The Foreign NGO Management Law ([境外非政府组织境内活动管理法]) that passed in April has left many with questions.
Foreign NGOs and other organizations doing CSR work in China are eager to learn how this new law will impact them. Aiming to air some of these concerns and questions, AmCham China organized a talk about the Foreign NGO Management Law on May 18 to bring together voices from the U.S. Embassy, nonprofits and law firms. To get a complete picture of the clarifications organizations are looking for, the AmCham China Policy Team is seeking input from impacted organizations. Submit questions about how the law will be implemented to email@example.com.
Here are some of the essential updates about the law.
Foreign NGO Management Law: National Security and Public Good
The 2016 PRC Law On The Management Of Foreign Non-Governmental Organizations' Activities Within Mainland China (its official name) was passed on April 28 and will go into effect Jan. 1, 2017. Its formal purpose, as stated in article one, is to “standardize and guide the activities of overseas NGOs on the Chinese mainland, to safeguard their legal rights and to promote exchange and cooperation.” Critics have argued that the law will make it unnecessarily difficult for foreign NGOs to operate in China, citing a large increase in police authority over the activities of NGOs in China. After a brief public comment period in March, the law underwent a third and final round of revisions. A few items of note:
- Who is “foreign”: NGOs based in Hong Kong, Taiwan and Macao will also be governed by this law.
- Areas of activity: Foreign NGO activity will have to stay within regions drawn out by the law (culture and sports, economics, education, environmental protection, health, science and technology) as well as a forthcoming catalog of areas for activity, potentially similar in spirit to the catalogs for foreign investment.
- Time limits removed: In previous versions, organizations were required to reregister every five years. These time limits have been removed.
- Number of offices: Organizations may establish offices throughout mainland China. The draft had limited foreign NGOs to one office.
- Volunteer recruitment: Legally registered organizations may freely recruit volunteers and staff. Previous iterations of the law required organizations to go through government channels to recruit.
- Increased disclosure: Financial reports audited by local tax bureaus must now be submitted for all activities and spending.
- Change in double registration: In previous versions, NGOs had to register with their professional supervisory unit (PSU) as well as apply for a police permit for any public activity. It is reported that the PSU is now responsible for reviewing activity proposals and applying for the police permit at least 15 days before an event. The police still have authority to halt activities at its discretion. Additionally, China Law Translate noted that “The full scope of agencies eligible to be a PSU is unclear, and it is also unclear if they will be willing to take on the added responsibility, and liability, of working with a foreign group whose work plans, financial reports, and activity summaries they must review.” A list of PSUs will be released at a later date.
- NGOs without rep offices: Previous iterations of the law had mandated NGOs without in-country rep offices to obtain a temporary activity permit or a supervisory unit, but this has been removed. NGOs without local offices will need local partners, though. In-country expenses must be routed through Chinese partner's bank accounts. This will effect the many NGO exchanges that involve foreign NGOs without a brick and mortar presence.
- Exceptions for education and hospitals: There is a closed set of carve-outs for cooperation between foreign and Chinese “schools, hospitals, natural science and engineering technology research agencies or scholar organizations,” under the condition that both must fall into this category.
It remains to be seen how the law will be enforced, and whether changes will make it easier for charities aligned with national interests to operate. However, concerns over bureaucratic backlog may discourage organizations from establishing comprehensive giving plans in China.