Sunday, September 25, 2016

Trial for Guangzhou Labor Activists Scheduled for September 26


Much of the recent news about Chinese civil society has centered around the trial of China’s rights defense lawyers such as Pu Zhiqiang, Zhou Shifeng, and most recently Xia Lin who was sentenced to 12 years in prison. All of them deserve a great deal of attention for the courageous and important work they do in taking on difficult cases.

In this post, I want to make sure that Chinese labor activists and workers are not neglected because they are some of the most active and potentially influential civil society actors in China. Worker strikes and protests are at historically high levels and worker self-organizing is taking place among Walmart China workers, teachers, and taxi drivers, among others.  In some cases, workers are assisted in their organizing efforts by activists working for independent labor NGOs in provinces like Guangdong.  Such is the case of the Guangzhou-based Panyu Workers Center which helped workers in dozens of factories organize and engage in collective bargaining with their employers. In their most recent successful case, the Panyu Center helped workers in the Taiwanese-owned Lide Shoe Factory reach an agreement for economic compensation and unpaid overtime and social security totaling nearly 120 million yuan.

A number of the staff of the Panyu Center are now about to go on trial tomorrow (September 26, 2016) at the Panyu District Court on criminal charges of “gathering a crowd to disturb social order” which carries a maximum five-year prison sentence. The staff on trial are Zeng Feiyang, the director, and Zhu Xiaomei. They will be joined by another labor activist who is not on staff at the Panyu Center, Tang Huanxing. A third Panyu Center staff member, Meng Han, had his trial postponed when local prosecutors sent his case sent back to the police for further investigation.

This is a high-profile case that began on December 3, 2015 when a number of labor activists in Guangzhou were rounded up and interrogated. Many were later released, with the exception of staff from the Panyu Center who were clearly the center of this attack. Unlike previous cases of repression against labor groups which originated from local authorities, this one showed clear signs of coming from Beijing. Soon after the crackdown, China’s main state media organs – the New China News Agency, CCTV and the People’s Daily – launched a smear campaign against the Panyu Center, and Zeng Feiyang in particular.

I encourage readers of this blog to follow this case closely to see how authorities of the Communist Party of China – the party of workers and farmers – treat some of China’s most prominent labor activists. The Panyu Center staff have already had their rights violated by the police and other authorities on a number of occasions. The state smear campaign, which sought to try them in the media, before they even had a court trial, was only the most brazen example. We also know that the police did not allow them to see their lawyers for several weeks. In Feiyang’s case, it took six months before he was able to finally meet with his lawyers.  In addition, their family members weresubjected to physical threats and verbal harassment when they did not cooperate or, in the case of Feiyang’s mother, after she filed a lawsuit against the state media organs for defaming Feiyang's character.

I will be posting more on this case once we hear the results of the trial. Hopefully, I will have some good news to report.

Sunday, September 11, 2016

Some Insights from a Q&A with the Ministry of Public Security on the Overseas NGO Law

I apologize for not posting as often as I would have liked over the past two months. I've been too busy trying to catch up on work after my summer vacation and was traveling quite a bit last month.

I thought I'd start my first post this month on the following summary of a recent Q&A session between the European Chamber of Commerce and the Foreign NGO Management Bureau of the Ministry of Public Security (MPS). The Q&A was sent to a listserve I participate in and appeared in the form of a newsletter dated August 10, 2016 from the international law firm Hogan Lovells.

It's now less than four months before the law goes into effect and so far we have had very little information from the MPS regarding the law, so this Q&A is important because it provides us some initial indications from the MPS about how it understands the law.

Below is the text of the Q&A, after which I discuss my main takeaways.


China's New Law on Foreign NGOs: Q&A

Summary of Meeting with The Foreign NGO Management Bureau, Ministry of Public Security

The Ministry of Public Security (the “MPS”) recently held a question and answer session in Beijing with the European Chamber of Commerce, in order to address various questions about the new Foreign NGO Management Law (the “NGO Law”). The responses are only verbal interpretations by MPS, so they remain subject to change, but the information offers some perspective of the relevant Chinese regulators.

Q: When will implementing rules and guidance for the NGO Law become available?

A: The MPS Foreign NGOs Management Bureau currently is in the process of creating a foreign NGO registration administration guideline and a catalogue of professional supervisory units for foreign NGOs. Those two documents will serve as implementation guidelines for the NGO Law. MPS estimates that it will release those documents online around October 2016.

Q: As to the carve-out provision under Article 53 of the NGO Law (which appears to specifically carve out from the NGO Law cooperation between foreign and Chinese schools, hospitals, and academic organizations) does the Chinese counterpart need to be the same-type institution as the foreign party?

A: Yes. Article 53 of the NGO Law is intended to address exchange and cooperation between two organizations of the same type, e.g., foreign school to Chinese school, or foreign hospital to Chinese hospital. If not the same type, MPS may need to decide on a case-by-case basis.

Q: Will those WFOEs already set up by foreign NGOs in China be permitted to continue their operations in China under grandfather approval rules? Is a WFOE still a viable option for a foreign NGO to enter into China if it uses an overseas for-profit holding company?

A: For WFOEs set up by a for-profit corporation with a foreign NGO as the ultimate shareholder, they can continue in operation as long as they will do ordinary businesses as normal for-profit companies and comply with applicable law. They can donate their money or otherwise use their money for public interests or charity purposes in China. However, the WFOE cannot be used to solely carry out “NGO” activities on behalf of the foreign NGO to promote the mission of the foreign NGO.

Q: Is a foreign university that comes to China to recruit students required to comply with the NGO Law?

A: No. Foreign universities may engage in recruiting activities in China through overseas study agencies that have a license from the Ministry of Education (MOE). These activities are not subject to the NGO Law, as they are subject to MOE regulations.

Q: What types of for-profit activities carried out or sponsored by a foreign NGO will be forbidden under the NGO Law? Will foreign NGOs still be allowed to have income generated from activities in China?

A: The NGO Law prohibits foreign NGOs (including their representative offices registered in China) from engaging in or providing financial support to any for-profit activities. However, this doesn’t mean income is not allowed to foreign NGOs. Whether it is for-profit or not-for-profit is determined by the purpose. Foreign NGOs should not focus on earning a profit and providing dividends for shareholders/owners.

According to Article 36, foreign NGO representative offices may enjoy tax benefits in accordance with law. Also, Article 21 permits foreign NGOs to use “other funds legally acquired within China” for their activities in China. This means income or revenue is allowed as long as the foreign NGO keeps its not-for-profit nature, namely, will not distribute dividends or profit to its shareholders/owners. For example, it is permissible for a foreign NGO to charge a fee for providing services or licensing intellectual property rights to a Chinese party.

Q: For those representative offices/affiliates already established by foreign NGOs and registered with the Ministry of Civil Affairs (the “MOCA”) or the State Administration for Industry and Commerce (the “AIC”), will they still be acknowledged as legally existing under PRC law and permitted to continue their operation under a grandfather and/or transition rule?

A: The NGO Law will be effective on January 1, 2017. However, there will be a transition period for existing foreign NGOs that are registered with the MOCA or AIC to complete the process of transferring from the original registration authority to MPS by submitting certain supplemental documents, and for new foreign NGOs to apply for relevant certificates and go through relevant administrative process. MPS acknowledged the registration process may take some time after the effective date of the NGO Law.

The 29 foreign foundations that were previously registered with MOCA will be handed over to MPS and will be administered by MPS.

Q: Which MPS department at which level will be mainly in charge of the foreign NGO registration process?

A: The foreign NGO registration process will be administered by the Exit and Entry Administration Authority of provincial level service portals.

Q: Is it correct that after the NGO Law becomes effective, there will be only two paths for foreign NGOs to conduct activities in China?

A: Yes. There are only two ways for foreign NGOs to carry out activities in China under the NGO Law:

1. Establish a representative office for long-term activities with the approval of the Professional Supervisory Authority and registration with the MPS; or

2. Cooperate with a Chinese Partner for temporary activities, and have the Chinese Partner apply for an approval of the competent authority and file and record the temporary activities with the MPS.

Q: Are there any further guidance/requirements on temporary activities conducted by foreign NGOs and their Chinese Partners?

A: Foreign NGOs that have not established a representative office in mainland China to carry out temporary activities must cooperate with a Chinese Partner. There are only 4 types of Chinese Partners. They are government agencies, people’s organizations, public institutions, or social
organizations. Corporations and individuals cannot be Chinese Partners.

Q: What is the intent of the requirement for foreign NGOs to make filings on their proposed temporary activities?

A: The reporting requirement is not to set limitations on a NGO’s temporary activities, but mostly to record the overall status of activities for statistical purposes. When temporary activities (such as disaster relief) must be carried out in emergency situations, it is permissible to file after the activities. The filing process is not expected to become a barrier for serving a good cause.

Q: For foreign corporations doing corporate social responsibility activities in China, is it still possible for them to provide funding to Chinese entities in mainland China as a donation or grant?

A: A corporate foundation based outside China cannot give money directly to Chinese entities as a donation or granting, but instead may transfer funds to an affiliate corporation or contracting third-party corporation offshore and have that corporation fund its Chinese partner for charity activities.

Q: Can foreign NGOs do fundraising in China?

A: No. A foreign NGO cannot set up entities in China to do fundraising, whether public offering or private offering.

Q: Can foreign industry associations develop membership in China?

A: No. A foreign industry association cannot develop membership in China.


My Takeaways

1)  The Q&A tells us that the MPS has set up a special department, the Foreign NGO Management Bureau, to deal with the law. It does not tell us how many staff they are planning to hire, or whether there will be a similar office set up in the provincial Public Security departments.

2)  It appears that the MPS will not have implementing regulations out before the law goes into effect. Instead the MPS states it will provide a set of guidelines, and a list of qualified professional supervisory units for foreign NGOs thinking about registering a representative office. This announcement is not all that surprising. The Ministry of Civil Affairs (MCA) is only now coming out with implementing regulations for the Charity Law which went into effect September 1, 2016 and they have had a running start because they've been working on implementing guidelines for the last few years. Unlike MCA, the MPS has no experience managing NGOs and to my knowledge has not been working on implementing guidelines. Unlike the Charity Law which has been in the drafting phase for 10 years, the Overseas NGO Law came out quite suddenly and MPS may simply not have the expertise or staff to develop the necessary implementing regulations within a short period of time.

3) The response to the question about whether WFOEs set up by NGOs can continue under the current form is interesting because it appears the MPS is willing to be flexible and allow NGOs to continue operating in China as a representative office of a WFOE as long as "the WFOE cannot be used to solely carry out “NGO” activities on behalf of the foreign NGO to promote the mission of the foreign NGO." The wording here is strange and reflects in my opinion a misunderstanding of what NGOs or nonprofits are and do, but I won't get into that here. As I read this, the WFOE needs to be running some for-profit, commercial activities alongside its "NGO" activities to justify its WFOE form. What the MPS does not clarify here is whether the use of WFOEs will only be allowed for those NGOs that already had this type of arrangement prior to the law going into effect, or will it also allow NGOs to continue this practice after the law goes into effect? In any case, the WFOE arrangement may provide a possible alternative for NGOs that will be unable to find a willing professional supervisory unit and thus be unable to register a representative office. It's not clear, however, just how long the MPS will allow this WFOE arrangement. The MPS mentions a transition period for foreign NGOs that are already registered with MCA or with the Administration of Industry and Commerce (AIC) but doesn't specify how long that transition period will be.

4) For those NGOs thinking of carrying out "temporary activities," the Q&A confirms something that I had been wondering and that is the "filing a record" (bei'an) procedure is meant to inform the MPS about the "activities" and will not require an approval from the MPS. Of course, if the activity requires approvals from other government departments, then those approvals should be submitted as part of the record, but MPS itself does not have to approve the activity for it to proceed. And the MPS also confirms that a NGO's Chinese partner for the purpose of carrying out the "temporary activity" cannot be a corporation, although I still cannot figure out why they made that rule.

5) On the question of foreign corporations working on CSR projects with Chinese partners, this appears to be ok. The MPS person answering the question confuses a foreign corporation doing CSR with a corporate foundation which is a NGO. Many foreign corporations don't necessarily do CSR through their corporate foundation, but through their CSR department which would seem to be fine as long as the CSR department is part of the company which is for-profit and thus would not come under the law.

Wednesday, August 3, 2016

Draft Regulations for Social Associations (社会团体)Are Out


In June, the Ministry of Civil Affairs issued draft registration and management regulations for public comment for two of the three types of social organizations (社会组织): Foundations (基金会) and Social Service Organizations(社会服务机构). This month, the Ministry has released draft registration and management regulations for public comments for the third type: Social Associations (社会团体) which are the equivalent of membership associations such as trade associations, chambers of commerce, science and technical associations, professional associations, academic associations, arts and cultural associations and so forth.

Those draft regulations are available on the Ministry's website here, and comments are due by August 21.

These three sets of regulations form the heart of the regulatory system governing the registration and management of social organizations, China's equivalent of not-for-profit organizations. They specify which government bodies are responsible for their registration and management, the registration requirements and procedures, the internal governance of the organization, their legal responsibilities, and so on.

Each of these regulations was originally issued at different times over a span of 16 years. The regulations for Social Associations first came out in 1988 and was revised in 1998. The regulations for Social Service Organizations (a big improvement from the previous term, Civil, Non-Enterprise Institutions or 民办非企业, coined by someone who wanted to disguise the real nature of these organizations) came out in 1998, and the regulations for Foundations in 2004. Now you have drafts of the revised regulations for all three types coming out all in one year, in addition to the Charity Law and the Overseas NGO Law. The one thing we can say for sure at this point is that the legal landscape for nonprofits in China will be substantially reshaped by 2017.

I hope to say more about the content of these revised regulations in a later post.

Friday, July 22, 2016

Kissinger Institute Webcast: Is China's Door Closing?

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf
Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf
Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf
On June 28, I spoke in Washington D.C. on a panel at the Wilson Center's Kissinger Institute on China and the U.S. on the topic "Is China's Door Closing?" Below is an introduction to the panel and a link to the webcast of the panel which addresses whether China is closing its doors to foreign NGOs, businesses and media.

Is China's Door Closing?

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.

Until recently. The passage of China’s Foreign NGO Law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGOs under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond? 

Our panel discussed the future of American NGOs, corporations, and media in Xi’s China.
The event was webcast, and footage of the entire panel is available on our website at: 

https://www.wilsoncenter.org/event/chinas-door-closing

Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers
Deputy Director, China Labour Bulletin
Senior Vice President, US-China Business Council
Asia Editor, Foreign Policy
Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
 
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?
Our panel discussed the future of American NGO’s, corporations, and media in Xi’s China.
Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.uHk5ZtC8.dpuf

Saturday, July 16, 2016

Questions & Answers on the Overseas NGO Law

-->I'm back from a month-long trip that took me around the world starting from Hong Kong to Morocco (vacationing with my wife and daughter who was studying abroad there), then to Washington, D.C. (work), then to upstate New York (family reunion), then to New York City (more work), and finally back to Hong Kong where it was good to get back into my old routine. Traveling around the world was fun but tiring.

Over the last few months, I’ve received some questions in response to my postings and talks on the Overseas NGO Law and apologize for not responding to them earlier. I decided to post my answers to those questions here so that more people could benefit from this Q&A. As always, feel free to post questions and I’ll try to respond as quickly as I can.


Q1: Regarding the foreign NGO law, will the Ministry of Public Security become sympathetic towards NGOs or maintain a hard line? How does it perceive its new role? 
A1: I don't think we should assume a particular attitude from MPS towards NGOs. I think the law presents an opportunity for NGOs to help the MPS better understand what they do  in China. Of course, MPS has a security mindset just because of what it is, but they also know that law-abiding NGOs are now going to be their clients, so as long as foreign NGOs can show they are law abiding and maintain open communication channels with MPS, then there's room for them to work with the MPS and them to better understand the contribution NGOs are making to China’s development and thereby soften the MPS’s security mindset. We also have to keep in mind that provincial and local public security will also be involved, and as we all know local bureaucrats' attitudes towards foreigners and foreign organizations can vary quite significantly.


Q2: First of all, it is clear that the recent law applies only to offshore non-profit NGOs. This naturally leads to a definitional issue. I assume if a Chinese citizen establishes a non-profit in China, then this law would not apply, correct? Assuming that is correct, what regime would apply?


If a Chinese citizen establishes a non-profit NGO offshore, does the recently passed law apply to its activities in China? I assume the answer is yes.

Can foreigners establish a non-profit in China? If yes, would the recently passed law apply to them?

Does source of funding determine onshore/offshore status? In other words, if a Chinese citizen establishes a non-profit onshore with seed funding from overseas, is this an onshore or an offshore NGO. What about ongoing, operational funding?

A2: Yes the Overseas NGO Law applies only to offshore non-profit NGOs. If a Chinese citizen establishes a nonprofit in China then the recently passed Charity Law (see the FAQs in this blog for that law) will apply as will relevant regulations for registration and management of social organizations that are currently under revision.

The Overseas NGO Law will, however, apply to a Chinese nonprofit's work if it is collaborating with or receiving funding from an overseas nonprofit (e.g. a Chinese partner of that nonprofit). It doesn't matter if that funding is seed funding or continuous funding. Both would most likely count as a "temporary activity".

In Article 53 of the law, there does appear to be an exemption for education exchanges between schools, hospitals, research institutes and the like, but it’s unclear if an exchange or relationship between a U.S. university and a Chinese nonprofit would qualify for this exemption. We're going to need more guidance on this area from the Chinese authorities when they draft the implementing regulations, and need to know what relevant national provisions the authorities have in mind in Article 53.

The question on whether foreigners can establish Chinese nonprofits is an interesting one. The Overseas NGO Law only allows foreign NGOs to register a representative office or carry out “temporary activities”. Registering a Chinese nonprofit does not appear to fit into either of these two categories. In the second draft of the law, there were articles stating that foreign nonprofits could “co-found” a Chinese nonprofit, but those articles were taken out. But I wouldn’t exclude the possibility of foreigners using other means to register a Chinese nonprofit.

Some foreigners have managed to register domestic nonprofits in the past, presumably with the help of Chinese partners. The Overseas NGO Law would presumably not apply to these nonprofits which were founded before the Law was passed. The Charity Law would apply and so would several regulations for registering domestic nonprofits (social organizations) that are currently being revised.


Q3: Would this law prohibit Chinese companies from paying membership fees or dues to a global trade body or federation, that is headquartered outside China?

A3: Interesting question. I don’t think so. Article 28 of the Overseas NGO Law state that “representative offices of an overseas NGO and overseas NGOs conducting temporary activities must not openly recruit members within China, unless otherwise regulated for by the State Council.” The literal Chinese translation for “openly recruit members” is “developing its membership”. What that actually means is open to interpretation. It could mean that overseas NGOs are not allowed to recruit members through public channels, but maybe recruitment through private channels would be allowed. In any case, if the Chinese company is already a member of that trade body or federation, then there’s nothing in the Law prohibiting it from paying membership fees. According to Article 21 of the Law, overseas NGOs are not allowed to conduct fundraising activities in China, but there is nothing that prohibits overseas NGOs from accepting donations or fees.


Q4: Many foreign NGOs that focus on China are based in Hong Kong. How will their access to China change, if at all, due to the newly enacted legislation and troubling issues between Hong Kong and mainland China?

A4: First of all, all foreign NGOs based in Hong Kong, including Hong Kong NGOs, are covered under the Overseas NGO Law which applies to all NGOs registered outside of mainland China.


Second, It is true that the worsening relations between Hong Kong and Beijing have made it more difficult for Hong Kong-based NGOs, particularly after the Occupy Central protests in the fall of 2014. But Hong Kong still enjoys a number of advantages for foreign NGOs, compared with being based in other countries or in China. Foreign NGOs based in Hong Kong have the geographic proximity to the mainland, can draw from a large Chinese-speaking population staff when hiring staff, and have access to world-class universities, companies, media outlets and NGOs with China expertise and experience. In addition, foreign NGOs enjoy the benefits of Hong Kong's open society and a legal system that remains professional, independent and transparent even in the face of growing encroachment by mainland Chinese authorities. With the passage of the Law, I can see some foreign NGOs with offices in China finding it more attractive to relocate to Hong Kong. If they wanted to stay in China, they would have to register a representative office which would require finding an official sponsor. If the foreign NGO wasn't able to find a sponsor, then they might consider setting up an office in Hong Kong and run their "temporary activities" in China from Hong Kong given that the requirements for carrying out "temporary activities" are easier to meet than the requirements for registering a representative office. Hong Kong also has a regulatory structure that makes it easy for organizations to register a company. In fact, many foreign and local NGOs registered in Hong Kong are registered as limited liability companies. Some of these companies have charitable status, but others do not. Setting up a for-profit company that does business in China on a service-for-fee basis – a social enterprise model if you will – may be one way to work in China that would not come under the scope of this Law.


Q5: One of my activities in Brazil is to work on government relations. Most of the times I am lobbying for Chinese firms' interests in Brazil. In this context I ended up knowing a lot of people working with government relations around the world and a question came to me on whether it would be possible for a foreign firm (in the pharmaceutical sector) to support Chinese associations of doctors and patients with technical training. The long term goal of the company is to be known by such associations, as they are a global company and support this kind of activity in different countries. I already gave the pharmaceutical company the link to your blog and your FAQs on the new Charity Law and INGOs. However, questions remain: (i) is it possible for foreign companies to give training to grassroots NGOs, GONGOs and social organizations in China? ; (ii) associations of doctors and associations of patients would, in your view, fit into which category? Social organizations? ; (iii) if they are social organizations, a new law is under implementation, from what I read in your blog, right? So it would be hard to predict exactly if foreign companies can cooperate with them or not?

A5: On question (i), foreign companies are not covered under the Overseas NGO Law which applies to “nonprofit, non-governmental social organizations that have been legally established outside of mainland China.” So yes it should be possible for foreign companies to give trainings to social organizations in China.  Interestingly, the Overseas NGO Law does not seem to allow for cooperation between a foreign NGO and a Chinese company. Article 16 of the law states that foreign NGOs can cooperate with Chinese government agencies, mass organizations (e.g. GONGOs), public institutions (e.g. universities), and social organizations but does not include companies in this list. It’s not clear if this is an oversight, but it’s odd that companies are excluded as potential partners of foreign NGOs given the growing interest in CSR in China’s private sector.

Regarding question (ii), yes associations, such as professional associations of doctors, and associations of patients would fit into one of the three types of social organizations, in this case what the Chinese call “social associations” or 社会团体 (shehui tuanti) which are essentially membership associations. You would need to ascertain that these associations are actually registered with Civil Affairs as “social associations.”  Regarding question (iii), I expect there to be new registration and management regulations for social associations forthcoming,  since draft regulations for the other two types of social organizations were already issued in June for public comment. These new regulations should not effect whether foreign companies can cooperate with them because, unlike the more restrictive Overseas NGO Law, these regulations tend to create a more enabling environment for Chinese social organizations.

Wednesday, July 6, 2016

Speaking in New York City on July 11 on New Legal Landscape for NGOs in China

I'll be speaking next week in New York City on the latest legislation for NGOs in China. Below is the official notice from the National Committee for U.S.-China Relations. I hope to see some of you there. 

The New Legal Landscape for NGOs in China: Opportunities and Challenges? With Dr. Shawn Shieh on Monday, July 11 in New York City

In recent months, the Chinese authorities have issued a Charity Law approximately ten years in the making, an Overseas NGO Management Law, with a much shorter gestation, and most recently drafts of regulations for the registration of foundations and social service organizations.  Please join us for a discussion of the implications of these laws and regulations - how they open up opportunities at the same time that they pose challenges, for both foreign and domestic Chinese NGOs.  Dr. Shawn Shieh, deputy director of China Labour Bulletin (CLB) in Hong Kong, will lead the discussion.  From 2007 to 2014, Dr. Shieh lived in Beijing where directed English-language operations for China Development Brief (CDB), a bilingual, independent media and research platform covering China’s civil society and philanthropy sector.  

The meeting will be held at the National Committee office, 6 East 43rd Street (between Fifth and Madison), 24th Floor, from 4:00 p.m. to 5:30 p.m. on Monday, July 11.  Building security is quite strict, so we are required to submit a name list in advance.  Please RSVP by replying to events@ncuscr.org  by 12:00 p.m. on Sunday, July 10.

This event is part of an ongoing series of discussions we have convened since the second draft of the International NGO Law was issued in spring 2015.

Tuesday, June 14, 2016

Speaking in Washington, D.C. on June 28th on the question "Is China's Door Closing?"

I'll be speaking at this event in D.C. on June 28. My answer to the question in the title will of course be no. Hope to see some of you at the event!
 
Is China's Door Closing? (https://www.wilsoncenter.org/event/chinas-door-closing)

Ever since Deng Xiaoping launched his reforms in 1978, "openness" (对外开放) has been a central tenet of Chinese policy. While the actual degree of China's openness has varied from time to time and sector to sector over the past 38 years, the trend toward greater liberalization of society, institutions, and the economy has been clear.
Until recently. The passage of China’s foreign NGO law raises doubts about Xi Jinping’s commitment to further opening and reform. The law, which places foreign NGO’s under the supervision of the Ministry of Public Security, is the latest in a series of regulations meant to control “hostile foreign forces.” Surveys indicate that foreign companies are concerned about tightening business regulations in China and wonder whether they are as welcome as they were in recent decades. International journalists and publishers, too, are finding it difficult to obtain visas and to reach Chinese audiences. Is China’s door closing to foreigners? Why are conditions changing for international actors in China? How should the United States respond?

Please join us for a discussion of the future of American NGO’s, corporations, and media in Xi’s China.

Moderator: Robert Daly, Director, Kissinger Institute on China and the United States

Speakers

- See more at: https://www.wilsoncenter.org/event/chinas-door-closing#sthash.caZB5PBe.dpuf