On April 28, 2016, the Standing Committee of the National People’s Congress adopted the Law of the People’s Republic of China on the Management of Foreign Non-Governmental Organizations’ Activities within Mainland China (hereinafter “Foreign NGO Law”), which will come into effect on January 1, 2017. After more than a year of soliciting views from the public and revisions since the publishing of the second draft of the Foreign NGO Management Law (hereinafter, “Second Draft”) in April 2015, the Foreign NGO Law has attracted widespread attention from domestic and international non-governmental organizations (hereinafter “NGOs”), and forms another landmark piece of legislation governing NGO activities in addition to the Charity Law of the People’s Republic of China, which was adopted on March 16, 2016.
The Foreign NGO Law consists of 54 articles in 7 chapters, and covers aspects from NGO registration and filing to the regulation of activities, facilitation measures, supervision and management, and legal responsibility. This article outlines some of the major provisions.
Scope of Activities
The Foreign NGO Law specifies that Foreign NGOs may conduct activities beneficial to the development of social welfare in fields such as economics, education, science culture, health, sports, environmental protection and for areas such as poverty relief and disaster relief, while exchanges and collaborations between foreign schools, hospitals, natural science and engineering science research establishments or academic organizations and the domestic organizations within these same categories, is to be handled according to the relevant provisions of national law. Moreover, the Foreign NGO Law prohibits foreign NGOs from “engaging in or funding for-profit activities or political activities,” and “illegally engaging in or funding religious activities” within mainland China. In order to provide guidance to overseas NGOs carrying out activities, the Foreign NGO Law requires public security authorities, together with the relevant departments, to draft catalogs of foreign NGOs' areas of activity and projects, and to publish a list of competent administrative authorities. The aforesaid catalogs and lists will be provided prior to the entry into force of the Foreign NGO Law, as confirmed at a press conference for the Foreign NGO Law (“Press Conference”) that was held by the head of the NGO administration office of the public security department under the State Council.
Double Approval System by Registration Management Organs and Competent Administrative Authorities
The 2013 State Council-issued Explanation of Proposals of the State Council for Institutional Reforms and Functional Transformation states that certain social organizations, such as industry associations and chambers of commerce, technology, public welfare charities, and urban and rural community services, are subject to a system of direct registration with the civil affairs departments and that competent administrative authorities’ approval is no longer required. On the on the hand, given the complex scenarios involving political, legal or religious social organizations and foreign NGO representative offices in Mainland China, the Proposal mandates that the establishment of such organizations and offices shall be subject to approval by competent administrative authorities.
Consistent with the aforesaid State Council Proposal, the Foreign NGO Law maintains the double approval system involving registration management organs and competent administrative authorities for foreign NGOs.
- Registration Management Organs: The public security department under the State Council and the public security organs of provincial level people's governments are the registration management organs for foreign NGOs. It is worth noting that, in accordance with Administrative Regulations on the Registration of Social Organizations, Regulation on the Administration of Foundations and the Tentative Regulations for the Registration of Private Non-Enterprise Entities, the civil affairs departments are the registration management organs for three types of NGOs registered in mainland China (social organizations, foundations and private non-enterprises entities). Regulation on the Administration of Foundations stipulates in Article 6 that civil affairs departments are the administrative departments responsible for “representative offices established by overseas foundations located in mainland China,” and, in practice, there are a number of foreign foundations’ representative offices registered with civil affairs departments. Issues concerning the legal status of these representative offices are not covered by the Foreign NGO Law, but the head of the NGO administration office at the public security department confirmed at the Press Conference that the office will formulate transitional policies with civil affairs and other relevant departments, and that registration organs will handle registration in accordance with the law provided that the offices file additional documents as required by the Foreign NGO Law.
- Competent Administrative Authorities: The relevant departments and units under the State Council and the relevant departments and units of the provincial level people's governments are the competent administrative authorities for foreign NGOs carrying out activities within mainland China. Foreign NGOs’ establishment of representative offices, modification of registration, and annual work reports for the last and the following year shall submit to registration management organs for filing or to obtain comments. The Public Security Department under the State Council and the public security organs of the provincial level people's governments, together with the relevant departments, shall publish a directory of competent administrative authorities.
Forms of Operation
The Foreign NGO Law specifies in Article 9 that there are only two methods for foreign NGOs to operate in China. They may operate through:
- Registered and established representative offices. Representative offices carry out activities in Mainland China. The restriction that “foreign NGOs may only establish one representative office in China” found in the Second Draft has been removed in the Foreign NGO Law.
- Foreign NGOs carrying out temporary activities within mainland China shall comply with the following requirements:
- Cooperating with state organs, mass organizations, public institutions, or social organizations (hereinafter "Chinese Partner Units").
- the Chinese Partner Unit shall follow national provisions to handle approval formalities, and file with the registration management organs responsible for the area of the proposed activity at least 15 days before the temporary activities are carried out. Where temporary activities must be carried out in emergency situations such as disaster relief or rescues, the time period for filing is not subject to these restrictions.
- The period for temporary activities is not to exceed 1 year, and where there is truly a need to extend the period, a new filing shall be made.
Daily Operation Rules
In accordance with the Foreign NGO Law, foreign NGOs are subject to the following requirements in their daily operation:
- Prohibition on fundraising: Foreign NGOs and their representative offices must not raise funds within mainland China. Regulation on the Administration of Foundations provisions states: “representative offices of foreign funds cannot engage in fundraising in China or collect donations.” The Foreign NGO Law further clarifies that foreign NGOs cannot themselves raise funds in China.
- Annual Plan and Reporting: Representative offices of foreign NGOs shall send an activity plan for the following year before December 31 of each year, which includes project implementation, use of funds and other such content to competent administrative authorities. In addition, foreign NGO representative offices shall file annual work reports for the previous year to competent administrative authorities before January 31 of each year, and, after the competent administrative authorities issue comments, shall send the reports to the registration management organs before March 31 for annual inspections.
- Account Management: Foreign NGOs that have established representative offices shall use funds from bank accounts within mainland China that are recorded with the registration management organs. Foreign NGOs carrying out temporary activities shall use their Chinese Partner Unit's bank account to manage and use funds in mainland China, perform independent bookkeeping, and use funds only as they are allocated. Foreign NGOs, Chinese Partner Units, and individuals must not use any other arrangement to receive and spend funds for project activities inside mainland China.
- Personnel Recruitment: Foreign NGO representative offices hiring employees in mainland China shall report information on employed personnel to the competent administrative authorities and registration management organs. Restrictions including “foreign staff members must not exceed 50% of a representative office’s total staff headcount” and “foreign staff members cannot concurrently work for the representative office of another foreign NGO” in the Second Draft are removed in the Foreign NGO Law. Moreover, the Foreign NGO Law does not specify volunteer recruitment issues, and deletes requirements in the Second Draft that “foreign NGO representative offices shall entrust local foreign affairs service units or other designated government departments to recruit and hire staff members or volunteers in mainland China” and “organizations operating short-term activities in China shall not directly recruit volunteers, and where there is truly a need to recruit volunteers, it shall be conducted by Chinese Partner Units.”
- Membership Development: Foreign NGO representative offices and foreign NGOs carrying out temporary activities must not develop, or covertly develop, membership within mainland China, except as provided for by the State Council. The exceptions, according to answers at the Press Conference, refer to membership of some foreign NGOs (mainly international scientific associations and societies), since those organizations historically recruited membership and the Chinese government encourages scientists and scholars to join foreign scientific associations.