VZCZCXRO2892
RR RUEHCN RUEHGH
DE RUEHBJ #0451/01 0560904
ZNY CCCCC ZZH
R 250904Z FEB 10
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 8241
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 000451 
 
SIPDIS 
 
E.O. 12958: DECL: 02/25/2035 
TAGS: CH ECON PGOV PHUM PREL SOCI
SUBJECT: CHINA'S NEW CHARITY LAW ON THE HORIZON; CONTACTS 
HOPEFUL NPC WILL PASS THIS YEAR 
 
REF: 09 BEIJING 2733 
 
Classified By: Political Section Chief Aubrey Carlson 
               for reasons 1.4 (b)(d). 
 
¶1. (C) Summary:  Draft legislation to promote charitable 
organizations and foundations in China is on the National 
People's Congress (NPC) agenda for this year, according to 
several contacts.  The Ministry of Civil Affairs (MOCA) has 
sponsored a draft national Charity Law and has encouraged 
provincial governments to enact similar statutes.  For 
example, Jiangsu province recently passed new legislation 
governing charities to take effect May 1, and the Beijing 
municipal government is considering similar measures. 
Potential changes include expanding the definition of what 
constitutes a charitable organization, ending the widespread 
practice of forcing corporations to donate to 
government-affiliated charities, and creating a direct filing 
system to streamline registration of non-profit entities. 
However, contacts caution the Charity Law would not lead to 
fundamental changes in the strict government supervision of 
civil society.  The definition of "charity" will still be 
narrow, and faith-based charities are unlikely to receive 
formal recognition.  End Summary. 
 
Bill in Sight, Passage Likely 
----------------------------- 
 
¶2. (C) The Charity Law "is in the legislative track" for 
2010, Pei Bin (protect), director of the Beijing office of 
Business for Social Responsibility (BSR) and a former 
Ministry of Civil Affairs (MOCA) official, told PolOff 
February 8.  As of February, the draft legislation was with 
the State Legislative Affairs Office and would soon pass 
though a series of markup sessions before heading to the 
National People's Congress (NPC) for a vote.  Although the 
working draft has not been made public, Pei Bin had been told 
that it was "very likely" the draft legislation would be 
published to solicit feedback.  In a meeting with PolOff 
February 11, Wang Zhenyao, Director General of MOCA's newly 
created Department of Social Welfare and Promotion of 
Charities, said that he thought the NPC would likely pass the 
Charity Law in 2010.  Not all contacts were so optimistic. 
Liao Anxi (protect), a program officer at The Asia Foundation 
(TAF) noted February 4 that a precursor to the current draft 
legislation had been sent to the State Council in 2006 and, 
after thorough revision, placed on the NPC calendar for 2008 
but never became law.  Liao said the current version would 
likely undergo a similarly lengthy process of revision, so 
passage this year was far from certain. 
 
Potential Breakthroughs 
----------------------- 
 
¶3. (C) According to Pei Bin, the Charity Law, as currently 
drafted, would usher in three important changes.  It would 
widen the legal definition of a charity in China to include 
public entities in addition to non-profits.  It would 
prohibit local governments from forcing corporations to 
donate money to government-affiliated charities, a common 
practice.  Only charitable organizations would be able to 
solicit donations, and these organizations would be required 
to adhere to information disclosure guidelines about funds 
received.  The central government hoped this measure would 
encourage more transparency in the business sector.  Finally, 
the dual-management system (under which an NGO must first 
obtain a formal government sponsor to legally register and 
operate) would give way to simplified registration, which was 
already underway as part of a pilot program in Shenzhen. 
Such reforms would diminish the current policy "disconnect" 
between forcing corporate social responsibility on one hand 
while restricting charities on the other, commented Nancy Kim 
(protect), TAF deputy country representative in Beijing. 
 
After Quake, Government Realizes NGO Benefits 
--------------------------------------------- 
 
¶4. (C) MOCA was the most open-minded government entity when 
it came to promoting and expanding the role of charities in 
Chinese society and was "pushing the Charity Law hard," said 
TAF's Liao.  MOCA's Wang confirmed that his ministry was 
indeed lobbying for quick passage, though he noted that 
promotion of charities and NGOs in general did not 
necessarily require new legislation since MOCA's internal 
rules affected the situation on the ground more than formal 
changes of law.  In fact, Wang said, most internal rules for 
managing NGOS were not written and how tightly NGOs were 
controlled varied greatly depending on which government 
agency had oversight over a particular group.  For example, 
Wang said, he took a hands-off approach to NGOs that were 
 
BEIJING 00000451  002 OF 002 
 
 
partnered with his agency because he believed civil society 
could only advance with less government interference.  As 
such, pairings between NGOs and his department were in name 
only, giving these organizations de facto independence.  The 
next step was to start pairing grassroots NGOs with larger 
organizations such as the Red Cross or chambers of commerce 
and allow them to register.  Under this model, Wang said, 
there would be no government sponsor, only an established 
mentor organization to oversee the healthy development of 
upstart NGOs. 
 
¶5. (C) The 2008 Sichuan earthquake catalyzed both corporate 
and individual charitable giving in China, contacts agreed. 
This tragedy was a "watershed moment" for civil society, 
especially small grassroots NGOs and foundations, because 
government officials saw the practical benefits these groups 
could deliver firsthand, Wang remarked.  Civil society groups 
had responded immediately, and telephone calls from NGO 
leaders began pouring into Wang's office.  Wang gave them 
permission to enter the disaster area without formal approval 
because he knew any delay would have rendered their 
assistance useless.  Although a self-described "liberal 
insider," Wang believed he was not alone among Chinese cadres 
in his support for a more independent civil society.  Many 
other officials backed a more open approach to social service 
NGOs and charitable organizations because they "know the 
needs" of local people and were better equipped to provide 
services in areas where the government was falling short, 
thus contributing to social stability.  Obsessed with 
"showing a strong face" to the outside world, the Chinese 
leadership was neglecting internal problems such as crushing 
rural poverty, a rapid aging of society, left-behind children 
of migrant workers, labor unrest, and other destabilizing 
factors, Wang observed. 
 
Local Governments a Step Ahead 
------------------------------ 
 
¶6. (C) MOCA, contacts said, had been encouraging regulatory 
innovation among provincial governments in the absence of a 
nationwide Charity Law.  With the most to gain from outside 
social service organizations, charities and foundations, most 
local governments considered rules that an NGO had to obtain 
a formal government sponsor to legally register and operate 
to be "stupid," quipped BSR's Pei Bin (reftel).  Local 
experimentation was common when a given system was broken at 
the national level, she added.  For example, Shenzhen had 
implemented fast-track NGO registration in limited sectors 
such as commerce, social welfare and philanthropy.  This 
"Shenzhen model" won a local governance award, and Beijing's 
municipal government was in the process of following suit by 
hiring NGOs as contractors to provide social services and 
promising to help charitable NGOs find government sponsors 
and register within 20 days, noted TAF's Liao.  Jiangsu 
province, meanwhile, had approved a lengthy set of 
"charitable sector promotion regulations" to take effect on 
May 1.  The Jiangsu regulations would ban unaffiliated 
individuals or agents from soliciting donations on behalf of 
an organization, a move Liao believed was an anti-fraud 
measure and not politically motivated.  The Beijing municipal 
government had drafted formal Jiangsu-style charity 
regulations with hopes of passage at the 2010 municipal 
congress, Liao told PolOff February 4. 
 
"Don't Expect Too Much" 
----------------------- 
 
¶7. (C) Although contacts said passage of a new Charity Law 
would be an important step in the development of civil 
society in China, they warned that China's leaders would 
continue to remain suspicious of NGOs.  TAF's Liao cautioned 
that foreign observers should not "expect too much" from the 
Charity Law.  The bill's effect would likely be watered down 
by multiple revisions, she pointed out, and the legal concept 
of what constituted charity would likely remain very narrowly 
defined.  There "had not even been discussion" of faith-based 
charities, saying the issue of allowing religious charities 
to register was "off the table," and educational and 
environmental NGOs might also be excluded under the Charity 
Law, Liao said.  Furthermore, the Charity Law would contain 
only principles, not specifics.  As with any legislation in 
China, the true impact of the Charity Law would be felt 
through implementation rules, which were yet to be decided, 
Pei Bin concluded. 
HUNTSMAN