Global Policy Forum

New Finance Rules Add to Squeeze on China NGOs



By Emma Graham-Harrison

March 12, 2010

Regulations posted on the website of China's foreign exchange watchdog will require most overseas donations go into special foreign exchange bank accounts. They must also be accompanied by a sheaf of paperwork including a donation agreement signed by a notary and translated registration documents from the donor.

Sector workers say the new rules will allow the government to keep a closer eye on where funds are coming from and going to, and give officials a tool for controlling political activities they are unhappy with.

"There will be an impact on NGOs and rights defenders," Yao Yao, director of law and public participation at non-government organisation Civil Society Watch in Beijing, told Reuters.

"If they want to disrupt these organisations, they can use these rules as an excuse."

Stability-obsessed leaders in Beijing have long feared the potential power of civil society groups they do not control and have been clamping down on the sector in recent years.

Many non-profit groups already register as companies because they cannot get approval to set up as NGOs, but can then be targeted on charges that are not overtly political.

A pioneering legal rights advocate was formally arrested for tax evasion last year, shortly after his Open Constitution Initiative, which brought together scholars, lawyers and rights activists, was shut down for non-payment of taxes.

The new regulations govern all donations to "domestic organisations", not just non-governmental ones.


China's State Administration of Foreign Exchange, which put out the rules, is more usually involved in managing foreign currency reserves and overseeing cross-border capital flows.

It regularly issues detailed regulations governing the minutiae of how money can flow in and out of the country. A prominent activist said it was unclear if the rules were meant to be politically restrictive or were just coming from a body used to exercising tight control of financial affairs.

But if it is fully implemented, it could be a massive blow to a sector already struggling after years of tightening controls.

"It will be really hard for organisations to get funding, many of them will find it hard to survive" said Wan Yanhai, a leader of an AIDS and gay rights organisation, Aizhixing.

"At present we estimate that with these formalities even if you have applied successfully for money, it will take 3 months to get it. It will be devastating," Wan said.

For religious groups there is a further requirement that any donation of more than 1 million yuan ($146,500) has official approval from the central or provincial government.

Wan said at least two organisations had already faced demands they bring their international donor with them to a notary's office to certify the donation agreement.

"Is every major international organisation going to come to China to get a notary's stamp on their donations? And when they get here who is to say officials will not give all kinds of excuses not to give them the certificates?" he said.

The notice was posted on the SAFE website ( at the end of last year and the new regulations came into effect on March 1. It was little noticed until NGOs were presented with the new demands.


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