Friday, July 22, 2016

Kissinger Institute Webcast: Is China's Door Closing?

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf
Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf
Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf
On June 28, I spoke in Washington D.C. on a panel at the Wilson Center's Kissinger Institute on China and the U.S. on the topic "Is China's Door Closing?" Below is an introduction to the panel and a link to the webcast of the panel which addresses whether China is closing its doors to foreign NGOs, businesses and media.

Is China's Door Closing?

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.

Until recently. The passage of China’s Foreign NGO Law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGOs under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond? 

Our panel discussed the future of American NGOs, corporations, and media in Xi’s China.
The event was webcast, and footage of the entire panel is available on our website at: 

https://www.wilsoncenter.org/event/chinas-door-closing

Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers
Deputy Director, China Labour Bulletin
Senior Vice President, US-China Business Council
Asia Editor, Foreign Policy
Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf

Saturday, July 16, 2016

Questions & Answers on the Overseas NGO Law

-->I'm back from a month-long trip that took me around the world starting from Hong Kong to Morocco (vacationing with my wife and daughter who was studying abroad there), then to Washington, D.C. (work), then to upstate New York (family reunion), then to New York City (more work), and finally back to Hong Kong where it was good to get back into my old routine. Traveling around the world was fun but tiring.

Over the last few months, I’ve received some questions in response to my postings and talks on the Overseas NGO Law and apologize for not responding to them earlier. I decided to post my answers to those questions here so that more people could benefit from this Q&A. As always, feel free to post questions and I’ll try to respond as quickly as I can.


Q1: Regarding the foreign NGO law, will the Ministry of Public Security become sympathetic towards NGOs or maintain a hard line? How does it perceive its new role? 
A1: I don't think we should assume a particular attitude from MPS towards NGOs. I think the law presents an opportunity for NGOs to help the MPS better understand what they do  in China. Of course, MPS has a security mindset just because of what it is, but they also know that law-abiding NGOs are now going to be their clients, so as long as foreign NGOs can show they are law abiding and maintain open communication channels with MPS, then there's room for them to work with the MPS and them to better understand the contribution NGOs are making to China’s development and thereby soften the MPS’s security mindset. We also have to keep in mind that provincial and local public security will also be involved, and as we all know local bureaucrats' attitudes towards foreigners and foreign organizations can vary quite significantly.


Q2: First of all, it is clear that the recent law applies only to offshore non-profit NGOs. This naturally leads to a definitional issue. I assume if a Chinese citizen establishes a non-profit in China, then this law would not apply, correct? Assuming that is correct, what regime would apply?


If a Chinese citizen establishes a non-profit NGO offshore, does the recently passed law apply to its activities in China? I assume the answer is yes.

Can foreigners establish a non-profit in China? If yes, would the recently passed law apply to them?

Does source of funding determine onshore/offshore status? In other words, if a Chinese citizen establishes a non-profit onshore with seed funding from overseas, is this an onshore or an offshore NGO. What about ongoing, operational funding?

A2: Yes the Overseas NGO Law applies only to offshore non-profit NGOs. If a Chinese citizen establishes a nonprofit in China then the recently passed Charity Law (see the FAQs in this blog for that law) will apply as will relevant regulations for registration and management of social organizations that are currently under revision.

The Overseas NGO Law will, however, apply to a Chinese nonprofit's work if it is collaborating with or receiving funding from an overseas nonprofit (e.g. a Chinese partner of that nonprofit). It doesn't matter if that funding is seed funding or continuous funding. Both would most likely count as a "temporary activity".

In Article 53 of the law, there does appear to be an exemption for education exchanges between schools, hospitals, research institutes and the like, but it’s unclear if an exchange or relationship between a U.S. university and a Chinese nonprofit would qualify for this exemption. We're going to need more guidance on this area from the Chinese authorities when they draft the implementing regulations, and need to know what relevant national provisions the authorities have in mind in Article 53.

The question on whether foreigners can establish Chinese nonprofits is an interesting one. The Overseas NGO Law only allows foreign NGOs to register a representative office or carry out “temporary activities”. Registering a Chinese nonprofit does not appear to fit into either of these two categories. In the second draft of the law, there were articles stating that foreign nonprofits could “co-found” a Chinese nonprofit, but those articles were taken out. But I wouldn’t exclude the possibility of foreigners using other means to register a Chinese nonprofit.

Some foreigners have managed to register domestic nonprofits in the past, presumably with the help of Chinese partners. The Overseas NGO Law would presumably not apply to these nonprofits which were founded before the Law was passed. The Charity Law would apply and so would several regulations for registering domestic nonprofits (social organizations) that are currently being revised.


Q3: Would this law prohibit Chinese companies from paying membership fees or dues to a global trade body or federation, that is headquartered outside China?

A3: Interesting question. I don’t think so. Article 28 of the Overseas NGO Law state that “representative offices of an overseas NGO and overseas NGOs conducting temporary activities must not openly recruit members within China, unless otherwise regulated for by the State Council.” The literal Chinese translation for “openly recruit members” is “developing its membership”. What that actually means is open to interpretation. It could mean that overseas NGOs are not allowed to recruit members through public channels, but maybe recruitment through private channels would be allowed. In any case, if the Chinese company is already a member of that trade body or federation, then there’s nothing in the Law prohibiting it from paying membership fees. According to Article 21 of the Law, overseas NGOs are not allowed to conduct fundraising activities in China, but there is nothing that prohibits overseas NGOs from accepting donations or fees.


Q4: Many foreign NGOs that focus on China are based in Hong Kong. How will their access to China change, if at all, due to the newly enacted legislation and troubling issues between Hong Kong and mainland China?

A4: First of all, all foreign NGOs based in Hong Kong, including Hong Kong NGOs, are covered under the Overseas NGO Law which applies to all NGOs registered outside of mainland China.


Second, It is true that the worsening relations between Hong Kong and Beijing have made it more difficult for Hong Kong-based NGOs, particularly after the Occupy Central protests in the fall of 2014. But Hong Kong still enjoys a number of advantages for foreign NGOs, compared with being based in other countries or in China. Foreign NGOs based in Hong Kong have the geographic proximity to the mainland, can draw from a large Chinese-speaking population staff when hiring staff, and have access to world-class universities, companies, media outlets and NGOs with China expertise and experience. In addition, foreign NGOs enjoy the benefits of Hong Kong's open society and a legal system that remains professional, independent and transparent even in the face of growing encroachment by mainland Chinese authorities. With the passage of the Law, I can see some foreign NGOs with offices in China finding it more attractive to relocate to Hong Kong. If they wanted to stay in China, they would have to register a representative office which would require finding an official sponsor. If the foreign NGO wasn't able to find a sponsor, then they might consider setting up an office in Hong Kong and run their "temporary activities" in China from Hong Kong given that the requirements for carrying out "temporary activities" are easier to meet than the requirements for registering a representative office. Hong Kong also has a regulatory structure that makes it easy for organizations to register a company. In fact, many foreign and local NGOs registered in Hong Kong are registered as limited liability companies. Some of these companies have charitable status, but others do not. Setting up a for-profit company that does business in China on a service-for-fee basis – a social enterprise model if you will – may be one way to work in China that would not come under the scope of this Law.


Q5: One of my activities in Brazil is to work on government relations. Most of the times I am lobbying for Chinese firms' interests in Brazil. In this context I ended up knowing a lot of people working with government relations around the world and a question came to me on whether it would be possible for a foreign firm (in the pharmaceutical sector) to support Chinese associations of doctors and patients with technical training. The long term goal of the company is to be known by such associations, as they are a global company and support this kind of activity in different countries. I already gave the pharmaceutical company the link to your blog and your FAQs on the new Charity Law and INGOs. However, questions remain: (i) is it possible for foreign companies to give training to grassroots NGOs, GONGOs and social organizations in China? ; (ii) associations of doctors and associations of patients would, in your view, fit into which category? Social organizations? ; (iii) if they are social organizations, a new law is under implementation, from what I read in your blog, right? So it would be hard to predict exactly if foreign companies can cooperate with them or not?

A5: On question (i), foreign companies are not covered under the Overseas NGO Law which applies to “nonprofit, non-governmental social organizations that have been legally established outside of mainland China.” So yes it should be possible for foreign companies to give trainings to social organizations in China.  Interestingly, the Overseas NGO Law does not seem to allow for cooperation between a foreign NGO and a Chinese company. Article 16 of the law states that foreign NGOs can cooperate with Chinese government agencies, mass organizations (e.g. GONGOs), public institutions (e.g. universities), and social organizations but does not include companies in this list. It’s not clear if this is an oversight, but it’s odd that companies are excluded as potential partners of foreign NGOs given the growing interest in CSR in China’s private sector.

Regarding question (ii), yes associations, such as professional associations of doctors, and associations of patients would fit into one of the three types of social organizations, in this case what the Chinese call “social associations” or 社会团体 (shehui tuanti) which are essentially membership associations. You would need to ascertain that these associations are actually registered with Civil Affairs as “social associations.”  Regarding question (iii), I expect there to be new registration and management regulations for social associations forthcoming,  since draft regulations for the other two types of social organizations were already issued in June for public comment. These new regulations should not effect whether foreign companies can cooperate with them because, unlike the more restrictive Overseas NGO Law, these regulations tend to create a more enabling environment for Chinese social organizations.

Wednesday, July 6, 2016

Speaking in New York City on July 11 on New Legal Landscape for NGOs in China

I'll be speaking next week in New York City on the latest legislation for NGOs in China. Below is the official notice from the National Committee for U.S.-China Relations. I hope to see some of you there. 

The New Legal Landscape for NGOs in China: Opportunities and Challenges? With Dr. Shawn Shieh on Monday, July 11 in New York City

In recent months, the Chinese authorities have issued a Charity Law approximately ten years in the making, an Overseas NGO Management Law, with a much shorter gestation, and most recently drafts of regulations for the registration of foundations and social service organizations.  Please join us for a discussion of the implications of these laws and regulations - how they open up opportunities at the same time that they pose challenges, for both foreign and domestic Chinese NGOs.  Dr. Shawn Shieh, deputy director of China Labour Bulletin (CLB) in Hong Kong, will lead the discussion.  From 2007 to 2014, Dr. Shieh lived in Beijing where directed English-language operations for China Development Brief (CDB), a bilingual, independent media and research platform covering China’s civil society and philanthropy sector.  

The meeting will be held at the National Committee office, 6 East 43rd Street (between Fifth and Madison), 24th Floor, from 4:00 p.m. to 5:30 p.m. on Monday, July 11.  Building security is quite strict, so we are required to submit a name list in advance.  Please RSVP by replying to events@ncuscr.org  by 12:00 p.m. on Sunday, July 10.

This event is part of an ongoing series of discussions we have convened since the second draft of the International NGO Law was issued in spring 2015.

Tuesday, June 14, 2016

Speaking in Washington, D.C. on June 28th on the question "Is China's Door Closing?"

I'll be speaking at this event in D.C. on June 28. My answer to the question in the title will of course be no. Hope to see some of you at the event!
 
Is China's Door Closing? (https://www.wilsoncenter.org/event/chinas-door-closing)

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?

Please join us for a discussion of the future of American NGO’s, corporations, and media in Xi’s China.

Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.caZB5PBe.dpuf

An Exchange with Professor Carl Minzer on the Overseas NGO Law

(Note: I'll be going on vacation starting tomorrow for about two weeks, and hope to start posting again after I've recharged my batteries.)

I think those of us who work in and on China can always use more information and perspectives when it comes to the regulatory environment in China.  Going on this assumption, I’m going to try to publish questions that were raised in response to the Overseas NGO Law FAQs that I posted on May 1, and my responses to those questions.

The first of these series of Q&As is a conversation between me and Carl Minzer, a professor of law at Fordham University and an expert on Chinese law and governance.


Carl:

One question:

I noticed in your blog post that you translated one of the required elements for the “file documents” (bei'an) procedure (specifically, this one:
中方合作位批准的文件) as (e) "approval documents for the activity from the Chinese partner." Are we sure that's correct?

That English phrasing suggests that what is involved is simply the Chinese partner organization submitting the materials that it itself has signed: i.e., foreign NGO reaches agreement with Chinese entity for a one-time health-related program, the Chinese entity could submit the signature page of the document that the boss of the Chinese entity has signed off on, and be compliant.

a) Such an interpretation would essentially duplicate (b) -  the agreement between the INGO and the Chinese partner.  [Which suggests e) must have some other kind of meaning]

b) That language does not seem to precisely correspond with the (“obtaining”) element of the Chinese - which to my mind suggests some element of "external" approval - the Chinese partner must demonstrate that it has "obtained approval" for the activity in question.  I know it might seem like a small distinction (and the language itself is unclear), but I think it's a key one.  If the bei'an procedure is interpreted to be a totally "passive" one - just send in your materials, and you're OK, then I think it won't necessarily "chill" the broader range of activities.  Conversely, I think if it is interpreted to required a demonstration of "outside" approval of the activity (from who - I'm not sure - the PSB, Civil Affairs, someone yet higher up in the chain of command of the entity in question?), I think that's precisely the element that is likely to result in a "chilling" of a broader range of activities - precisely b/c many Chinese higher-ups will drag their feet, be unwilling to sign off on things.

Consequently, if people were going to focus on how this new law gets implemented, I'd point the finger squarely at that language as element numero uno to pay attention to.  People are going to freak out about all of the environmental orgs, or the rule of law groups, because those grab the headlines.  Or they're going to hold out hope that authority will be taken away from the MPS to manage this. But I kind of look at many of those as lost causes already - I think the determination of a much more hardline approach has already been made. And some people can at least point out to Chinese authorities that there are different ways to limit the collateral damage.


Shawn:

Hi Carl, I can always count on you for a close reading of the law.

I think that my translation is correct. Both of the unofficial translations from ChinaLawTranslate and China Development Brief translate it along those lines. I don’t read it to mean that these “approval documents” are the same as the agreement between the INGO and Chinese partner. They are something else, but what they are is really unclear. As you say, the devil is in the details.

Article 17 says that “the Chinese partner needs to go through approval procedures according to national regulations”
中方合作应当按照国家批手. But what kind of national regulations are they referring to?

Let’s take a workshop or training as an example of an activity. What kind of national regulations govern the holding of a workshop or training? I have no idea. There are national regs on assembly but only in outdoor areas, not indoor ones. It seems that your Chinese partner would need to get approval from the place where the workshop or training takes place, but I don’t see how this could involve approval from a higher authority if the workshop or training was taking place at a university, a hotel or even a restaurant. Are there any national regs governing activities in a hotel or restaurant? Wouldn’t it just require approval from the university department or school, or the hotel, or the restaurant? Of course, the fact that they have to get approval in the first place may spook the host institution, but it seems that this procedure may not be as hard as you suggest.

Of course, intention is important too, and if the intention behind the law is simply to get rid of the troublemakers, then we’re doomed. But my gut instinct tells me otherwise. Even if that is the intention of the top leaders, those intentions get easily diluted as the law makes its way down the hierarchy. Maybe I’ve been in China too long but I’m hoping - no betting - that the China I’ve known all these years isn’t going to change overnight.


Carl:

You know - this really raises an interesting tactical question going forward, one which I have no idea what the correct answer is.  I'd be curious to get your opinion on this, because this is literally something folks are talking about right now.

So the two of us have identified at least one area where the lack of clarity in the law could have significant implications.  If Article 17 is interpreted to require some kind of affirmative external approval of each "temporary activity", that's clearly going to be a practical barrier to a much greater range of programs. Conversely, if it's a passive requirement - just send in your documents to the PSB and let us know what you're doing - that's going to be less of a barrier.  As
you mention, the devil will be in the details.

So here's the tactical question: given that, what's the correct response from foreign organizations?  I can see two different possibilities.

The first is to go in and raise the issue loud and clear with (say, the State Council or PSB) - hey, what does this mean? Can you please clarify this in your implementing regulations?  I'm pretty sure that this is exactly the approach that a bunch of American lawyers in various general counsel offices are are likely to adopt.

Now, there's a risk to that: you might end up getting a more hardline interpretation.  And such an interpretation (once codified into law or regulation) would effectively tie the hands of lower authorities/limit the flexibility of some Gansu or Guangxi provincial or municipal bureau who might be inclined to wave their hands and say - oh, sure, go right ahead, it looks like we've got everything we need.

The second is the reverse - note the possibility of interpreting that language in different ways, and hold ones tongue. Perhaps raise the general idea of how important US-China exchanges are, how many US organizations will feel very uncomfortable about engaging in projects in China given the general nature of and lack of clarity of the law, and how bad it would be if the entire spectrum of them were disrupted. But avoid a narrow, technical focus on specific provisions that could potentially get interpreted in a negative way.

Which do you think would be most advisable?


Shawn:

Carl, your tactical question is an interesting one. My sense is this is going to be a complex give-and-take process between the PSB and INGOs, and that PSBs in some provinces will have a different approach than others in implementing and enforcing the bei’an process, so even though some sort of standard procedure will emerge, there will be local variations in how it’s carried out. Both sides though will be seeking to come up with a workable process which I have to believe will require negotiation, and not just the PSB or SC just laying down the law. I think this is one of those “crossing the river by feeling for stones” moments where the PSB is trying to do something they haven’t done before. In that spirit, I would advise INGOs to approach the process as a negotiation and not try to establish clear terms or demands at the outset. Instead, work on establishing some good will with the PSB and start a discussion on how the two sides can make this process work.

I had a chance to look at the 2010 Yunnan regulations for INGOs and it’s interesting because there, the bei’an process was used but it was worded as an application process in which the application for bei’an had to be approved. In the Overseas NGO Law there is no mention of an application process or approval, and yet I have to think the drafters knew about the Yunnan regs. To me this suggests one of two things. One is that they made a conscious decision not to copy this aspect of the Yunnan model and require an application and approval to streamline the process. The other is that they didn’t want to put this “small detail" into the law but intend to include it into the implementing regulations.



Saturday, June 11, 2016

2016: the Year of Regulation and a New Future for Civil Society?

Outside China, we look to the past as a guide to China’s future. Here in Hong Kong we continued the wonderful tradition of commemorating the 27th anniversary of the June 4 massacre in Tiananmen Square with the usual candlelight vigil in Victoria Park. In Taiwan, where the Democratic Progressive Party now controls the presidency and legislature, the Legislative Yuan commemorated June 4 for the first time. Memory is used in the service of keeping alive the dream of a democratic China. 

Inside China, the Communist Party has chosen to brush out the past, or perhaps  more accurately to use the past as a guide to what should be avoided in the future. It is more interested in shaping the future, in particular the future of China’s civil society, in a way that will strengthen CPC rule and prevent the reoccurence of the 1989 movement. Memory is used in the service of keeping alive Xi Jinping’s “China dream” - a dream rooted in the future rather than the past.

The year 2016 could be said to be the year that future starts. It is the Year of Regulation when two national laws regulating the nonprofit, NGO, social organization sector were passed within the space of two months – the Charity Law in April and the Overseas NGO Law in May. These are the most consequential nonprofit laws passed in the history of the PRC.  Before this, you have to go back to the more esoteric Public Welfare Donations Law (PWDL, 公益事业捐赠法) passed in 1998 for a national law regulating the nonprofit, social organization sector. In contrast to the more narrow PWDL, the Charity Law and Overseas NGO Law are more detailed and comprehensive in scope. The former defines the scope of domestic nonprofit, charitable work in China, and regulates the establishment and operation of domestic charitable organizations and the sources and uses of charitable property and services. The Overseas NGO Law regulates the operations and activities of overseas nonprofit, non-governmental organizations and their represenative offices in China.

If these two laws had been the only legislation passed this year, one could still legitimately claim 2016 as the Year of Regulation. But we now have news that there is more on the way. In late May, the Ministry of Civil Affairs issued draft revisions of regulations for registration and management of two of the three types of “social organizations” (the Chinese term for nonprofit organizations): Civil Non-Enterprise Institutions (CNIs, 民办非企业单位) and Foundations (基金会). (Note: These draft revisions are being issued for public comment, so if you are interested in commenting, you can go to the Civil Affairs website here and here to download a copy of the revised regulations.) In the revised regulations, CNIs are now going to be called Social Service Organizations (社会服务机构), which is a more accurate description of this type of nonprofit and in line with the Charity Law which uses the new term instead of CNI. A draft of revised registration and management regulations for the third type – Social Associations (e.g. membership associations, 社会团体) – will most likely follow soon. 

We have been expecting revisions of these three sets of regulations since 2014 and thought they would be out earlier. What we did not expect was for the sequence to be reversed and have the Charity Law and Overseas NGO Law approved first, followed by revisions of these three regulations. If the revisions of the three regulations are all approved this year, then we will have seen passage of almost all the significant nonprofit laws and regulations in the time span of just one year.  This is unprecedented in the history of the PRC. A review of the history of regulation in the nonprofit, social organization sector shows three major peaks of regulation (See the table below). The first peak (in orange) comes in the 1988-89 period with the appearance of three regulations, two of which were issued after the demonstrations in June 1989. The second peak (in yellow) comes in the 1998-2004 period with the appearance of one new regulation, one new national and two revised regulations. The year 2016 (in blue) eclipses both of these peaks, with two comprehensive national laws, and potentially revised regulations on the registration and management of all three types of social organizations.


Year Major Laws and Regulations Governing Social Organizations in China
1988
Regulations on Management of Foundations

1989
Provisional Measures on Management of Foreign Chambers of Commerce

1989
Regulations on Registration and Management of Social Associations

1998
Regulations on the Registration and Management of Social Assocaitions (revision of the 1989 regulations)

1998
Provisional Regulations on the Registration and Management of Civil, Non-Enterprise Institutions

1999
Public Welfare Donations Law

2004
Regulations on the Management of Foundations (revision of the 1998 regulations)

2016
Charity Law

2016
Overseas NGO Law

2016?
Regulations on the Registration and Management of Social Service Organizations (revision of the 1998 Provisional Regulations on the Registration and Management of Civil, Non-Enterprise Institutions)

2016 ?
Regulations on the Management of Foundations (revision of the 2004 regulations)

2016?
Regulations on the Registration and Management of Social Associations (revision of the 1998 regulations)

Sunday, June 5, 2016

Draft Regulations for Social Service Organzations and Foundations Posted for Public Comment (deadline: June 26, 2016)

This has been an incredibly busy year when it comes to nonprofit, NGO regulation in China.

Following the passage of the Charity Law in April and the Overseas NGO Law in May, the Ministry of Civil Affairs is now issuing draft revisions of the regulations for management of Social Service Organizations (formerly called Civil Non-Enterprise Institutions), and for management of Foundations.

The draft regulations for Social Service Organizations (shehui fuwu jigou, 社会服务机构)can be found here, and for Foundations (jijinhui, 基金会)can be found here. The deadline for your comments is June 26, 2016.

1) Comments can be submitted via the website http://www.mca.gov.cn.

2) Comments can be sent as emails to zcfgs@mca.gov.cn.

3) Comments can also be posted to the following address:

Department of Policies and Laws of the Ministry of Civil Affairs, No.147 North Heyan Street, Docheng District, Beijing, Zip: 100721. (On the envelope please indicate ‘Comments on the Draft Regulation on the Registration and Management of Civil Non-Enterprise Units’) (北京市东城区北河沿大街147号民政部政策法规司,邮政编码:100721, 并请在信封上注明“民非条例征求意见”字样)