Foreign NGO Law Highlights

Thank you for visiting the AmCham China website, and your interest in the Foreign NGO Management Law. We have provided the below highlights of the NGO law to allow organizations that are unfamiliar with the law to better understand the potential impacts it may have on their operations in China.  

AmCham China is providing an unofficial translation of the law for your reference. 

To view responses in the Business Climate Survey from AmCham China members regarding the perceived impacts of the draft law, click here.

Section A: Decision to Register

Law’s Broad Scope

The draft Foreign NGO Management Law (the “draft Law”) applies to any foreign NGO seeking to conduct, fund, or otherwise participate in any activity in mainland China. (Note: Mainland China does not include Hong Kong, Macau, or Taiwan). The draft Law defines “foreign NGO” as any non-governmental, non-profit organization registered outside mainland China.

Overall Administrative Burden and Restrictions

As detailed further below, the draft Law imposes a large administrative burden and numerous restrictions on foreign NGOs seeking to conduct activities in China. For example, foreign NGOs must:

-secure sponsorship from a high-level government agency (Articles 7, 11) and approval from the Ministry of Public Security[1] to establish a representative office (Article 12);

-obtain approval from government sponsors and the Ministry of Public Security for all activities (Articles 19, 20, 22, 24) and provide post-activity reports to them (Article 36, 37);

-limit their work to certain approved areas such as culture, education and health (Article 3);

-hire personnel only through approved human resource management companies and recruit volunteers only through a Chinese partner organization (Article 32);

-limit its foreign staff working in China to four (Articles 34, 44) and have only one office in China (Article 23); and

-submit themselves to broad police powers with few, if any, due process checks to protect foreign organizations and their staff members (Arts. 49–51 and 55–60); etc. 

Scope of Activities Limited (Articles 3 and 10)

The draft Law limits foreign NGOs to work in certain approved topic areas. Some foreign NGOs are concerned that their current programming in China does not fall neatly into any of the approved categories that are listed in the law. For example, the list of approved categories does not include the field of law, which would seem to preclude activities such as visits by bar associations. The draft Law also restricts activities to those related to “development of the public welfare” or “development of public interest causes,” which might result in excluding industrial, professional, and commercial associations. 

Government Sponsorship (Articles 7 and 11)

The draft Law requires each foreign NGO to obtain sponsorship from a central or provincial-level government agency before conducting activities in China (the draft Law calls such sponsors “Professional Supervisory Units”). This sponsor should be relevant to the work of the applicant NGO (for example, an agriculture-related NGO could apply for sponsorship from the Ministry of Agriculture). These government agencies are likely to be overwhelmed as thousands of foreign NGOs submit applications, creating a bottleneck that would make obtaining sponsorship difficult if not impossible.

 

Section B: Operations and Human Resources

Prohibition on Branch Offices (Article 23)

The draft Law allows foreign NGOs to only have one office in China unless they obtain a special exception from the State Council. This would require foreign NGOs that already have branch offices in China to shut them down.

Limitations on Foreign Staff (Articles 34 and 35)

The draft Law puts restrictions on the number of foreign staff that may work in a representative office. The draft Law provides that each NGO representative office may have one chief representative and at most three additional representatives, positions which may be held by foreigners. The draft Law does not expressly provide whether representative offices may apply for work permits for additional foreign employees, raising the prospect that the number of foreign staff may be capped at four. The draft Law also states that foreigners cannot make up more than 50% of the total staff. For example, if your organization’s China office currently has three foreign staff and two local staff, your organization would either have to hire an additional local staff person or fire a foreign staff person.

Prohibition on Membership Recruitment (Article 33)

The draft Law prohibits foreign NGOs from recruiting members in China.

Prohibition on Fundraising (Article 26)

The draft Law prohibits fundraising by foreign NGOs (with or without offices in mainland China) unless they receive special permission from the State Council.

Must Use Registered Chinese Bank Accounts to Support Activities (Article 27)

The draft Law directs foreign NGO representative offices to use only bank accounts that they have registered with the Ministry of Public Security. Foreign NGOs that do not have representative offices in China would have to use the bank account of their Chinese cooperative partner. For example, such a foreign NGO would not be able to pay for hotels, event spaces, meals, or other activity costs using its US bank card. All funds would need to be routed through its Chinese cooperative partner. 

Must Hire Certified Accountants, Publicly Disclose Financial Reports (Article 29)

The draft Law stipulates that foreign NGOs must hire accountants with Chinese professional certifications, and have their financial reports publicly disclosed and audited by Chinese accounting firms.  

Must Hire Personnel and Recruit Volunteers through an Authorized Chinese Organization (Article 32)

The draft Law states that the representative offices of foreign NGOs can hire personnel only through approved human resource management companies and recruit volunteers only through a Chinese partner organization.

 

Section C: Programming

Foreign NGOs Without a Representative Office in China Must Partner with a Local Organization in Addition to Securing a Government Sponsor (Article 18)

The draft Law requires foreign NGOs that do not have a representative office must not only find a government sponsor, but also find a local cooperative partner before conducting activities. Partners may be selected from among “mass organizations,” such as the Women’s Federation,  “public institutions,” such as state-run universities or hospitals, or “social organizations,” which are a kind of domestic non-profit. This suggests that foreign NGOs may not choose for-profit enterprises or domestic NGOs that are not registered with the Civil Affairs Bureau to be their cooperative partners.

Temporary Activity Permits Only Valid for One Year (Article 18)

The draft Law stipulates that when foreign NGOs without representative offices conduct activities in China pursuant to temporary activity permits, their activities cannot exceed one year. The draft Law does not say anything about permit extensions or renewals.

Submission and Approval of Annual Work Plans (Article 24)

The draft Law requires that foreign NGO representative offices must submit an annual work plan to their government sponsors and the Ministry of Public Security each November detailing their work and funding for the coming year.

Submission of Temporary Activity Reports (Article 36)

The draft Law requires that foreign NGOs without representative offices in China send a report to their government sponsor and the Ministry of Public Security within 30 days of conducting activities pursuant to their temporary activity permit.

Submission of Annual Work Reports for Representative Offices (Article 37)

The draft Law requires foreign NGO’s representative offices to submit annual work reports to their government sponsors and the Ministry of Public Security, detailing the past year’s activities.


[1] Depending on how the law is implemented, province-level police agencies will also perform duties similar to the Ministry of Public Security.