The second draft of a new law dealing with the activities of foreign non-governmental organizations operating in China has been released for public consultation on the website of the National People’s Congress of the People’s Republic of China.[i] This law, The People’s Republic of China Overseas NGO Management Law (Second Draft) or “China’s Overseas NGO law”, will have a significant impact on how Canadian charities and NPOs operate in China.
Essentially, the law would require that Canadian charities and NPOs operating in China either register as a legally registered representative office or obtain a temporary activity permit in advance of conducting any activities in China. Entities that have not registered or that have not obtained a temporary activity permit and that conduct activities within China or engage the services of Chinese individuals, legal persons, or organizations to conduct activities within China will face serious sanctions, including potential criminal action and deportation.
Overseas NGOs applying for registration (and a temporary activity permit) will be required to obtain the consent of the local Professional Supervisory Unit (or, in the case of temporary activity permits, certain other state authorities or units). The process of registration (and issuance of temporary activity permits) will be managed by registration management authorities who will receive the application materials and will be required to issue a certificate of registration within 60 days (30 days for a temporary activity permit) of receipt of the application for a maximum period of five years (one year for temporary activity permits).
Various entities within the Chinese government, including the registration management authorities, Professional Supervisory Units, public security authorities, and relevant governmental departments, will have significant authority to regulate the conduct of overseas NGOs. Registered overseas NGOs will be required to submit an activity plan to the registration management authorities that details the projects that they intend to run and how they intend to use their funding in the coming year. Before beginning a project in China, they will be required to submit their registration documents, temporary activity permit, and a description of their project to local public security authorities. They will also be required to submit an annual work report to their Professional Supervisory Unit and, after the Professional Supervisory Unit has given its feedback, send the report to the registration management authorities.
Funding for projects in China will be limited to money legally raised outside of China, interest on deposits in China, and other money lawfully acquired within China, and cannot include money from fundraising activities or donations from within China. Overseas NGOs operating in China will be required to provide audited financial statements to the public and submit to Chinese taxation.
Recruitment of staff or volunteers in China must be undertaken by a local foreign affairs service unit, and information about staff and personnel arrangements is required to be filed with the Professional Supervisory Unit and the registration management authorities. Overseas NGOs that are considered by public security authorities to “subvert state power” or “engage in or provide financial assistance for political activities” can be detained for up to 15 days, fined up to 300,000 yuan and investigated for “criminal liability”.
Many governments and NGOs have been calling for changes to the proposed legislation that, in the view of many, would severely restrict the activities of non-government organizations, business groups and universities. According to a recent Reuters article, the European Union has said that China was using the law to “silence dissenting voices” and that the law would, in effect, grant law enforcement authorities sweeping powers to “micro-manage” foreign NGOs with political, religious and human rights organizations: “It’s an effort to control foreign organizations under the guise of law-based governance. These are the prevailing winds of the time in China.”[ii] According to another source cited in the Reuters article working for a major foreign non-profit organization, the registration process would be “a multi-layered death by bureaucracy” that could force some NGOs out of China.
On May 27th, 2015, the Council on Foundations and the International Center for Not-for-Profit Law (ICNL) organized a conference call on China’s Overseas NGO law. Over 130 people joined the call, which discussed how the proposed legislation would impact US organisations running projects in China. According to a prepared summary of the call, several specific concerns with the draft legislation were discussed,[iii] including requirements that:
- Foreign NGOs will be required to register with the Chinese public security authorities before they may conduct activities in China.
- NGOs must be sponsored by professional supervisory organizations, which are either ministries, agencies or other branches of the Chinese national or provincial governments or organizations authorized by the government to serve this function.
- The law gives Chinese public security authorities a wide range of tools and wide discretion to manage and supervise NGOs, in order to ensure compliance with a number of reporting requirements for the activities of the NGOs.
- Throughout the law, it is unclear how specific elements will be implemented, which leaves considerable discretion in public securities authorities at central and provincial levels.
- The law does not discuss regulation for disaster response activities, and the requirements for annual workplans and advance agreement on activities with Chinese authorities could make it difficult for foundations and NGOs to be responsive to situations like natural disasters.
The conclusion that seems to have been reached on the call was that the proposed legislation would, therefore, make it more time-consuming and complex for NGOs, foundations and other organizations, including potentially universities, to fund partners, run programs, and or collaborate on projects in China.
Canadian charities and NPOs operating in China, whether with their own staff or through intermediaries, should become familiar with the draft legislation and monitor developments closely, because compliance with this law will substantially impact their ability to continue to undertake these activities in the future. While in theory a registration requirement seems reasonable. and is indeed required by most jurisdictions, it is the way such a requirement is proposed to take effect in the context of an already complex and opaque bureaucracy in China that will cause the greatest difficulties for Canadian charities and NPOs. Further, Canadian charities and NPOS will need to consider the risk to field staff and volunteers that the substantial disclosure and supervision requirements could create, should the activities in China fall out of favour with the Chinese government.
[i] See http://www.npc.gov.cn/npc/xinwen/lfgz/flca/2015-05/05/content_1935666.htm or http://chinadevelopmentbrief.cn/research/ for an English translation).
[ii] Sui-Lee Wee, Michael Martina and James Pomfret, “Foreign governments, non-profits press China to revise draft NGO law” (1 June 2015) Reuters (available at http://www.reuters.com/article/2015/06/01/us-china-ngos-idUSKBN0OH2I720150601).
[iii] See summary and recording of the conference call available at http://www.cof.org/content/call-summary-chinas-draft-law-management-ngos-and-foundations. See also a recent article in the China Philanthropy Times (21 May 2015) translated by the China Development Brief available at http://chinadevelopmentbrief.cn/news/china-philanthropy-times-the-overseas-ngo-management-law-affects-more-than-just-ngos/).