China's non-governmental organisations have come a long way in safeguarding their existence in society and in playing an important role in supporting the country's economic development. For over two decades, the "third sector" has been allowed to assist the state in filling in the gaps of service provision where the state and the market have failed to deliver.

However, the 700,000-800,000 NGOs - in the estimate of Zhuang Ailing, founder of the Shanghai-based Non-Profit Organisation Development Centre - that make up China's third sector today are far from achieving their full potential due to a fundamentally weak organisational base characterised by underdeveloped laws and institutions.

Until recently, Chinese NGOs have been operating under laws that were drafted shortly after the Tiananmen incident in June 1989 when the state wanted to keep an iron grip over NGO activity. The two major statutes - "Regulations on the Registration and Management of Social Organisations" and "Regulations on People Managed Not-For-Profit Institutions" - provide the basic legal framework for non-profit activity in China, defining the state's multiple involvement in the third sector: as the NGOs' sponsor, as supervisor of NGO activity and as authoritative body approving their financial and official backing.

Such legal and institutional constraints have encouraged NGOs to adapt to this political environment and accept their obligation to operate in intimate consultation with the state leadership. The extent to which Chinese NGOs have embraced their social normative role has been diminutive to date. However, recent developments in the political climate show that the government may be willing to compromise some of its authoritative hold over NGOs for the first time in many years.

Until recently, the state has functioned as the sponsor for Chinese NGOs, supervised their activities, and was the final authority that they answer to. This is slowly changing.

This burgeoning civil society can be seen in the increased role of NGOs in environmental activism in China, the promulgation of new rules governing foundations, the growth of democracy at the grassroots level in rural China and the growth of legal aid.

China's environmental movement leads the way

18 January 2005 marked a landmark victory for Chinese environmental NGOs when China's State Environmental Protection Administration (Sepa) took notice of their protests and ordered thirty major construction projects to shut down because they had not conducted the legally required environmental impact studies. The ruling forced the majority of these construction projects to comply with the requirements to conduct environmental impact assessment and pay fines of $24,000 for each project.

Of the perpetrators, one was the state-owned enterprise China Three Gorges Corporation, the influential developer behind the $27 billion Yangtze river dam. The corporation, which has three projects affected by the ruling, attempted to ignore it but eventually was forced to comply. This is considered to be the biggest victory of Chinese NGOs to date.

Green Earth, Global Village and Green Earth Volunteers were among the NGOs that had spent months campaigning against the construction projects. Interestingly, the case has highlighted the important capabilities of NGOs. The environmental NGOs were useful sources of local information to the central government, which was subsequently integrated into this latest policy decision. In addition, the NGOs were able to assist the state in extending the reach of watchdog agencies.

What is happening today is extraordinary. Twenty years ago this kind of grassroots political involvement in China would have been unheard of.

This NGO victory followed an earlier state decree, which was won by another NGO campaign effort. Yu Shaogang of Yunnan People's River Basin and Wang Yongchen of Green Earth Volunteers led the movement to oppose the building of thirteen dams over the River Nu in Yunnan. Their vehemently-fought battle received wide media coverage, and was eventually recognised by the central government. This marked the first time that Chinese environmental NGOs cooperated on such a large scale. Hong Kong's Ming Pao reported that Wen
Jiabao temporarily stopped the construction of the thirteen
dams because of "a high level of concern in society" and
"opposition by environmentalists".

These two state rulings won in favour of environmentalists have increased the profile of Chinese NGOs, which is important to strengthen the institution of participation and activism in NGOs among the people. The state has been seen to encourage volunteerism and strengthen NGO activities in pro-environment policies. For example, Sepa worked with environmental NGOs in twenty-two cities to organise voluntary work to promote environmental protection and ecological conservation. Approximately 100,000 Chinese students took part in the joint initiative.

Pan Yue, vice-director of Sepa, is an advocate of public participation in environmental campaigns. In a press report he admitted that the government cannot do everything, however, NGOs need coordination, training and support. Furthermore, Pan said that Sepa would help to establish an NGO cooperation network in the next two years and provide professional training for small grassroots organisations. This is intended to fulfil Pan's vision of establishing full participation, a disclosure system for environmental information and a democratic decision-making process for environmental issues.

State agencies are not the only institution with which NGOs have forged cooperation links. Already efforts are underway to develop the capacities of NGOs in various partnerships with international associations. In December 2004, the China Association for NGO Cooperation and the US-based environmental NGO, Environmental Defence, agreed in Beijing to help strengthen Chinese NGOs in the next three years. The partnership hopes to build China's capacity to increase social participation in areas of climate change, biodiversity, ocean pollution and environmental protection. Zhang Jianyu, a visiting energy scholar at Tsinghua University, commented that Chinese laws provide opportunities for NGOs to express their views but NGOs need to improve their awareness of such opportunities and exploit them. For example, Chinese NGOs failed to take part in a public hearing organised by Sepa in August 2004, after the state agency issued a notice on its official website seeking comments on a draft rule on emission permission license management. The Business Daily Update reported that among the sixteen participants there was not one NGO. This shows that there is still a long way to go for NGOs to exercise their roles.

The environmental movement In China has gained momentum in training independent activists. They have also come a long way in changing people's attitudes towards NGOs as they become increasingly accountable to the public.

However, the increase of NGOs organising environmental programmes throughout the country in government-sponsored agencies and unofficial grassroots organisations, including student clubs at Chinese colleges and universities, has increased opportunities for greater civilian participation. Already the environmental movement has gained momentum in training independent activists, changing people's attitudes towards NGOs and fulfilling the accountability function on behalf of the state supervisory mechanism.

Twenty years ago this kind of movement would have been unheard of, but in today's political climate, the central government is encouraging the social forces from below to help root out corruption among local authorities and enforce China's new pro-environmental policies. It is questionable how much autonomy the state is willing to permit before it feels this new power base become too independent for the government's liking. Nevertheless, the progress of China's 2,000 environmental organisations is slowly setting an organisational base for Chinese civil society.

New rules for foundations

Another manifestation of the state's increasing efforts to further Chinese civil society is the release by the ministry of civil affairs of groundbreaking new rules for foundations. The "Regulations on the Management of Foundations" took effect from July 2004. The regulations intend to protect the legal rights of the foundation, donors and beneficiaries; promote participation of social organisations; simplify the process of establishing charitable foundations; and standardise the organisation and activities of foundations. The regulations divide foundations into publicly funded and non-publicly funded foundations. Overseas foundations, which are included in the latter category, will no longer be required to conduct background checks to set up operations in China.

For the first time, China has supported the enlargement of local democracy in the countryside.

However, the regulations stipulate that foundations in this category are not allowed to raise funds from the Chinese public. The regulations have also changed the funding provisions, raising the minimum amount required to establish a foundation from 30,000-100,000 renminbi (RMB) to 2 million-8 million RMB. This will not deter large international NGOs like Greenpeace or the Ford Foundation but will certainly keep small community groups outside the law.

The regulations require all NGOs to register with the ministry of civil affairs and tax bureaux so that foundations, donors and beneficiaries receive preferential tax treatment, which will result in cost savings and also hopefully encourage increased donations. Although the regulations do not increase the institutions' autonomy, they will certainly attract private overseas foundations to operate in China and increase available financial resources for the third sector.

It is hoped that the new rules may be the beginning of reform for NGO laws to reduce some of the problems NGOs have when operating in China. At present many NGOs face difficulty in finding a sponsor to complete the registration procedures. To overcome such a problem, many NGOs register as companies to operate their projects, though not without incurring enterprise tax rates that are substantially higher.

Qiao Shenqian, deputy head of the NGO registration service centre at China's ministry of civil affairs, predicted that NGOs would soon be able to register their organisations without having to be sponsored by a government department. Speaking at a Beijing seminar on international cooperation and public participation in October 2004 (and widely reported), Qiao revealed that withdrawal of the requirement has been debated for years, and will be likely to happen in the near future.

The news report went on to speculate about the contents of draft new rules for the management of social organisations that will include tax deductions and the public supervision system. No mention was made of changes of entry requirements for NGOs. It is hoped that if and when the new draft rules for social organisations are promulgated, this and the mechanics of establishing an office and setting up a public account for public donations will be simplified.

Democracy in the Chinese countryside

Huge breakthroughs in the Chinese countryside are changing the face of governance and politics in China. For the first time, the state has supported the enlargement of local democracy in the countryside. The state council has issued a circular giving villagers in China a greater say in supervising village committees and officials. This has great implications for the development of Chinese civil society.

The circular forms part of the undertaking by Hu Jintao, China's president, and Wen Jiabao, prime minister, to address the "three rural issues": village affairs, agriculture and peasants. It is intended to crack down on the problem of local officials and villagers undermining the party's rule in the countryside. A lack of transparency, rampant corruption and oppression by village officials has been the focus of complaints by hundreds of thousands of rural dwellers for years.

The circular contains six directives on how village committees should conduct their affairs, and details how villagers can monitor the officials and committees they elect. It makes clear that the right of villagers to information must be protected. Village committees will be expected to publicise their policies and decisions on matters such as officials' wages, use of state funds, the implementation of family-planning policies and the distribution of land and relief funds by the central and local governments. Supervisory committees must be established in villages to ensure village committees publish the required information.

In addition, the circular specifies that villagers can complain to the supervisory committees if they have doubts about the published information. It encourages the establishment of finance committees made up of members of the supervisory bodies that will be responsible for keeping an eye on village officials' use of funds. They will report to the village committees.




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To read a Global Envision article about globalization in China, see China's Win-Win Globalization.

To read Global Envision articles about the Chinese economy, see China Joins the Global Economy - Part One and China Joins the Global Economy - Part Two.