Tea Leaf Nation

It Just Got Harder to Make a Difference in China

A harsh new NGO law has foreign organizations scrambling.

Greenpeace activists unfurl a banner condemning the use of coal, on a dry riverbed near one of the Beijing's biggest coal-fired power plants on July 28, 2009. China's powerful energy companies must play a greater role in fighting climate change and building the nation a low-carbon sustainable energy sector, top environmental group Greenpeace China said in a report on the coal use of China's top ten power companies. According to the report, in 2008, China's biggest three power companies emitted more greenhouse gasses than the UK. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Greenpeace activists unfurl a banner condemning the use of coal, on a dry riverbed near one of the Beijing's biggest coal-fired power plants on July 28, 2009. China's powerful energy companies must play a greater role in fighting climate change and building the nation a low-carbon sustainable energy sector, top environmental group Greenpeace China said in a report on the coal use of China's top ten power companies. According to the report, in 2008, China's biggest three power companies emitted more greenhouse gasses than the UK. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

On April 28, China’s national legislature adopted the highly controversial Law on the Management of Domestic Activities of Overseas Nongovernmental Organizations, also known as its overseas NGO law. The enactment of the law, which has been in the works for over a year, sets the stage for months of anxiety and jockeying as thousands of foreign, Hong Kong, and Taiwanese NGOs, foundations, universities, trade associations, and other nonprofits try to divine how new restrictive rules on registration and operations will affect their work in mainland China.

China’s controls over the domestic activities of foreign nonprofit and educational institutions have long been divided, episodic, and spotty. To deal with the confusing maze of poorly understood and unevenly enforced regulations, some groups have registered as companies, others through the Ministry of Civil Affairs. Thousands more have operated under the radar with Chinese partner organizations. Now, all foreign NGOs will be controlled by the Ministry of Public Security (MPS), China’s huge internal security apparatus.

The overseas NGO law is the result of significant political tightening in China. Beginning in 2012, when president Xi Jinping took office, domestic and foreign nonprofit groups alike have faced a sharply restricted environment. Labor activists, women’s rights leaders, and others have been arrested; some domestic advocacy groups have been closed; and many domestic nonprofit groups have become far more cautious about the work they do, particularly where it may involve advocacy. In 2014, as part of these tougher new policies, the leadership decided to shift responsibility for regulating the work of foreign nonprofits in China to the MPS. A law that would govern foreign nonprofit organizations had languished in the civil affairs ministry for several years; once the MPS took over drafting responsibilities, with a major political push from above, things moved quickly.

A highly restrictive draft law was presented to the National People’s Congress in December 2014, then revised and shared with the public in April 2015. A firestorm of criticism from foreign and domestic groups ensued, including thousands of written comments on the draft. Public security leaders were forced to reassure foreign nonprofit groups that China remained open to their work. The law was controversial enough that its harsh proposed restrictions arose during discussions between Presidents Barack Obama and Xi during the latter’s September 2015 U.S. state visit.

After Xi left Washington, virtual silence descended on the process. But over in Beijing, intensive work continued on redrafting the statute and considering whether some activities or groups should have a slightly easier time of it.

The result is the law just passed. In most respects, it retains the draconian nature of the earlier draft, with some minor revisions. Foreign nonprofits and foundations must still be registered and authorized through the MPS. They still must find a Chinese partner organization to take responsibility for all the foreign entity’s work in China before the latter can apply for registration with the MPS. Chinese partner organizations must be vetted in advance. Preferred or approved project lists will be issued by the MPS and other agencies; it is not clear whether projects not listed will be permitted. Groups that don’t plan to have offices in China but only intend to conduct what the law calls “temporary activities” must still register (albeit with less paperwork) and must still have a domestic partner.

Even after a foreign NGO jumps these hurdles, serious restrictions on its activities will remain. Overseas nonprofits will be allowed to work only in certain enumerated fields that include the economy, education, science, culture, health, sports, and the environment. (An “et cetera” at the end of this list indicates that additional fields might be approved.) They can generally work only within the geographic area for which a given activity has been approved.

There will also be ongoing headaches. Each year, foreign NGOs will be required to furnish a report outlining all aspects of their planned work, and must then report when and where it occurred after the year has ended. Their offices and bank accounts will be subject to inspection. Penalties, including detention, will apply for violations — and Chinese organizations or individuals that take funding or other benefits from unregistered foreign groups will also be punished. Foreign NGOs will not be permitted to raise funds inside China. And a crucial catch-all provision in Article 5, which seems intentionally vague, prohibits any foreign nonprofit activities that “endanger China’s national unity, security, [or] ethnic unity,” or that “harm national interests or the public interest,” or even that harm “the lawful interests of legal persons and other organizations.” Even an environmental group working with Chinese groups to sue polluters could run afoul of such a rule.

The law does provide for a vague exception for research and scholarly “exchanges and cooperation” between Chinese partners and overseas schools, hospitals, science, and engineering and technology research outfits. This is doubtless a response to loud criticism that the vague and over-broad earlier draft swept university programs, academic exchanges, and joint research within its scope, potentially dampening joint academic, scholarly, and scientific work important to China. Of course, these exchanges and cooperative ventures will not operate unregulated — they will simply be free from the new law’s onerous restrictions. And the scope of this carve-out remains vague and uncertain.

All foreign nonprofits that seek to operate in China will need to register again under the new law. But a few groups may have a leg up in the process. While it’s entirely unmentioned in the law itself, officials at the national legislature and the MPS have held out the possibility that certain overseas foundations that have already registered may be able to use that previous status to fast-track their re-registration. That may assuage some major U.S., European, and Hong Kong foundations that have been concerned about the new law, as long as they are already registered in China.

Over more than three decades, foreign nonprofits, foundations, and universities have played an important role, usually welcomed by China, in the extraordinary transformation of the country’s society and economy. The drafting of this new law, and the centralization of control in the MPS, threatens balanced and effective partnerships built up over decades and has raised fears that a sharply tightened environment in China means a closing to the world — or at least the most significant retrenchment since reforms began in the late 1970s.

It is early days yet in this process. The Chinese authorities must detail all these new requirements before the law comes into effect on Jan. 1, 2017, while building an implementation mechanism that works with thousands of overseas organizations, both resident and nonresident. The process and severity of implementation will be key, given that implementation is often unpredictable in China and the Ministry of Public Security is new to this process. And all this will take place in an atmosphere of uncertainty, anxiety, and foreboding that this new law has heightened, not alleviated.

Photo credit: FREDERIC J. BROWN/Getty Images

Mark Sidel is Doyle-Bascom Professor of Law at the University of Wisconsin-Madison and Consultant for Asia at the International Center for Not-for-Profit Law (ICNL).

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