What is the Future of Foreign NGOs in China?

What is the Future of Foreign NGOs in China?

Published on October 9, 2015

A Non-Governmental Organisation (“NGO”) is an entity that is neither a part of government nor a conventional for- profit business. Usually set up by citizens, NGOs may be funded by governments, foundations, businesses, or private people for different reasons. Some avoid formal funding altogether and are run primarily by volunteers.

In China, there are reportedly approximately 1,000 foreign NGOs engaged in long-term activities in the territory, with another approximately 6,000 in short-term cooperative projects. They are active in many areas, such as poverty alleviation, child and environmental protection, healthcare and education. The amount of financial stimulus into China through foreign NGOs may be annually in the hundreds of millions of US dollars.

The Standing Committee of the National People’s Congress, a de facto legislative body, is drafting a law on the management of foreign NGOs. The second draft of the PRC Foreign Non-governmental Organizations Management Law (“the Draft”) was published to the public to solicit their opinions between April and June of 2015, in which Article 1 reads, “This Law is formulated order to regulate and guide activities conducted by foreign NGOs within mainland China, safeguard their lawful rights and interests, and promote exchanges and cooperation”. Although the legal status of NGOs could be recognised and legal property and rights protected through the legislation, the draft would put NGOs under the supervision of the police and impose a variety of restrictions on them. There are also those who think that the Draft’s true legislative background is to strengthen national security in China. Improvements and Concerns

(i) Support
In accordance with the Draft, Chinese authorities shall provide foreign NGOs with various support and facilitate foreign NGOs in lawfully carrying out activities in mainland China, such as policy consultation, while receiving preferential tax rates. The state will commend foreign NGOs that make outstanding contributions to the development of China’s public welfare causes, and establish information service platforms online for processes such as registration.

(ii) Unclear Definitions
Many experts believe terms within the Draft, such as “foreign NGOs”, “activities” or “political activities” lack clear definition, leading to problems in the future. For example, “Foreign NGOs must not engage in or fund for-profit activities or political activities, and must not illegally engage in religious activities or illegally fund religious activities.” Without a clear scope and definition of “political activities”, how can a foreign NGO realise if it is breaking the law?

(iii) Funding
According to the Draft, foreign NGOs and their representative offices must neither solicit contributions nor accept donations within mainland China, except those otherwise provided by the State Council. That donations shall be from lawful sources outside mainland China could restrict the financial resources of foreign NGOs.

(iv) HR
HR is also a significant issue. The Draft states, “the proportion of foreign personnel at foreign NGOs’ representative offices must not exceed 50 percent of total staff numbers.” Meanwhile, they cannot directly hire personnel or recruit volunteers within mainland China though a few selected intermediaries may help them to handle the issue. Such restrictions are seen as unreasonable by many foreign NGOs which would like to personally recruit the people they want.

Foreign NGOs, such as foreign industry associations, environmental organizations, science and technology institutes and other NGOs defined under the Draft play an important role not only for foreign communities but also for Chinese people and entities. They have made significant contributions to Chinese economic boom and social development. Public Security Minister Guo Shengkun, speaking at a recent symposium on overseas NGOs, said, “China highly appreciates the contributions made by overseas nongovernmental organizations and will further support their friendly activities in China.” For the NGOs, they merely hope the new law will guide them in complying with Chinese laws, protect their legitimate rights in mainland China, and provide them with greater support and convenience, while imposing a lesser, not greater, financial, administrative, and operational burden.

This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness.
Copyright 2015
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