 when a number of labor activists in Guangzhou were rounded up and interrogated. Many were later released, with the exception of staff from the Panyu Center who were clearly the center of this attack. Unlike previous cases of repression against labor groups which originated from local authorities, this one showed clear signs of coming from Beijing. Soon after the crackdown, China’s main state media organs – the New China News Agency, CCTV and the People’s Daily – launched a smear campaign against the Panyu Center, and Zeng Feiyang in particular.

I encourage readers of this blog to follow this case closely to see how authorities of the Communist Party of China – the party of workers and farmers – treat some of China’s most prominent labor activists. The Panyu Center staff have already had their rights violated by the police and other authorities on a number of occasions. The state smear campaign, which sought to try them in the media, before they even had a court trial, was only the most brazen example. We also know that the police did not allow them to see their lawyers for several weeks. In Feiyang’s case, it took six months before he was able to finally meet with his lawyers.  In addition, their family members weresubjected to physical threats and verbal harassment when they did not cooperate or, in the case of Feiyang’s mother, after she filed a lawsuit against the state media organs for defaming Feiyang's character.

I will be posting more on this case once we hear the results of the trial. Hopefully, I will have some good news to report.

Sunday, September 11, 2016

Some Insights from a Q&A with the Ministry of Public Security on the Overseas NGO Law

I apologize for not posting as often as I would have liked over the past two months. I've been too busy trying to catch up on work after my summer vacation and was traveling quite a bit last month.
I thought I'd start my first post this month on the following summary of a recent Q&A session between the European Chamber of Commerce and the Foreign NGO Management Bureau of the Ministry of Public Security (MPS). The Q&A was sent to a listserve I participate in and appeared in the form of a newsletter dated August 10, 2016 from the international law firm Hogan Lovells.

It's now less than four months before the law goes into effect and so far we have had very little information from the MPS regarding the law, so this Q&A is important because it provides us some initial indications from the MPS about how it understands the law.

Below is the text of the Q&A, after which I discuss my main takeaways.

China's New Law on Foreign NGOs: Q&A

Summary of Meeting with The Foreign NGO Management Bureau, Ministry of Public Security
The Ministry of Public Security (the “MPS”) recently held a question and answer session in Beijing with the European Chamber of Commerce, in order to address various questions about the new Foreign NGO Management Law (the “NGO Law”). The responses are only verbal interpretations by MPS, so they remain subject to change, but the information offers some perspective of the relevant Chinese regulators.

Q: When will implementing rules and guidance for the NGO Law become available?

A: The MPS Foreign NGOs Management Bureau currently is in the process of creating a foreign NGO registration administration guideline and a catalogue of professional supervisory units for foreign NGOs. Those two documents will serve as implementation guidelines for the NGO Law. MPS estimates that it will release those documents online around October 2016.

Q: As to the carve-out provision under Article 53 of the NGO Law (which appears to specifically carve out from the NGO Law cooperation between foreign and Chinese schools, hospitals, and academic organizations) does the Chinese counterpart need to be the same-type institution as the foreign party?

A: Yes. Article 53 of the NGO Law is intended to address exchange and cooperation between two organizations of the same type, e.g., foreign school to Chinese school, or foreign hospital to Chinese hospital. If not the same type, MPS may need to decide on a case-by-case basis.

Q: Will those WFOEs already set up by foreign NGOs in China be permitted to continue their operations in China under grandfather approval rules? Is a WFOE still a viable option for a foreign NGO to enter into China if it uses an overseas for-profit holding company?

A: For WFOEs set up by a for-profit corporation with a foreign NGO as the ultimate shareholder, they can continue in operation as long as they will do ordinary businesses as normal for-profit companies and comply with applicable law. They can donate their money or otherwise use their money for public interests or charity purposes in China. However, the WFOE cannot be used to solely carry out “NGO” activities on behalf of the foreign NGO to promote the mission of the foreign NGO.

Q: Is a foreign university that comes to China to recruit students required to comply with the NGO Law?

A: No. Foreign universities may engage in recruiting activities in China through overseas study agencies that have a license from the Ministry of Education (MOE). These activities are not subject to the NGO Law, as they are subject to MOE regulations.

Q: What types of for-profit activities carried out or sponsored by a foreign NGO will be forbidden under the NGO Law? Will foreign NGOs still be allowed to have income generated from activities in China?

A: The NGO Law prohibits foreign NGOs (including their representative offices registered in China) from engaging in or providing financial support to any for-profit activities. However, this doesn’t mean income is not allowed to foreign NGOs. Whether it is for-profit or not-for-profit is determined by the purpose. Foreign NGOs should not focus on earning a profit and providing dividends for shareholders/owners.

According to Article 36, foreign NGO representative offices may enjoy tax benefits in accordance with law. Also, Article 21 permits foreign NGOs to use “other funds legally acquired within China” for their activities in China. This means income or revenue is allowed as long as the foreign NGO keeps its not-for-profit nature, namely, will not distribute dividends or profit to its shareholders/owners. For example, it is permissible for a foreign NGO to charge a fee for providing services or licensing intellectual property rights to a Chinese party.

Q: For those representative offices/affiliates already established by foreign NGOs and registered with the Ministry of Civil Affairs (the “MOCA”) or the State Administration for Industry and Commerce (the “AIC”), will they still be acknowledged as legally existing under PRC law and permitted to continue their operation under a grandfather and/or transition rule?

A: The NGO Law will be effective on January 1, 2017. However, there will be a transition period for existing foreign NGOs that are registered with the MOCA or AIC to complete the process of transferring from the original registration authority to MPS by submitting certain supplemental documents, and for new foreign NGOs to apply for relevant certificates and go through relevant administrative process. MPS acknowledged the registration process may take some time after the effective date of the NGO Law.

The 29 foreign foundations that were previously registered with MOCA will be handed over to MPS and will be administered by MPS.

Q: Which MPS department at which level will be mainly in charge of the foreign NGO registration process?

A: The foreign NGO registration process will be administered by the Exit and Entry Administration Authority of provincial level service portals.

Q: Is it correct that after the NGO Law becomes effective, there will be only two paths for foreign NGOs to conduct activities in China?

A: Yes. There are only two ways for foreign NGOs to carry out activities in China under the NGO Law:

1. Establish a representative office for long-term activities with the approval of the Professional Supervisory Authority and registration with the MPS; or

2. Cooperate with a Chinese Partner for temporary activities, and have the Chinese Partner apply for an approval of the competent authority and file and record the temporary activities with the MPS.

Q: Are there any further guidance/requirements on temporary activities conducted by foreign NGOs and their Chinese Partners?

A: Foreign NGOs that have not established a representative office in mainland China to carry out temporary activities must cooperate with a Chinese Partner. There are only 4 types of Chinese Partners. They are government agencies, people’s organizations, public institutions, or social
organizations. Corporations and individuals cannot be Chinese Partners.

Q: What is the intent of the requirement for foreign NGOs to make filings on their proposed temporary activities?

A: The reporting requirement is not to set limitations on a NGO’s temporary activities, but mostly to record the overall status of activities for statistical purposes. When temporary activities (such as disaster relief) must be carried out in emergency situations, it is permissible to file after the activities. The filing process is not expected to become a barrier for serving a good cause.

Q: For foreign corporations doing corporate social responsibility activities in China, is it still possible for them to provide funding to Chinese entities in mainland China as a donation or grant?

A: A corporate foundation based outside China cannot give money directly to Chinese entities as a donation or granting, but instead may transfer funds to an affiliate corporation or contracting third-party corporation offshore and have that corporation fund its Chinese partner for charity activities.

Q: Can foreign NGOs do fundraising in China?

A: No. A foreign NGO cannot set up entities in China to do fundraising, whether public offering or private offering.

Q: Can foreign industry associations develop membership in China?

A: No. A foreign industry association cannot develop membership in China.

My Takeaways

1)  The Q&A tells us that the MPS has set up a special department, the Foreign NGO Management Bureau, to deal with the law. It does not tell us how many staff they are planning to hire, or whether there will be a similar office set up in the provincial Public Security departments.

2)  It appears that the MPS will not have implementing regulations out before the law goes into effect. Instead the MPS states it will provide a set of guidelines, and a list of qualified professional supervisory units for foreign NGOs thinking about registering a representative office. This announcement is not all that surprising. The Ministry of Civil Affairs (MCA) is only now coming out with implementing regulations for the Charity Law which went into effect September 1, 2016 and they have had a running start because they've been working on implementing guidelines for the last few years. Unlike MCA, the MPS has no experience managing NGOs and to my knowledge has not been working on implementing guidelines. Unlike the Charity Law which has been in the drafting phase for 10 years, the Overseas NGO Law came out quite suddenly and MPS may simply not have the expertise or staff to develop the necessary implementing regulations within a short period of time.

3) The response to the question about whether WFOEs set up by NGOs can continue under the current form is interesting because it appears the MPS is willing to be flexible and allow NGOs to continue operating in China as a representative office of a WFOE as long as "the WFOE cannot be used to solely carry out “NGO” activities on behalf of the foreign NGO to promote the mission of the foreign NGO." The wording here is strange and reflects in my opinion a misunderstanding of what NGOs or nonprofits are and do, but I won't get into that here. As I read this, the WFOE needs to be running some for-profit, commercial activities alongside its "NGO" activities to justify its WFOE form. What the MPS does not clarify here is whether the use of WFOEs will only be allowed for those NGOs that already had this type of arrangement prior to the law going into effect, or will it also allow NGOs to continue this practice after the law goes into effect? In any case, the WFOE arrangement may provide a possible alternative for NGOs that will be unable to find a willing professional supervisory unit and thus be unable to register a representative office. It's not clear, however, just how long the MPS will allow this WFOE arrangement. The MPS mentions a transition period for foreign NGOs that are already registered with MCA or with the Administration of Industry and Commerce (AIC) but doesn't specify how long that transition period will be.

4) For those NGOs thinking of carrying out "temporary activities," the Q&A confirms something that I had been wondering and that is the "filing a record" (bei'an) procedure is meant to inform the MPS about the "activities" and will not require an approval from the MPS. Of course, if the activity requires approvals from other government departments, then those approvals should be submitted as part of the record, but MPS itself does not have to approve the activity for it to proceed. And the MPS also confirms that a NGO's Chinese partner for the purpose of carrying out the "temporary activity" cannot be a corporation, although I still cannot figure out why they made that rule.

5) On the question of foreign corporations working on CSR projects with Chinese partners, this appears to be ok. The MPS person answering the question confuses a foreign corporation doing CSR with a corporate foundation which is a NGO. Many foreign corporations don't necessarily do CSR through their corporate foundation, but through their CSR department which would seem to be fine as long as the CSR department is part of the company which is for-profit and thus would not come under the law.

Wednesday, August 3, 2016

Draft Regulations for Social Associations (社会团体)Are Out

In June, the Ministry of Civil Affairs issued draft registration and management regulations for public comment for two of the three types of social organizations (社会组织): Foundations (基金会) and Social Service Organizations(社会服务机构). This month, the Ministry has released draft registration and management regulations for public comments for the third type: Social Associations (社会团体) which are the equivalent of membership associations such as trade associations, chambers of commerce, science and technical associations, professional associations, academic associations, arts and cultural associations and so forth.

Those draft regulations are available on the Ministry's website here, and comments are due by August 21.

These three sets of regulations form the heart of the regulatory system governing the registration and management of social organizations, China's equivalent of not-for-profit organizations. They specify which government bodies are responsible for their registration and management, the registration requirements and procedures, the internal governance of the organization, their legal responsibilities, and so on.

Each of these regulations was originally issued at different times over a span of 16 years. The regulations for Social Associations first came out in 1988 and was revised in 1998. The regulations for Social Service Organizations (a big improvement from the previous term, Civil, Non-Enterprise Institutions or 民办非企业, coined by someone who wanted to disguise the real nature of these organizations) came out in 1998, and the regulations for Foundations in 2004. Now you have drafts of the revised regulations for all three types coming out all in one year, in addition to the Charity Law and the Overseas NGO Law. The one thing we can say for sure at this point is that the legal landscape for nonprofits in China will be substantially reshaped by 2017.

I hope to say more about the content of these revised regulations in a later post.