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Five takeaways from China’s draft foreign NGO law

BritCham / CBBC
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Operating as an Non-Governmental Organisation (NGO) in China has not been easy for the last 20 years, and it is not about to get any easier. There is a lack of clear legislation, but most people somehow manage to thrive in the grey zone. This grey zone of lax legislation is soon to disappear. 
 
The People's Republic of China Foreign Non-Governmental Organisations Management Law (Second Reviewed Draft) was reviewed by the 14th meeting of the Standing Committee of the 12th National People's Congress on April 4, 2015.  
 
For foreign NGOs operating in China there will be a number of repercussions which can be divided into five areas:
 
1) Increased transparency of operation
 
Many NGOs operating in China are not officially registered or operate as private companies. The major change in this draft legislation is that now if you are not registered with the Public Security Bureau (PSB), an official will be entitled to knock at your door, detain you in prison for 15 days and ask you to pay a RMB 50,000 fine. 
 
2) New registration requirements
 
The PSB is one of the most powerful organs of the Government. Previously NGOs were registered under the Ministry of Civil Affairs, a much less influential institution. The fact that the administration of foreign NGOs has been escalated to the PSB means that the Government is serious in its intent to closely monitor their operation.
 
The chances of receiving approval for registration of a foreign NGO will come down to two things:
  1. Does the Government trust your programme?
  2. Does the Government trust your people in China?
If it is a "real" physical project such as training teachers or undertaking 100 cleft palate surgeries per year you are likely to be allowed to operate. But if your NGO is focused on an intangible area such as "policy advocacy" or "capacity building" it is unlikely that the registration will be approved.
 
3) Required to show a track record
 
The second area that the Government will check before approving your registration is the people involved in the project. A foreign NGO has to show that it has worked in its country of origin for a minimum of two years before coming to China, e.g. if registered in the US you have to have operated in the US for two years with a clear track record. 
 
If you are not registered with the PSB, in theory you can apply for a permit to undertake one project, but this would require finding a China partner to prepare the application document. The Chinese business partner will be the guarantor.  
 
4) Need for a supervisor
 
Once an NGO has been accepted for registration by the PSB they can then officially apply to another department, e.g. Health or Education, to act as their supervisor. This sounds simple, but in reality the supervisory department is controlled by the PSB. The supervisory departments will be less willing to cooperate with foreign NGOs than in the past because it could put them at risk.
 
For example, one Singaporean NGO recently gave equipment for disabled organisations to the Ministry of Health, but they did not want to receive it because the risk of displeasing the PSB was too great. They may have been more open to the gift if cash and discretionary spending had been involved. The change in law shows that the Government very much wants to set the agenda of how NGOs operate.
 
5) Opportunities and drawbacks
 
Once you are registered you are protected by law and the government will give an award once a year to the best NGO; this will increase fundraising opportunities. But for those that have a political, human rights objective there will be increased risk.
 
However, if you register as a company, this regulation does not necessarily apply to you. The Government wants the legislation to apply to social-enterprise companies but currently it does not cover this group. The issue has been raised and will be discussed.
 
In the end the legal structure of the NGO/company will not determine the sustainability of operation.  Whatever it is called, the Government will ask the same two questions: what is your programme; and whom do you work with in China? Answering these questions is going to lumber all NGOs in China with an increased administrative burden.  
 
Conclusion
Foreign NGOs operating in China today are experiencing what the first foreign companies experienced when they came to China 25 years ago. They are tolerated but not trusted.
 
For example, when the Jianguo Hotel was established as the first hotel in Beijing in the 1980s it could not choose which staff to hire. The PSB kindly provided "appropriate" employees.
 
This is because the Government did not know what the foreign companies wanted or whom they were connected with. The good news is that in 2015, foreign companies can hire more or less whomever they like and are subject to fewer restrictions.
 
During this sensitive period, foreign NGOs must do all they can to build trust and invest in government relations. When the official regulation comes out, by August 2015 at the latest, expect to see some test cases and examples made of large foreign NGOs by the Government.
 
The message from Government is clear. They will not close the door for foreign NGOs or social services, but they do not want foreign NGOs to have too much influence in China. It is a waiting period and a very good time to do nothing and maintain a very low profile.
 
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