Friday, December 30, 2016

The Evolution and Implication of China's Overseas NGO Law


Prologue

In March of 2013, Xi Jinping was named the President of the People’s Republic of China at the 12th National People’s Congress (NPC).  At the time, I was working for China Development Brief, an independent Chinese NGO started by the British journalist Nick Young in 1996.

I remember that month well because we were busy preparing for the launch of our directory of independent Chinese NGOs and a report on public advocacy in China. That event was a celebration of the substantial growth in independent civil society organizations over the last decade. It was also a coming out party for CDB which had assumed a low profile after Nick was denied entry back into China in 2007 for reasons that have never been made clear. Nick’s English-language website stopped posting content a short time afterwards. The Chinese CDB team continued to publish a Chinese-language quarterly covering civil society developments in China, but did not issue any new directories or special reports or organize major public events. The last NGO directory CDB had published was a directory of international NGOs in 2005, and before that a directory of Chinese NGOs in 2001.

To promote the new NGO directory and advocacy report, we held a day-long Civil Society Forum in the U.S. Embassy’s American Center. We invited over a hundred representatives from independent Chinese NGOs, foreign NGOs, diplomats, scholars and media, and asked several Chinese NGOs to speak about the significance of the directory and their advocacy experiences in China. 

We were anxious before and during the event because it was taking place 10 days after the close of the NPC session. Generally it’s not a good idea to organize large civil society gatherings in China, let alone in the capital one week after Xi’s coronation. Given the heightened security presence, we encountered difficulties and delays in the printing of the directory. One printing company pulled out when the police showed up unannounced at their office, so we approached a company located further outside Beijing that agreed to publish it. I remember the copies not showing up in our courtyard office until only a few days before our event.

Despite our fears, the Forum was a success. It was standing room only, we did not run out of food, the simultaneous interpreters performed admirably, and the police did not show up. Or if they did, they did not announce their presence.

That spring now seems like a distant memory, much like the week-long blue sky days that appeared over Beijing during the Olympics. Little did we know that two years later, the environment for civil society would change dramatically, that a number of the Chinese NGOs that attended the Forum would be subjected to harassment and detention and some would leave the country for safer havens, and that a draconian law placing foreign NGOs under police supervision would be passed.

Introduction

Since China opened its doors to the outside world in the late 1970s, thousands of overseas not-for-profit NGOs have carried out programs and activities in China, contributing to China’s development and engagement with the rest of the world. These NGOs run the gamut from trade and commercial groups like the U.S.-China Business Council and European Chamber of Commerce to universities like NYU and Stanford to foundations like Mercator and Ford to performing arts groups like the Philadelphia Symphony to think-tanks like Brookings and Carnegie to sporting associations like the International Olympic Committee and the NBA.

No one really knows how many of these organizations are operating in China, but the numbers are substantial. In 2005, China Development Brief (which also started as an overseas NGO) published the first directory of international NGOs in China listing around 200 selected NGOs. Since then, estimates ranging from 1,000 to 7,000 have been provided by Chinese and foreign scholars that include both overseas NGOs that have an office in China and those carrying out programs and activities in China from their overseas offices[i].   

For many years, the vast majority of these NGOs operated quietly in China in a grey area. Many are unregistered and work in China through local partners, while others are registered as a representative office of a company. That will all change with the passage in April of the Law on Administration of Activities of Overseas NGOs in the Mainland of China (hereafter Overseas NGO Law) which goes into effect on January 1, 2017. The Law is the first comprehensive regulation of its kind covering all overseas NGO activity in China.


The Long Road to Regulating Overseas NGOs

Prior to the Law, the Chinese government had taken halting, incremental steps to regulate foreign NGOs. The first came in April 1989 in the form of the Provisional Regulations for Foreign Chambers of Commerce that allowed chambers of commerce to register with the Ministry of Foreign Economic Relations and Trade (MOFERT). Foreign NGOs that were not chambers of commerce had to wait another 15 years when the 2004 Foundation Management Regulation made its appearance. This regulation was issued by the Ministry of Civil Affairs (MCA), the government agency responsible for regulating “social organizations” (China’s official term for NGOs), and was primarily intended to promote the development of Chinese foundations. Yet it included for the first time language on the registration of representative offices for “overseas foundations”[ii].  Overseas foundations and NGOs were allowed to register a representative office in China under a stringent “dual management system” in which an NGO first needed to get approval from a Professional Supervisory Union (PSU) in a similar field (essentially a government sponsor) before it could register with MCA.

The Foundation Regulation had a very limited impact on overseas NGOs: only a handful succeeded in registering primarily because most were unable to find a PSU. These fortunate few included operational NGOs like the World Wildlife Fund, China Medical Board and World Economic Forum and grant-making foundations like the Bill and Melinda Gates and Li Ka Shing Foundation. By 2015, the number of overseas NGOs that had registered a representative office numbered a mere 29 out of the hundreds of overseas NGOs with offices in China.

In early 2010, as part of a series of local policy experiments intended to improve the regulations of NGOs, the MCA launched a pilot program to register overseas NGOs in Yunnan.  The “Yunnan Province Provisional Regulations Standardizing the Activities of Overseas NGOs,” required overseas NGOs to “file documentation” (bei’an) about all their partners, funding and activities in Yunnan with the provincial Civil Affairs and Foreign Affairs departments. By December 2010, around 140 overseas NGOs had registered under this regulation and by 2013, MCA leaders were touting the Yunnan regulations as a model for national policy. This was also the year when Xi Jinping was anointed President of the PRC and the approach to regulating NGOs suddenly changed.

Xi Jinping’s New Governance Approach

Xi Jinping’s rise to power coincided with a new governance approach that focused on strengthening national security and “governing the country according to law” (yifa zhiguo) as ways to rejuvenate Communist Party rule. Already in the spring and summer of 2013, a major crackdown on activists, lawyers, bloggers and journalists was taking place to head off potential threats to social stability. By the end of 2013, a National Security Commission (NSC) headed by Xi Jinping was established. In early 2014, reports of overseas and Chinese NGOs working in Tibetan areas being closed down began to surface. In April of 2014, the NSC held its first meeting and a month afterwards ordered a national survey of overseas NGOs operating in China. 

During the 2014-16 period, a major anti-corruption drive launched by President Xi gathered momentum along with the repression against NGOs and human rights and labor activists and lawyers. Several foreigners who had been working for Chinese and overseas NGOs were evicted in 2015 for working on improper visas, and in January 2016 a Swedish citizen – Peter Dahlin – appeared on state-run television where he made a forced confession to working for an organization that supported Chinese human rights lawyers. These troubling developments were accompanied by the passage of several new security-oriented laws one after another in 2015 and 2016: the Counterterrorism Law, National Security Law, the Overseas NGO Law and most recently the Cybersecurity Law.

The Overseas NGO Law Surfaces

The first sign of the Overseas NGO Law came in December 2014 with the announcement that the NPC Standing Committee was deliberating the first draft of the law. That announcement caught many observers by surprise. Before this, MCA had been taking the lead on drafting regulations for overseas NGOs, using the Yunnan regulations as the basis for national regulations. In the case of the Overseas NGO Law, a draft of a national law was being proposed, not just a draft of a ministerial regulation like the one in Yunnan. More importantly, the announcement of the draft law was being made by the Vice-Minister of Public Security who stated that the registration and management authority for overseas NGOs would now be vested in the Ministry of Public Security (MPS), not the MCA. He noted that the regulation of overseas NGOs had been raised as an urgent issue at the Third Plenum in October 2013 and the Fourth Plenum in October 2014, and that the MPS had been working with the MCA and other departments as early as April 2014 on researching and drafting the law. The mention of April is significant because it coincides with the first meeting of the National Security Commission and suggests that the decision to make MPS responsible for regulating overseas NGOs was made at that meeting.

The Drafting and Substance of the Law

The first draft of the Overseas NGO Law was not made public, but an English translation quickly circulated. That draft was quite draconian. It gave overseas NGOs only two ways to operate legally in China. One was for the NGO to register a representative office, which required getting approval from a professional supervisory unit (PSU) working in the same field as the NGO, and then applying for registration with provincial Public Security departments. For NGOs that did not want to establish a representative office but only wanted to carry out projects and activities in China, the second option was to register for a “temporary activities” permit lasting one year.  Applying for a permit would also require jumping through a series of hoops, namely getting approval from a PSU, collaborating with a Chinese partner, and then applying for a permit from the relevant Public Security department. The draft law stated that overseas NGOs that did not follow one of these two channels would be operating illegally. 

There are a number of signs that point to a clear national security focus behind the drafting of this law. One was the transfer of registration and management authority from MCA to the MPS. Another was the MPS Vice Minster’s mention of April 2014, the same date as the first meeting of the National Security Commission, as the time when research and drafting on this law began. A third can be found in the language of the draft which has a stronger security emphasis than the Yunnan regulations.

At the same time, parts of the law are influenced by the Yunnan regulations developed by MCA[iii]. It uses the same term “overseas NGO” to refer to “…non-governmental, non-profit or public interest organizations that have been legally established overseas.” It preserves the “dual management” system which requires overseas NGOs to get approval from a PSU, although the PSU plays a somewhat different role in the Yunnan model. It also incorporates a similar “document filing” (bei’an) system for overseas NGOs to report on their activities, partners and funding.

We can also learn something about the law by examining its evolution from the first draft to the final version that was passed by the National People’s Congress in April of 2016. As is the norm, the law went through three drafts before its passage. The second draft, issued in early May of 2015, was the only one publicized to solicit comments from the public.

The revisions made in the later drafts reflect MPS recognition that certain provisions were going to be administratively burdensome, and changed them to streamline the process. The most significant example was the simplification of procedures for NGOs carrying out “temporary activities.” In the first and second drafts, NGOs would first need to get approval from a PSU, and find a Chinese partner to collaborate with. After that, it still needed to apply for a “temporary activities” permit from the relevant Public Security department and wait for their approval. After receiving public comments about the draft, the MPS dropped the requirements for PSU approval and Public Security approval for a permit in the final version of the law, and only required that NGOs work with their Chinese partner to “file documents” about their “temporary activity”. In other words, in the final version of the law, NGOs carrying out “temporary activities” only had to inform the relevant Public Security department about the activities but not wait for approval. 

In other instances, the MPS realized that certain procedures and requirements either overlapped with, or conflicted with, procedures and requirements in other laws and regulations. The first draft, for example, prohibited NGOs from having branch organizations but when it was discovered that some science and technology NGOs already had branch offices, the final version of the law allowed for branch offices “specified by the State Council.” Similarly, the first draft only allowed NGOs to register one representative office in China, but later drafts removed that limit although no language was inserted explicitly stating that NGOs could register more than one representative office.

The MPS also removed articles in the first and second drafts that allowed overseas NGOs to set up domestic NGOs, realizing that this could be used as a loophole giving overseas NGOs a channel for working covertly through these domestic NGOs. Given that domestic NGOs are regulated by MCA through a different set of laws and regulations, these articles would also have raised questions about which ministry would be responsible for supervising these domestic NGOs.

The amount of time it took to get from the first draft to the passage of the law is also telling. It took a total of nearly 16 months, 11 of which were spent digesting the many public comments made to the second draft and preparing a revised draft that was passed by the NPC Standing Committee in late April 2016. In comparison, the Counterrorism Law took 13 months, the National Security Law eight months, the Charity Law six months, and the Cybersecurity Law 15 months. The lengthy drafting process of the Overseas NGO Law was likely a product of several factors: the unfamiliarity of the MPS in regulating such a diverse set of organizations and the challenges it faced in processing the public comments; the need to coordinate with MCA and other relevant agencies on the revisions; concerns about the draft law raised by foreign NGOs, businesses and governments; and perhaps even infighting among agencies and groups with different views on the law.

The Law’s Intent and What NGOs Can Do

Two observations emerge from this examination of the Overseas NGO Law’s emergence and evolution. One is that Xi Jinping’s rise to power and his concerns about China’s security environment was the major driver behind the law’s establishment and timing. The second observation, drawing from the revisions made to the different drafts of the law and the length of time spent in the drafting, is that the law is being taken seriously by Chinese leaders as a governance tool to strengthen “law-based administration” (yifa xingzheng), recognize the role played by overseas NGOs in China’s development, and strengthen their regulation. In this sense, the law can be seen as part of Xi Jinping’s broader “governing the country according to law” (yifa zhiguo) campaign to improve Party discipline and governance over both the Chinese state and society. By strengthening regulation of a group of social actors associated with foreign values and agendas, the law is intended to provide legal channels for those actors to carry out their activities while also better protecting China from external threats. But another intent of the law, I would argue, is to require more transparency and accountability on the part of the implementing authorities, and the MPS in particular. By providing a detailed framework, procedures and responsibilities for regulating overseas NGOs, the law seeks to limit the discretionary power of the MPS even while it expands its administrative authority and resources.

I realize that this last point is not widely shared by many critics of the law who see the law giving the MPS unlimited power over overseas NGOs. While I am not a fan of this law, the critics’ view ignores the fact that Public Security organs and local governments already have the authority to close down many of the overseas NGO projects and offices in China that are unregistered or improperly registered. In 2000, the MCA issued the “Interim Regulations for Banning Illegal NGOs” that provided guidance to local authorities who were unclear about how to deal with unregistered or improperly registered Chinese and overseas NGOs working in their jurisdiction. As Deng Guosheng points out, local authorities were given wide discretion over how to implement this regulation which was much more ambiguous than the Overseas NGO Law[iv]. Over time, an unwritten understanding emerged among authorities to adopt a hands-off approach towards these “illegal” NGOs unless they posed a real threat to social stability or national security.

If the Chinese leadership really wanted to make life difficult for overseas NGOs, all they would need to do is issue a national directive or law to ensure that this regulation was enforced. But that would be like using a cudgel whose appearance would scare away many overseas NGOs. Instead the leadership chose to use a more surgical instrument by creating a law that required overseas NGOs to be transparent about their partners and funding, but also placed limits on the discretionary authority of Public Security and other government agencies. The intended effect, in my view, was not to drive NGOs from China but to corral them into officially-sanctioned areas and away from more sensitive areas working with grassroots NGOs working on rights protection, advocacy, religion, etc. To a large extent, this was also the effect of the Yunnan regulations[v].

Getting the intent of the law right is important because the MPS will be judged on its performance in implementing the law so that it does achieve its intended effect. If the intent of the law is truly to make life difficult for overseas NGOs and encourage them to leave the country, then the MPS has an easy job to do, and there is little that NGOs can do to shape implementation. But if the intent of the law is to ensure that overseas NGOs are able to work legally in officially-sanctioned areas, then the MPS has its work cut out for it and overseas NGOs have some leverage to shape the law’s implementation by monitoring and holding the MPS and other government agencies accountable for implementing and enforcing the law in an effective and impartial manner.


[i] Shawn Shieh and Signe Knutson, Special Report: the Roles and Challenges of International NGOs in China’s Development, China Development Brief (2012), http://chinadevelopmentbrief.cn/publications/special-report-the-roles-and-challenges-of-international-ngos-in-chinas-development/.
[ii] http://chinadevelopmentbrief.cn/wp-content/uploads/2014/08/REGULATIONS-FOR-THE-MANAGEMENT-OF-FOUNDATIONS-.pdf
[iii] Jennifer Hsu and Jessica Teets, “Is China’s New Overseas NGO Management Law Sounding the Death Knell for Civil Society? Maybe Not.” The Asia-Pacific Journal, vol. 14 (February 2016).
[iv] “The ‘Hidden Rules’ Governing China’s Unregistered NGOs: Management and Consequences,” The China Review, vol. 10 (Spring 2010).
[v] Hsu and Teets, “Is China’s New Overseas NGO Management Law Sounding the Death Knell for Civil Society? Maybe Not.”

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