Karla W. Simon Professor of Law Catholic University of America October 2009

1. Two Steps Forward and One Step Back – Developments in the Regulation of Civil Society Organizations in China Karla W. Simon Professor of Law Catholic University of America October 2009

2. HISTORY • 1911-1949: Republic of China allowed not-for-profit organizations (NPOs) or civil society organizations (CSOs) • At collapse of Republic, est. 80,000 NPOs • 1950 to late 1980’s: NPOs were essentially abolished and became in reality part of the State or the Party • 1977-78: Department of Social Organizations established within Ministry of Civil Affairs (MoCA) • 1982 Constitution recognized the right to freedom of association in Article 35 • 1986: Promulgation of General Principles of the Civil Law (GPCL)

3. HISTORY (cont.) • GPCL recognizes 4 kinds of legal persons • Enterprises • Government organs (jiguan) • Public institutions (shiyedanwei)(PIs or PSUs) • Social organizations (shehuituanti)(SOs) • SO’s treated as part of noncommercial sphere that provides public goods • Religious institutions regulated quite separately from SO’s • Regulations published for foundations (jijinhui) in 1988 and for SOs in 1989

4. HISTORY (cont.) • 1998: Regs. for Regis. & Adm. of SOs (RASO) • 1998: Temp. Regs. for Regis. & Adm. of “civil non-business institutions” (minbanfeiqiyedanwei or min fei) (TRANCNI) • 2001 Trust Law enacted (charitable trusts) • 2004: Regs. for Regis. & Adm. of Foundations (RAF) • 2006: Draft Charity Law begun (although now appears to be on hold) • No new regulations for foundations and SOs since 2004

5. Problems for Chinese NPOs • Dual Management • Difficulty in finding Sponsor Agency • Regis. can be denied if another SO is already operating in that field in that locale • Sponsor not required even to reply to request to sponsor • This leads NPOS to not register, which leaves them vulnerable

6. A Case Study • Dual Management may lead NPOs to register as commercial entities, which also leaves them vulnerable • Case of Gongmeng and XuZhiyong (Open Constitution Society) • The authorities charged that it was improperly registered as a commercial entity (claiming that it instead was carrying out social organization type activities) and that it failed to pay taxes on a $100,000 grant received from Yale’s China Law Center. Given Mr. Xu’s international stature and reputation for working within the law, legal scholars both in China and abroad said that his prosecution suggested a new level of repression. MrXu later released, but unclear whether tax evasion charges have been suspended.

7. Hopeful Developments -- 1 • Registration of Narada Foundation without a sponsor • Narada Foundation is a private foundation set up in 2007 with funds from an important Chinese businessman • Although no sponsor was required, a high official of the CSO management department of MoCA sits on the board.

8. Hopeful Developments - 2 • White Paper on Political Democracy, 2005, sets out two roles for NPOs/CSOs: • First, provision of basic public services that State cannot or need not provide any longer, or provide them in partnership with State • Second, as constructive sources of citizen input • “The building of political democracy with Chinese characteristics is progressing with the times, exhibiting great vigor and vitality. . . . When democratic centralism is practiced, it requires that we give full play to democracy and discuss matters of concern collectively, so that people’s wishes and demands are fully expressed and reflected. . . . There is still a long way to go in China’s building of political democracy.”

9. Hopeful Developments - 3 • The 2009-2010 National Human Rights Action Plan “The construction and management of social organizations will be strengthened to enhance their functions in serving society. Revisions will be made to the Regulations … to ensure social organizations conduct activities in accordance with the law and their respective charters. The government encourages social organizations to participate in social management and public services, encourages the establishment of private non-enterprise entities in the fields of education, science and technology, culture, health care, sports and public welfare. It gives play to the social functions of social organizations such as industry associations, societies, and chambers of commerce, and develops and standardizes all kinds of foundations to promote programs for the public good.”

10. Hopeful Developments - 4 Outsourcing Social Services to CSOs ICCSL was commissioned by the World Bank and MoCA to study models of outsourcing of social services to CSOs in ten countries and prepared a 150 page report for the government. Report is available at http://www-wds.worldbank.org/external/default/main?pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&theSitePK=523679&entityID=000333038_20090917230533&searchMenuPK=64187283&theSitePK=523679 .

11. Hopeful Developments - 5 Local experiments on the dual management system Five different methods for getting rid of the dual management system are under local experimentation: i. getting rid of dual management altogether and moving to a simple registration system; ii. moving to a “documentation system;” iii. adjusting the supervisory authority’s permission process; iv. reducing the oversight role of the supervisory authority; and v. making it possible to have a one-stop shop, with MoCA having both registration and supervisory powers.

12. Hopeful Developments – 5 cont. • The documentation system (instead of registration) is a very promising development, and it is being used for small local CSOs that provide services to the poor and other persons suffering social or economic disabilities (children of migrant workers, etc.) It does not require a formal registration, but a CSO is granted “recognition” by the local civil affairs authorities if it files papers with them. • One-stop shop (no sponsor) is being used for certain types of CSOs, such as trade associations (these obviously do not threaten the government but assist with economic development.

13. Hopeful Developments - 6 • A report published by the China Trade Associations and Chambers of Commerce says that the Ministry of Civil Affairs and the government of Shenzhen, a southern city located in Guangdong Province, signed an agreement in July under which they will attempt a reform in Shenzhen of parts of the social organization regulation (SO) system applicable throughout China. According to the agreement, some aspects of the 1998 regulations will no longer apply and new measures will replace them in this experimental project. The new measures include:

14. Hopeful Developments – 6 cont. a. Trying to establish a system for social organizations to register directly with the civil affairs department instead of finding a competent business unit first.b. Giving the Shenzhen civil affairs bureau the right to regulate foundations which are located in Shenzhen but have business both inside and outside China.c. Giving the Shenzhen civil affairs department the right to accept registration of social organizations that have business throughout China (under the 1998 regulations national SOs are required to register with the national civil affairs bureau). Presumably some of the measures will be limited to trade associations and will not apply to all SOs

15. STRAWS IN THE WIND • White Paper: “By way of media publicity of drafts of laws and regulations, consultation and discussion with experts, seminars and hearings, the Chinese government has stepped up the practice of open government to ensure the effective participation of the public in its work.” This has played out in practice – various regulations and laws have been vetted in public before they are enacted; there has been dissent from the Party’s ideas, both on the right and the left (e.g., property law)

16. STRAWS IN THE WIND (cont.) • 2004 Reg. for Foundations was discussed publicly in draft form before being finalized, and the draft law on corporate responsibility is also subject to public discussion; the foundation evaluation system is also being discussed at seminars • In Feb. 2006 for the first time NPOs were selected on a competitive basis to receive state funds for national programs to work on poverty. • BeiDa NPO Law Center presented a report to government in March 2006 recommending abolition of dual management system and to have one comprehensive law for all corporate and NPO entities. One professor works closely with MoCA on NPO/CSO law issues.