Update for January-June 2014: Legislative Progress and Continuation of a Clampdown

Looking back at this update that I wrote for the International Center for Not-for-Profit Law back in 2014, I see that I was on target about the Charity Law although understandably pessimistic that a draft would appear in the next year or so.  I was also right in reading the signals about upcoming regulation for international NGOs but failed to anticipate the Xi Jinping administration’s embrace of national security priorities in 2014, and what that embrace would mean for international NGOs in the form of the Overseas NGO Management Law that came out in draft form in early 2015.

January-March 2014

In March of 2014, the annual “two meetings” (lianghui) – the second session of the 12^th National People’s Congress (NPC) and the Consultative People’s Political Conference (CPPCC) – were held in Beijing. The NPC session’s focus was on introducing a legislative agenda to carry out the broad policy pronouncements issued by the Third Plenum of the 18^th Central Committee which met earlier last November.  According to various sources, that agenda includes working on the revision of the registration and management regulations for social organizations, the Charity Law which has been in limbo for almost 10 years, and various other policies on tax exemptions to encourage charitable donations, government procurement of services, strengthening trust in charitable organizations through third-party evaluations, improving transparency of foundations and nonprofits, and promoting religious charitable activity.

1) Formulating a Charity Promotion Law  (cishan shiye cujin fa, 慈善事业促进法) to regulate charitable organizations and undertakings. The Charity Promotion Law has been referred to in other discussions in this Note as the Charity Law. Li Liguo, Minister of Civil Affairs, recently revealed that the Charity Promotion Law was placed on the NPC Standing Council’s agenda for this year, although observers believe it will be several years before the Law will be passed[1].

2) Improving previous proposals to encourage religious groups to establish charitable undertakings such as hospitals.

3) Relaxing and clarifying policies regarding the development of civic charitable undertakings [民间慈善事业], as well as giving tax breaks to promote those undertakings. In January of 2013, the Ministry of Finance and State Administration of Taxation issued more clarification on tax exemptions in the form of a Notice on Management Issues Related to Determining Qualification for Tax-exempt Nonprofit Organizations.

4) Strengthening lack of trust in charitable organizations through third-party evaluations and rating systems.

April-June 2014

The spring months have been a tumultuous period for civil society in China. With the launching of an unprecedented high-level anti-corruption campaign by the new administration under President Xi Jinping, the 25^th anniversary of the June 4, 1989 protests looming, large-scale strikes at the IBM and Yue Yuen shoe factories in Guangdong in March and April, and a number of bombings and attacks in the spring that the Chinese government attributes to Uyghur separatists, the security situation for civil society groups and activists became increasingly tense. During the April-July period, a number of lawyers and other civil society activists were detained or arrested and charged with “gathering to create a public disturbance” and other crimes. The well-known anti-discrimination NGO, Yirenping, had its Zhengzhou office raided in June and again in July. In addition, a number of Christian churches in the eastern province of Zhejiang were demolished. The scope of these detentions and arrests was substantial – some say unprecedented – and included groups and activists who had not experienced repression in the past. 

At the same time, we continue to see some progress on the legislative front such as the newly-revised Environmental Protection Law which allows a broader range of NGOs to file environmental public lawsuits, mention of the Charity Law being placed on the national legislative agenda, and signals about formulating regulations for international NGOs.

On April 24, 2014 the 8th meeting of the Standing Committee of the 12th National People’s Congress approved the revised Environmental Protection Law which will come into force in 2015. This Law went through several drafts. Earlier drafts elicited criticism from civil society organizations because they placed narrow restrictions on NGOs that were qualified to file environmental public interest lawsuits. Thus, in the first two drafts of the law, only NGOs with close government ties such as the All-China Environment Federation (a GONGO established by the Ministry of Environmental Protection) were allowed to file lawsuits. Following debates and suggestions, a third draft was presented in August 2013 according to which new actors could file a lawsuit if they respected the following conditions: being registered with a Civil Affairs Bureau above the city level, being active for at least five years, and have “a good reputation.”  In the final draft, presented in March of 2014, “good reputation” was replaced by “no record of illegal activity,” thereby widening the scope of actors entitled to file public interest environment lawsuits[2].  

Reports also came out about the drafting of the Charity Law which has been placed on the National People’s Congress (NPC) legislative timetable. The NPC Domestic Affairs Legal Committee (全国人民代表大会内务司法委员会）has taken the lead in the drafting of the Charity Law and is expected to submit it for consideration in 2015 if the legislative process proceeds smoothly. Legal scholars such as Jin Jinping, director of Peking University’s Civil Society Research Center, spoke in favor of legislation protecting one’s right to engage in charitable acts. She hoped that legislation should give communities more freedom, and stressed that when considering legislation that has to do with liability, supervision, management, and taxes, it was important to consider whether the Charity Law would promote or “imprison” one’s right to do good[3].

There has also been more high-level signaling that new regulations may be in the works that will make it easier for international NGOs to gain legal status. In May of 2014, the newly-formed National Security Commission headed by President Xi Jinping ordered a review and investigation into the operations of international NGOs working in China, particularly those with projects in rural areas. The text noted that the investigation’s purpose was to “lay the foundation for further strengthening standardized management.” This suggests that the investigation should be seen not so much as a crackdown on international NGOs working in China, but as part of a broader initiative to strengthen regulation over international NGOs which, in the past, have operated largely without much government regulation or oversight. Given the 2013 news of impending new regulations for international NGOs, it may very well be that this investigation will help to shape the content of those new regulations.

These positive legislative initiatives accompanied a wave of optimism following the Third Plenum Decision of November of 2013 and the NPC meeting in March of 2014, both of which signaled greater government support for civil society through the moniker of “social governance.” But true to the Communist Party leadership’s penchant for contradictions, these measures were followed quickly by a more repressive period in which many civil society activists, lawyers and NGOs came under greater scrutiny in the run-up to the 25^th anniversary of the June 4, 1989 protests and a substantial number were detained, investigated, harassed or arrested.

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[1] “Minister of Civil Affairs, Li Liguo: The countdown for our country’s charity legislation has begun”, 民政部部长李立国：我国慈善立法进入倒计时, China Broadcasting, 6 March 2013, available online: http://www.chinadevelopmentbrief.org.cn/newsview.php?id=8734

[2] http://chinadevelopmentbrief.cn/news/caixin-the-npc-law-committee-presents-the-features-of-the-new-environmental-protection-law-concerning-public-interest-lawsuit/

[3] http://chinadevelopmentbrief.cn/news/after-10-years-of-twists-and-turns-chinese-charity-legislation-to-be-considered-next-year/

Some Good News Regarding the Overseas NGO Management Law Draft and the Long-Awaited Charity Law

In a difficult year for civil society, we have two pieces of good news for a change. One is that the Overseas NGO Management Law (sometimes translated as Foreign NGO Management Law) draft has yet to be reviewed a third time by the National People’s Congress Standing Committee. Generally after a draft law is reviewed a third time, it is voted on unless significant problems or controversies emerge.

A comparison with the National Security Law is instructive. Both the second draft of that law, and the second draft of the Overseas NGO Management Law, came out about the same time in May for public comment. The National Security Law draft was reviewed a third time at the next Standing Committee meeting on July 1, voted on and passed overwhelmingly with only one abstention. The Overseas NGO Management Law draft, in contrast, has not been mentioned at any of the subsequent Standing Committee meetings. Since the Standing Committee meets every other month, there is still a chance that it could be reviewed in December. Still the delay suggests that the many comments on the draft law coming from both the foreign NGO and business community, and the concerns voiced by various government leaders at the highest levels in both the U.S. and Europe have been heard. In his private meeting with Xi Jinping in Washington, President Obama was said to have voiced his concerns about the law. President Xi said he supported a law to regulate overseas nonprofits, but did not say that he supported the law in its current form. In addition, my sources tell me that there is considerable dissension among various Chinese government agencies over this draft law. In short, there seems to be enough problems and controversies to delay this draft law. It may not be reviewed until next year, if then, and when it is, it may contain some significant revisions. Stay tuned.

The second piece of good news is the long-awaited arrival of the first draft of the Charity Law for public comment[1]. This law has been in the legislative pipeline since 2005 and it has become almost a yearly ritual to predict the law’s appearance and then to be disappointed. It looks that streak of bad luck is about to come to an end. On first glance, the Charity Law draft looks quite good. I’ll write in more detail about it in another post. But let me note three major highlights of this draft law.

One is that it upholds a quite expansive view of charity or philanthropy, what the Chinese call “big philanthropy” (da cishan) in going beyond traditional notions of philanthropy such as poverty alleviation and disaster relief to including the promotion of education, culture, sports, health, environmental protection and “other activities consistent with the societal public interest”.

Second, it appears to allow for the direct registration of charitable organizations, thereby doing away with the old “dual management system” in which NGOs had to find a professional supervising agency before they could register with Civil Affairs. The language in the draft could be clearer on this point, but an article posted on the NPC’s website confirms that this is the intent.

Third, the last article in this draft law notes that “even when a non-profit organization with the purpose of conducting charitable activities is not registered, it can still conduct charitable activities within its limits, but shall comply with the relevant provisions of this Law and benefit from relevant rights and interests according to law.” In the past, I have never seen such a clause appear in any Chinese regulations concerning NGOs. Instead, one usually sees regulations appear (such as a Guangzhou draft regulation which came out last year and has not been heard of since) banning “illegal social organizations (the official Chinese term for NGOs),” referring to organizations that operate as NGOs without having registered. What this clause essentially says is that unregistered NGOs should not be considered as illegal and should be allowed to carry out charitable activities. That is a significant step forward.

Of course, there are some problems with this draft such as continuing to insist on a higher bar for charitable organizations that want to engage in public fundraising, and too much emphasis on compelling charitable organizations to disclose information. I’ll write more on these issues in a later post.

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[1] I’m grateful to ChinaLawTranslate for providing a preliminary English translation. This translation still has a number of problems but is the only English translation available, and the nature of crowdsourced translations is that they will improve over time. China Development Brief should have a more authoritative translation out soon.