On January 1, 2017, new legislation in China came into force that will significantly impact charities and not-for-profits wanting to operate in China, namely the Law of the People’s Republic of China on Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China (“Overseas NGO Law”). The Overseas NGO Law came into force after China’s new Charity Law came into effect on September 1, 2016.
Although these laws are complicated and involve technical interpretation, a high level overview of the Overseas NGO Law sets out that they apply to all overseas nongovernmental organizations (“NGOs”) operating in mainland China, including foundations, social groups, think tanks, and other NGO social organizations. Further, it allows NGOs to carry out activities that benefit the public in the areas of “economy, education, science, culture, health, sports, environmental protection […] poverty and disaster relief.” However, overseas NGOs are not permitted to “engage in or finance profit-making or political activities [… nor] illegally engage in or finance religious activities,” or “solicit donations in the mainland of China.”
In order for overseas NGOs to engage in permitted activities, they are required to register an established representative office in China, even where the NGO wishes to carry on temporary activities. To apply to establish a representative office, NGOs will need to satisfy several requirements including being legally established overseas, having the ability to bear civil liability, and having existed and engaged in substantive activities overseas for more than two years.
It is important to note that China’s new Charity Law also provides for a special designation for “non-profit organisations” operating with a charitable purpose in China. According to the Charity Law, in order for an organization to apply to be designated as a “charitable organization”, they must be carrying on charitable activities, which include: helping the poor and the needy; assisting the elderly, orphans, the ill, the disabled, and providing special care; alleviating losses incurred by natural disasters, accidents, public health incidents and other emergencies; promoting the development of education, science, culture, health, sports and other causes; preventing and alleviating pollution and other public hazards; protecting and improving the eco-environment; and other public interest activities.
Although these laws were passed pursuant to a stated effort to strengthen China’s “social sector,” in the process they also increase barriers for overseas NGOs wanting to operate in mainland China and prohibit certain activities, including engaging in or financing religious activities. In this regard, it is important for charities and not-for-profits in Canada contemplating carrying on or funding operations in China to consult with legal counsel in order to determine the impact of these new laws and to ensure they are able to satisfy all of the necessary requirements prior to proceeding.