Until recently, there have been few formal regulations regarding
the operation of foreign non-governmental organizations (NGOs) in
China. While the Chinese government has expressed skepticism and,
at times, hostility toward foreign NGOs, many NGOs –
including many prominent U.S. based organizations – currently
operate in China. Based on new legislation in China, however, the
status of the more than 7,000 foreign NGOs operating in China
– in addition to many other organizations wanting to expand
into the country – now remains in question.
In late April 2016, the People's Republic of China passed
the Foreign Non-Governmental Organizations Management Law (the
"Foreign NGO Law"), which provides considerable
restrictions on the operations of NGOs in China. This article
highlights a few of the key changes that NGOs should be aware of in
light of the Foreign NGO Law, which will take effect on January 1,
NGOs Required to Register:
Under the Foreign NGO Law, all NGOs currently operating in China
– as well as those who wish to operate in China – will
be required to register with the government and partner with a
Chinese entity. The foreign NGO must register either (1) a
representative office if it plans to engage in long-term activities
in China, or (2) a temporary event or activity in China. In either
case, such registrations will be subject to review and approval by
the local police department and Public Security Bureau (PSB).
Previously, foreign NGOs were overseen not by the PSB, but by
the Ministry of Civil Affairs. The Ministry is considered by many
to be less powerful within the government than the PSB, so this
change may indicate that NGO registration is being taken more
seriously by the Chinese government.
Eligibility to Register:
Under the new law, foreign NGOs that have a political or
religious background are not permitted to register. Entities that
have expressed criticism of the Chinese government may also be
subjected to heightened scrutiny. Similarly, it is anticipated that
NGOs focused on advocacy or preparatory work will be subject to a
high level of scrutiny before registration.
The PSB will look to the NGO's history when determining
whether it should be permitted to register. A foreign NGO will be
expected to have operated successfully for at least two years in
its home country before attempting to register in China.
Requirements After Registration:
After the NGO has been accepted for registration by the PSB, the
NGO must apply to another government department to obtain a
"supervisor" for the work. The other departments (e.g.,
Health and Education) typically are controlled by the PSB, and may
be reluctant to agree to supervise the work as doing so puts the
other department at risk of incurring the wrath of the PSB.
Once registered, the foreign NGOs are not permitted to engage in
fundraising or political activity. If the NGO is suspected of
activity viewed as harmful to the Chinese government
–including "spreading rumors" or obtaining state
secrets – it may be shut down and penalized by the
government, including by confiscation of properties or income,
warnings, and potentially criminal detention of employees.
Penalties for Failing to Register:
An unregistered foreign NGO may not engage in any activity in
China directly or indirectly, and may not authorize or fund any
Chinese entity or individual to engage in activity on behalf of the
unregistered NGO. If an entity violates the law by engaging in
activity in China without having registered, the entity and those
acting on its behalf may be subjected to penalties including:
confiscation of illegal properties or income, warnings, and/or
criminal detention up to 10 days.
More Information To Come:
Implementing rules, which may provide more guidance regarding
enforcement, may be released by the State Council of the Ministry
of Public Security to supplement the Foreign NGO law between now
and the effective date of January 1, 2017. We will provide more
information on this topic as it becomes available.
Anyone with standard form contracts who deals with small business must review the contracts for potential unfair terms.
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