Foreign NGO in China : What the new laws are saying ?
Legal landscape in China is changing fast in a somewhat hard to read fashion: administrative easements may be the pretext for more stringent requirements or limitations on the authorized scope of operations of foreign entities. As a consequence, the new draft on the “Administration of Overseas Non-Government Organizations Act (境外非政府组织管理法, jingwai feizhengfu zuzhi guanli fa)” (the “Draft”) raises concerns within the NGO community, which has been facing an ambivalent welcoming in China: they are considered to be as much a threat as an opportunity to the Chinese political organization.
This Draft is supposed to have a significant impact on many aspects of NGO’s operations in China and makes a reassessment of European NGOs’ public affairs strategies necessary. This paper will summarize the political intent behind the Draft (I), before exploring its content (II), in order to assess the base lines of European NGOs’ public affairs strategies for their Chinese activities (III).
I) NGO as a new legal concept in China
a. The creation of NGOs as legal entities in China…
According to official statistics, reported by Wu Shan, there are around 1.000 foreign NGOs carrying out long-term projects in China, and the number of NGOs involved in short-term activities is between 4.000 and 6.000. These activities involve important incoming foreign cash flows within Chinese boundaries.
As a consequence, Wu Shan reports that the political decision to further regulate foreign NGOs was already stated in the “Decisions of the Plenum on important matters regarding the improvement of the rule of law” (中共中央关于全面推进依法治国若干重大问题的决定, zhonggonggongying quanmian tuijing yifa zhi guo ruogan wenti de jueding) summarizing the outcome of the fourth plenum of the 18th congress.
This new Draft will considerably impact NGOs’ freedom of activity in China by paradoxically providing them with a legal status. As reported by Wu Shan, this piece of legislation would be the first act specifically designed to regulate the administration of foreign NGOs in China. The current legal regime of foreign NGOs can be found in the “Regulations on foundations management”(基金会管理条例，jijinhui guanlin tiaoli) dated 2004, and in the “foreign chamber of commerce administration provisional rules” (外国商会管理暂行规定，waiguo shanghui guanli zanxing guiding) dated 1989, as well as by piecing together a diversity of general legal provisions.
As reported by Ma Jun, within the current legal landscape, many NGOs are registered as profit companies but, due to state investigations, some are forced to close office in the absence of real business activities. Other NGOs operate within Chinese territory without any kind of formal legal existence, making the obtainment of visas, the opening of bank accounts complex and creating a risk of acting against immigration law or other legal provisions.
As a consequence, the bright side of the proposed Draft is that it provides foreign NGOs with a legal existence – they will no longer be forced to remain in a legal grey area. According to Ma Jun, this will make it easier for them to open a bank account and would offer them a legal status, in order to be more effective in their endeavors by making it possible to take part in official actions and to be able to formulate more legitimate claims. As reported by Huang Qingchang during the joint press conference held by the Public Security Bureau (公安部, gongan bu) and the Ministry of Civil Affairs on July 25th, 2015, the Chinese authorities praised foreign NGOs for their help in developing China, providing education and modernizing the private sector.
Nonetheless, the bleak side is the stress on the importance of the “administration” (管理, guanli) of NGOs by the Public Security Bureau and Huang Qingchang, quoting a participant of the meeting, expresses the main political message: “who walks straight has nothing to fear” (走得正就不怕, zhou de zheng, jiu bu pa).
b. … as part of a national security plan
Wu Shan reports that in the opinion of Jia Xijin – vice-president of the Qinghua University research center on NGOs – this new legislation shows a change of perspective, which can be traced back to the second version of the draft of the “National Security Act” (国家安全法, guojia anquan fa) dated April 2015, which added “resist the penetration of unhealthy culture”(抵御不良文化渗透, diyu bulang wenhua shentou) as a national security priority.
According to Jia Xinjin, the NGO administration Draft’s stated objective is to reinforce China’s national security system – encompassing international threats but also political stability. For Jia Xinjin, this change would enable the Public Security Bureau to access the management of welfare activities and economic activities in China through its investigative powers. As a consequence, this Draft would bring all the national security concerns within the realm of NGOs’ work. Jia Xinjin stresses that Public Security Bureaus’ priorities are concerned with a very narrow scope of horizon, which is disconnected from the NGO range of activities.
According to Ma Jun, this Draft is mostly dominated by “wei quan”(维权) concerns and would have a wide impact, since foreign NGOs are deeply integrated in Chinese economy at all levels, mostly through cultural exchanges, scholarships, poverty alleviation programs and education. The PCC has become increasingly concerned with the stability risk that NGOs’ endeavors may represent in China. Some NGOs are viewed as covertly working for foreign powers against Chinese interests.
II) A prior authorization regime set forth by the Draft
Fu Yugang reports that to carry out activities within Chinese boundaries, foreign NGOs will, pursuant to the new Draft’s requirements, either have to register a permanent representative office (article 6) or apply for a temporary activity permit (article 18). In other words, prior approval is made necessary for all and every foreign NGO’s activities within Chinese boundaries.
Additionally, article 11 of the Draft requires that NGOs applying for a representative office in China shall obtain the sponsorship of a Professional Supervisory Unit (业务主管单位, yewu zhuguan danwei), that is to say local administrative entities or state related entities that an NGO will be working with. For Fu Yugang, this limitation may be an important hinder since the requirement to find a professional supervisory unit, which will agree to sponsor the application and as such to assume some level of political or legal liability for the activities of foreign NGOs within Chinese territory, may be hard to meet for some organizations.
Article 15 of the Draft provides another limitation by restricting the validity period of the approval to 5 years and makes it necessary to renew the whole application process after the completion of this time lapse. The consequence being that NGOs’ right to access and operate within Chinese territory would always be under the threat of non-renewal.
Wu Shan reports that registration and administrative follow up of NGOs would be allocated to the provincial level rather that at the local level: as a consequence, a local government willing to welcome the help of a foreign NGO within its territory would be powerless and need to obtain the support of the provincial level. On top of that, there will be a double level of administrative supervision: by the provincial Public Security Bureau and by the civil affairs administration, creating two parallel layers of standards to comply with, thus rendering administrative proceedings more complex.
b. Scope of activities
The law, as pointed out by Fu Yugang, is quite unclear with regard to the legal concepts used: for example “activities” (活动，huodong) is never defined, but as soon as an “activity” is carried out, obtainment of a permit is required. In the same way, the concept of “foreign NGO” is not clearly defined either: it only shall be “not-for-profit” (非营利, feiyingli) and “non-governmental”(非政府，fei zhengfu). As described by Fu Yugang, these legal imperfections are bound to create legal uncertainty, miscomprehension and grant more power to the Public Security Bureau who will eventually benefit from the lack of clarity, since it is an authorization rule and not a liability rule.
An additional difficulty is the meaning of “international” according to Fu Yungang; in a globalized economy, it appears as more and more difficult to clearly distinguish what a foreign NGO and a local NGO are. If it is clear when it comes to a branch, it is less so when it is a smaller NGO funded by foreign capitals and being mostly present in China. This is important since the law concerns only foreign NGOs and the legal provisions applicable to local NGOs are different.
Conversely, Fu Yungang points out that the notion of “within Chinese territory” is not clear at the era of the Internet, when many NGOs can act in China from abroad through a website, among others. Hence the question: what constitutes NGO activities in China and what does not?
Wu Shan reports that these ambiguities may have a wider impact than expected since for short terms activities a temporary activity permit will be necessary. As a consequence, it is uncertain whether a US professor doing field research in China on a foreign foundation or university grant would be considered doing NGOs’ activities in China? What about a staff member of a foreign NGO (say a college, a hospital or a life science research institute) with no activity in China attending a meeting in China? These activities may be considered as NGO related activities in China under the new Draft.
Elizabeth L. Lynch reports that the scarcity of local funding in China makes it necessary for almost any NGO within the Chinese territory to seek financing abroad. The proposed Draft would prohibit mainland NGOs from receiving funds from foreign NGOs (article 38 of the draft). Such a change in the legal landscape would make international cooperation harder and limit Chinese NGOs’ capacity to raise funds.
With regard to foreign NGOs, they will need to use their funds only within the extent of their registered scope of business or partnership agreements (Article 28). Additionally, their proposed allocation of funds will need to be accepted by the Public Security Bureau.
d. Administrative control
The new Draft will considerably strengthen the scope of state supervision by: (1) making it mandatory for a foreign NGO to provide administrative authorities with a detailed plan of action, including the funding details of different actions, and by (2) providing new investigation rights to the Public Security Bureau.
Article 24 of the Draft requires that “Representative offices of foreign NGOs shall send an activity plan for the following year, including project implementation, use of funds and other such content to the professional supervisory unit for their consent before November 30th of each year; and report to the registration management organs within 10 days of the professional supervisory unit agreeing to file it in the record”.
State investigation powers
The Draft provides the Public Security Bureaus with stronger investigative powers (Article 49) including the right to enter foreign NGO offices, to conduct on-site investigations, to question individuals, to consult documents and to seize venues and facilities.
The Draft operates a switch to a management model of foreign NGOs by enhancing the role of China’s Public Security Bureaus versus the civil affairs administration. This change is quite significant, if not only by its symbolic impact. The Public Security Bureaus are in charge of political stability and avoiding social disorder. Elizabeth L. Lynch stresses that document n°9 is still a fresh memory, which highlights the PCC’s view that civil society and western concepts remain an important peril to the current political apparatus in China.
As reported by Lubman, one of the remaining concerns in this new Draft is found in its article 35, which limits the number of foreign personal to 50 % of the total staff. Additionally, it is not possible for a foreigner to represent more than one foreign NGO within Chinese boundaries. These restrictions may have a significant impact, for example, for any NGO mostly staffed with foreigners, i.e. a national chamber of commerce, a college alumni association, etc.
III) How shall European NGOs bend their public affairs strategies?
The new legal landscape will not prohibit foreign actions in China and may even make it easier to a certain extent by offering a legal status to NGOs. Nonetheless, NGOs will have to play alongside the rules of the Public Security Bureaus and shall have clear guidelines regarding permit obtainment and its Internet publications, which shall comply with regard to its content to the Chinese Internet regulations, among others.
As a consequence of this Draft, foreign NGOs shall soon consider and prepare regarding the new legislation’s most important three topics: (1) which Chinese NGO they are currently financing, and how it would be possible to maintain these cash flows in compliance with the new regulations, (2) prepare for the new application process and review the needed activity permits, (3) set out compliance good practices and guidelines to monitor their exposure.
The necessity of a prior approval for all activities with a stated budget and a detailed plan of action will force NGOs to clarify their intent and to plan and properly draft their goals so as to effectively operate in China.
 In the Chinese national security policy language, it refers to the right to maintain stability.  It is not clear which entities will be entitled to act in the capacity of a professional supervisory unit, and it is possible that for example smaller universities or research centers may be declined the authorization to act as such, creating disparities and unequalities.  In legal theory, there are two ways of regulating activities: (a) a liability rule: civil entities can act freely but will be held accountable for misconducts (the administration can only react), (b) a prior authorization rule: administrative permission is required prior to any actions (civil entities can only react).  The major difference being the prohibition made to local NGOs to receive funds from abroad, and a recent proposition under discussion by the PCC seeking that all local NGOs establish a political bureau.  This notion is very interesting in the light of the Chinese concept of Internet Sovereignty and the current Great Firewall policy.  Elizabeth L. Lynch, “A slow death China’s draft foreign NGO management Law” May 10th, 2015, available at: http://chinalawandpolicy.com/2015/05/10/a-slow-death-chinas-draft-foreign-ngo-management-law/  Stanley Lubman, “China asserts more control over foreign and domestic NGOs”, China Real Time, June 16th, 2015, available at: http://blogs.wsj.com/chinarealtime/2015/06/16/china-asserts-more-control-over-foreign-and-domestic-ngos/