China's New Charity Law to Loosen Rules But May Face Resistance

China's National People's Congress has passed a charity law that promises to support the country's nonprofit sector but could spark resistance from certain groups, including some of the organizations it aims to help, the Wall Street Journal reports.

The new law, which makes it easier for charities to register and raise funds, enhances tax incentives for giving and makes it easier for the wealthy to establish charitable trusts, could boost a sector that has been hampered by government restrictions and scandals despite the increasing number of wealthy entrepreneurs in China and a growing Chinese middle class. The law also imposes tougher transparency requirements on charities in a bid to restore the public's confidence in the sector.

Crucially, according to Edward Cunningham, director of the Ash Center's China Programs and the Harvard Kennedy School Asia Energy and Sustainability Initiative, the law does not limit the number of nonprofit groups that can work in an area — a tactic other governments have used to keep civil society fragmented. "From the philanthropy side and public policy side, it's very well written," Cunningham told the Journal. The law could run into resistance, however, from local government officials who don't understand or appreciate the charitable sector, or who, given the central government's aggressive anti-corruption campaign, may be afraid of being seen as too cozy with the charitable sector. "There's this assumption these days," said Cunningham, "that when there are intimate partnerships between private wealth and local government, there necessarily must be something nefarious going on."  

Grassroots organizations also are worried that the law is unclear on newer forms of fundraising such as crowdfunding. And some analysts told Reuters the law is unlikely to protect groups that advocate for human rights, including groups that have been subject to a broad crackdown by President Xi Jinping's government. According to a recent draft of the legislation, such groups will be banned from sponsoring activities that "endanger national security," which could give authorities greater latitude to take action against groups deemed a threat.

Western governments and nonprofits have been putting pressure on China to revise a second proposed law that would put foreign nongovernmental organizations under the jurisdiction of the police and could effectively force most to leave the country. "There's a scenario where you squeeze the foreign groups out, and you co-opt some of the local groups," Cunningham told the Journal, "and then you might actually get a shrinking of civil society."

"The Good — and Bad — About China's New Charity Law." Wall Street Journal Blog 03/10/2016. Megha Rajagopalan. "China Set to Introduce Charity Law Though Some Unlikely to Benefit." Reuters 03/10/2016.