Commentary on the New Charity Undertakings Law:
Socialist Modernization Through Collective Organizations
Tsinghua University NGO Research Center
The China Non Profit Review (2016)
Larry Catá Backer
ABSTRACT: China’s new Charity Law represents the culmination of over a decade of planning for the appropriate development of the productive forces of the charity sector in aid of socialist modernization. Together with the related Foreign NGO Management Law, it represents an important advance in the organization of the civil society sector within emerging structures of Socialist Rule of Law principles. While both Charity and Foreign NGO Management Laws could profitably be considered as parts of a whole, each merits discussion for its own unique contribution ot national development. This essay considers the role of the Charity Law in advancing Socialist Modernization through the realization of the Chinese Communist Party(CCP) Basic Line. The essay is organized as follows: Section II considers the specific provisions of the Charity Law, with some reference to changes between the first draft and the final version of the Charity Law. Section III then considers some of the more theoretical considerations that suggest a framework for understanding the great contribution of the Charity Law as well as the challenges that remain for the development of the productive forces of the civil society sector at this historical stage of China’s development.
After almost a decade of discussion, the Chinese National People’s Congress enacted its first Socialist Charity Undertakings Law (the “Charity Law”). The effort culminated in a consultation of drafts in late 2015 and early 2016. In 2015, Chinese authorities released an initial draft of a Charity Undertakings Law to which Chinese authorities invited commentary from both within China and from foreigners. In January 2016, Chinese authorities circulated a second draft Charity Undertakings Law to which they again invited commentary. The Charity Law was thereafter amended and adopted by the NCP in March 201, effective September 1, 2016.
In announcing this important milestone in the development of the Socialist legal architecture for the People’s Republic of China, Xinhua/China Daily focused on four measures of its importance and three measures of challenges. The most significant portions of the new Charity Law touched on its broad definition of charity, its efforts to simplify the registration and supervision system for charities, its encouragement of public fundraising, and certain favorable tax preferences for charities. These are meant to meet the challenges of charity in China—providing a means for supervising a growing number of social organizations, with an aggregate budget of over 104 billion yuan, and encouraging individual donations which lag behind those of the United States per capita. Additionally, the Charity Law represents a decisive move toward public accountability through state supervision.
Along with the Charity Law, the NCP also approved a regulation of Foreign Non-Governmental Organizations (FNGOs). But while charity organizations are now subject to local civil affairs departments, except to the extent of national legislation, foreign NGOs will put the supervision of foreign NGOs under the public security organs at the national, provincial or local levels. Both represent an effort to organize the productive forces of and better manage the civil society sector in line with the basic national policies of pushing forward the development of Socialist rule of law, Socialist culture and Socialist environmental policies. Both seek to ensure that non-economic activity within China serve the state as its government determines and for the ends of state. But each takes a quite distinct approach to regulatory management. Both have been subject to positive and negative review in both China and the West. Despite their relationship, the administrative coordination between these two regulatory frameworks has yet to be undertaken.
These approaches mark both the great strength and the ultimate contradiction of the management of labor in the provision of public goods within a Marxist Leninist foundational conception of law, society and politics. The Foreign NGO Management Law treats foreign actors as a quasi state actor. In contrast, the Charity Law treats charitable organizations as Leninist labor cooperatives. While both Charity and Foreign NGO Management Laws could profitably be considered as parts of a whole, each merits discussion for its own unique contribution to national development. It is easy to agree with NCP spokesperson Fu Ying that “the importance of the law ‘cannot be underestimated.’”
This essay considers the role of the Charity Law in advancing Socialist Modernization through the realization of the Chinese Communist Party(CCP) Basic Line. That is, it examines the Charity Law from the perspective of its conformity to the CCP Basic Line with reference to the fundamental obligation of emancipating the mind, reform and opening up. “The general starting point and criterion for judging all the Party's work should be how it benefits development of the productive forces in China's socialist society, adds to the overall strength of socialist China and improves the people's living standards”. Considered from the perspective of the CCP line the Draft Charities Undertakings Law offers both challenge and opportunity. The key areas that merit further consideration include provisions dealing with corruption protection, the voluntary nature of service on charitable organizations and the role of foreign NGOs. “The law’s provisions affect not only domestic and foreign non-profits, but also a wide range of companies and corporate social responsibility (CSR) initiatives.”
The essay is organized as follows: Section II considers the specific provisions of the Charity Law, with some reference to changes between the first draft and the final version of the Charity Law. Section III then considers some of the more theoretical considerations that suggest a framework for understanding the great contribution of the Charity Law as well as the challenges that remain for the development of the productive forces of the civil society sector at this historical stage of China’s development. The comments assume familiarity with the Charity Law.
 W. Richard and Mary Eshelman Faculty Scholar & Professor of Law & International Affairs, Pennsylvania State University
 中华人民共和国慈善法 (Charity Law of the People’s Republic of China), enacted March 16, 2016. My thanks to GAO Shan for his excellent assistance and his marvelous translation. English translation available here: http://chinalawtranslate.com/2016charitylaw/?lang=en.
 A Comparison between the first and second draft may be accessed here http://www.backerinlaw.com/Site/wp-content/uploads/2015/06/Comparison_CUL1_CUL2_2016.pdf.
 Charity Law Article 112. See also, Ashwin Kaja and Timothy P. Stratford, “China Builds New Framework Governing Civil Society Organizations, Part I: Charity Law,” Global Policy Watch (Covington & Burling, May 12, 2016) available https://www.globalpolicywatch.com/2016/05/china-builds-new-framework-governing-civil-society-organizations-part-i-charity-law/.
 See, “China's Charity Law takes effect Thursday,” Xinhua/China Daily, Aug. 31, 2016. Available http://www.chinadaily.com.cn/china/2016-08/31/content_26658510.htm.
 Ibid. (charity includes efforts to help the por as well as to advance education, culture, health care, sports, and environmental protection).
 Ibid. (charitable organizations to register only with local civil affairs departments).
 Ibid. (encouragement for charities to apply for permits to raise funds publicly, substantially loosening the current restrictions on broad fundraising among the populace). Xinhua noted: “Internet fundraising has become an easy platform for fraud, so the law requires online charities to work with 13 websites approved by civil affairs authorities, including www.gongyi.net under the Tencent Foundation.” Ibid.
 Ibid. (tax benefits for donors, both individuals and enterprises, with some permission for overseas donations to reduce import duties and value added taxes).
 "There was very little public accountability," said Rupert Hoogewerf, founder of the Hurun China Rich List. "When there's fund-raising from the public, you have the right to know how that money is being used." Megha Rajagopalan, “China set to introduce charity law though some unlikely to benefit,” Reuters, (March 10, 2016), available http://www.reuters.com/article/us-china-parliament-charities-idUSKCN0WC0UB.
 中华人民共和国境外非政府组织管理法People's Republic of China Law on the Management of Foreign Non-Governmental Organizations' Activities within Mainland China (Adopted at the 20th meeting of the Standing Committee of the 12th National People's Congress on April 28, 2016). See also, “The Good — And Bad — About China’s New Charity Law,” The Wall Street Journal (March 16, 2016) available http://blogs.wsj.com/chinarealtime/2016/03/16/the-good-and-bad-about-chinas-new-charity-law/.
 For the Charity Law, see, e.g., Reza Hasmayj, “The Pros and Cons of China’s NGO Laws,” The Diplomat (March 23m, 2016), available http://thediplomat.com/2016/03/the-pros-and-cons-of-chinas-ngo-laws/. Jia Xijin, "Legislation for Foreign NGOs; how will the second boot land?" originally in Chinese in Caijing; English version http://chinadevelopmentbrief.cn/articles/legislations-for-foreign-ngos-how-will-the-second-boot-land/. Western criticism tended to focus on the effects of the new Charity Law on the creation of Western style civil society sectors in China. See, e.g., Josh Freedman, “China’s Charitable Turn?: How Beijing is Redefining the NGO Sector,” Foreign Affairs July 10, 2016, available https://www.foreignaffairs.com/articles/china/2016-07-10/chinas-charitable-turn.
 See, e.g., Dong Zijin, “Five Considerations Regarding the Charity Law,” Alliance Magazine (Herman Zheng, trans., June 6, 2016), available http://www.alliancemagazine.org/blog/five-considerations-regarding-the-charity-law/ (“Thus, in spite of the Charity Law, foreign charitable organizations regarded as charitable organizations cannot be included in the Charity Law management. This would require organic links in the management system in order to achieve the necessary combination, and a delicate balance between the management of charities and foreign NGOs.”)
 See Larry Catá Backer, "Walls and the Symbolic Barrier in the Era of Reform and Opening Up" Law at the End of the Day (May 7, 2016), available http://lcbackerblog.blogspot.com/2016/05/larry-cata-backer-on-chinas-new-foreign.html.
 On the concept of Leninist labor cooperatives as they opérate in Cuba, see, Jesús Crz Reyes and Camila Piñero Harnecker, “An Introduction to Cooperatives,” in Cooperatives and Socialism: A View From Cuba (Camila Piñeiro Harnecker, ed., Palgrave MacMillan, 2013). For critical analysis, see, e.g., Larry Catá Backer, “The Cooperative as Proletarian Corporation: The Global Dimensions of Property Rights and the Organization of Economic Activity in Cuba,” Northwestern Journal of International Law and Business 33(3):527-618 (2013).
 “The Good — And Bad — About China’s New Charity Law,” supra.
 Constitution of the Communist Party of China (“CCP Constitution”), General Program ¶ 9.
 Kaja and Stratford, “China Builds New Framework Governing Civil Society Organizations,” supra.
Tuesday, October 25, 2016
New Paper Posted: Commentary on the New Charity Undertakings Law: Socialist Modernization Through Collective Organizations
(Pix Larry Catá Backer 2016)
I am happy to report that I have posted a new paper for comment: Commentary on the New Charity Undertakings Law: Socialist Modernization Through Collective Organizations. It is expected to be published in the China Non Profit Law Review.
The paper draft may be accessed at SSRN HERE.
The Introduction and Abstract follow.