[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]



 
TO SERVE THE PEOPLE: NGOs AND THE DEVELOPMENT OF CIVIL SOCIETY IN CHINA

=======================================================================

                               ROUNDTABLE

                               before the

              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 24, 2003

                               __________

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              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                    LEGISLATIVE BRANCH COMMISSIONERS

House                                  Senate

JIM LEACH, Iowa, Chairman              CHUCK HAGEL, Nebraska, Co-Chairman
DOUG BEREUTER, Nebraska                CRAIG THOMAS, Wyoming
DAVID DREIER, California               SAM BROWNBACK, Kansas
FRANK WOLF, Virginia                   PAT ROBERTS, Kansas
JOE PITTS, Pennsylvania                GORDON SMITH, Oregon
SANDER LEVIN, Michigan*                MAX BAUCUS, Montana
MARCY KAPTUR, Ohio*                    CARL LEVIN, Michigan
SHERROD BROWN, Ohio*                   DIANNE FEINSTEIN, California
JIM DAVIS, Florida*                    BYRON DORGAN, North Dakota

                     EXECUTIVE BRANCH COMMISSIONERS

                 PAULA DOBRIANSKY, Department of State*
                 GRANT ALDONAS, Department of Commerce*
                D. CAMERON FINDLAY, Department of Labor*
                   LORNE CRANER, Department of State*
                   JAMES KELLY, Department of State*

                      John Foarde, Staff Director

                  David Dorman, Deputy Staff Director

* Appointed in the 107th Congress; not yet formally appointed in 
  the 108th Congress.

                                  (ii)
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

Hamrin, Carol Lee, Chinese affairs consultant and research 
  professor, George Mason University, Clifton, VA................     2
Ma, Qiusha, assistant professor of East Asian Studies, Oberlin 
  College; research associate, the Mandel Center for Nonprofit 
  Organizations, Case Western Reserve University, Oberlin, OH....     5
Simon, Karla W., professor of law, and co-director, the Center 
  for International Social Development, Catholic University of 
  America, Washington, DC........................................     7
Yuan, Nancy, vice president, the Asia Foundation, Washington, DC.    10

                                APPENDIX

                          Prepared Statements

Ma, Qiusha.......................................................    28
Simon, Karla W...................................................    36
Yuan, Nancy......................................................    38


TO SERVE THE PEOPLE: NGOs AND THE DEVELOPMENT OF CIVIL SOCIETY IN CHINA

                              ----------                              


                         MONDAY, MARCH 24, 2003

                            Congressional-Executive
                                       Commission on China,
                                                    Washington, DC.
    The roundtable was convened, pursuant to notice, at 3 p.m., 
in room 2255, Rayburn House Office Building, John Foarde [staff 

director] presiding.
    Also present: David Dorman, deputy staff director; Mike 
Castellano, office of Representative Sander Levin; Tiffany 
McCullen, representing Grant Aldonas, Department of Commerce; 
Andrea Yaffe, office of Senator Carl Levin; Lary Brown, 
specialist on labor issues; Steve Marshall, senior advisor; 
Susan Weld, general counsel; and Andrea Worden, senior counsel.
    Mr. Foarde. Good afternoon, everyone. Why don't we get 
started.
    Let me welcome you on behalf of the Congressional-Executive 
Commission on China, particularly, Chairman Jim Leach and Co-
Chairman Senator Chuck Hagel.
    We are meeting today in a very difficult time for our 
country and for the world. And I know that all of the members 
of our Commission support our fighting men and women abroad and 
are praying for them and their families in this difficult time.
    Also, I would like to introduce our new deputy staff 
director for the CECC staff. He is my old friend and fellow 
language student, Dave Dorman, who has been hired by Senator 
Hagel to be the staff director for the Senate and gets the 
title of deputy staff director for this Congress. David's first 
day is today and his first of many issues roundtables is today. 
David, welcome.
    Mr. Dorman. Thanks very much.
    Mr. Foarde. I would also like to remind you that there are 
two additional issues roundtables in the next 2 weeks. 
Normally, we try to have these every other week, but with the 
Easter recess coming up in very short order, we decided to pack 
the front part of April a little heavier. On Tuesday, April 1--
note that is a Tuesday, rather than a Monday--we are having a 
roundtable on ``Lawyers Without Law in China,'' beginning at 
2:30 p.m., in this room. Also on Monday, April 7, we will have 
a roundtable on ``Tibet and the Future of the Tibetan 
Language''--also at 2:30 p.m. in this room.
    Our topic for today is ``NGOs [non-governmental 
organizations] in China and the Development of Civil Society.'' 
A question that many of us, and as I see the faces of many 
friends in the room, many friends here in Washington care a 
great deal about. We are fortunate to have with us an 
extraordinarily distinguished panel of experts. I will 
introduce them in more detail before they speak, but let me 
just say that Carol Lee Hamrin, Ma Qiusha, Karla Simon, and 
Nancy Yuan are here with us today.
    So, let us begin. I am really pleased to introduce an old 
friend and former State Department colleague, Carol Hamrin. 
Carol is a Chinese affairs consultant and also research 
professor at George Mason University where she works with the 
Institute for Conflict Analysis and Resolution, and the Center 
for Asia Pacific Economic Cooperation.
    Carol's current research interests include the development 
of the non-profit and non-governmental sector in China, 
cultural change, human rights and religious policy, and 
indigenous resources for conflict management.
    Carol, please.

 STATEMENT OF CAROL LEE HAMRIN, CHINESE AFFAIRS CONSULTANT AND 
    RESEARCH PROFESSOR, GEORGE MASON UNIVERSITY, FAIRFAX, VA

    Ms. Hamrin. Well, I have the honor of starting today. The 
topic I have been asked to speak on is faith-based 
organizations in China and the possible role they may play in 
civil society.
    I want to emphasize the growing importance of these 
organizations, both domestic and foreign faith-based non-profit 
organizations [NPOs], which have been relatively invisible 
groups, and I think deserve more careful attention. I want to 
make first some careful distinctions between two kinds of 
organizations.
    One is religious organizations that promote traditional 
activities of worship and prayer, religious sacraments, 
teaching the laity, training clergy, proselytizing, and 
publication of sacred texts and other religious materials. This 
is what we normally think of as a faith-based organization. 
This is a tightly controlled sector in China, as we all know.
    Distinct from that is what I am going to focus on in my 
comments today, and that is faith-based non-profit 
organizations. These are non-profits that have faith-based 
motivations, and hiring policies, and funding sources, but do 
not do religious work, narrowly defined as in the other group. 
They offer social services in other sectors--not the religious 
sector--like education, health, and charitable work under the 
supervision of education, health, or civil affairs authorities, 
not religious affairs authorities.
    I would say before I continue, though, that both types are 
important for us to consider as part of China's growing civil 
society. They are voluntary organizations. They operate at the 
grassroots or popular level. Many are national or at least 
inter-provincial in scope. They have a growing autonomy and 
operation. We can come back and discuss that later. Both types 
actually do provide sources of 
social capital, ideas, values, and networks that help people 
work 
together on a voluntary basis. This is voluntary association 
for mutual assistance and other purposes.
    As I began to do some reading in the body of research on 
civil society development and democratic political reform in 
Asia, Africa, and Latin America, people are finding that there 
is a complex interaction between educated elites and grassroots 
organizations, including religious organizations. In fact, some 
would claim that faith-based organizations are the catalyst 
behind forming modern voluntary associations that transcend the 
traditional ties of kinship in local community to form a more 
modern civil society. So, I think it is worth our attention to 
look at both and the role they may play.
    In this brief few minutes that I've got, I want to focus on 
giving you a few examples of domestic and international faith-
based NPOs working in China, and then talk about some policy 
implications.
    I would start with the Amity Foundation, which was one of 
the very first government organized NGOs [GONGOs] to be formed 
in China. It has operated since the early 1980s. Some people 
think it is independent, but actually, it is registered under 
the United Front Work Department, just like churches and other 
religious organizations. It has been a channel for outside 
funding and services from mainline Protestant religious 
organizations, many of them in Europe and Hong Kong, and some 
in North America.
    They began with teaching English just in eastern China. 
They are based in Nanjing, but expanded to social welfare and 
health work, and now to rural development in southwest China. 
They really developed a lot of experience and expertise, as 
well as a budget of $7.5 million last year. They have a good 
reputation in China among the other NPOs, and have really been 
one of the 
pioneers in China.
    Another more recently organized counterpart is the Beifang 
Jinde Social Service Center in Hebei Province, which is the 
first domestic Catholic NGO. And I think it has come much later 
just because of the political problems in the relationship with 
the Vatican.
    What is very important for us to notice, but hard for us to 
notice, is the smaller-scale, often unregistered local social 
service agencies that have just sprung up spontaneously all 
over China, by individuals, congregations, and religious 
associations of various kinds. Just to mention a few, there is 
a youth club that operates, virtually, on the Internet and by 
e-mail, in Ningbo, affiliated with the Catholic diocese there.
    Another is in Wenzhou, Zhejiang called the Salt and Light 
Christian Fellowship. It's business people that are providing 
flood relief and community service.
    From my research, I can see that most domestic Buddhist, 
Taoist, and Islamic humanitarian work has kind of grown in 
tandem with domestic and foreign pilgrimages to special holy 
sites. This kind of religious tourism provides funds for 
development in these areas, sometimes just small scale welfare 
projects, but even universities and hospitals are developing 
out of this.
    The government response to such grassroots development is, 
basically, to kind of play catch-up ball, granting legitimacy 
to them ex post facto in order to get access to the resources 
and try to find some means of supervision over these 
developments. So, I've just learned that the official 
Protestant organization has set up a new social service 
department to encourage and provide guidance to such local 
initiatives. They mention specifically the need to generate 
domestic funds--instead of just foreign funds--specifically, 
from rich churches in coastal areas. So, the commercial factor 
is there at work.
    International faith-based NGOs are doing important work in 
China. Most denominational groups work directly with their 
counterparts. For example, the Mennonites and Amity are 
implementing a Canadian Government aid project in rural areas 
in China. The Islamic Development Bank works through provincial 

Islamic Associations to fund schools, primarily.
    The non-denominational, but still faith-based organizations 
tend to partner directly with government officials, usually at 
the local level, in non-religious sectors as I mentioned. I can 
give more 
examples of that in the question and answer period if you want.
    I would just mention that this kind of work really expanded 
after the late 1990s, starting with the floods of 1998, the 
historic floods in central China. Many of these large 
organizations, like World Vision International, which is one of 
the largest international relief agencies, began to work in 
China at that time, and have since really expanded their 
operations. United Board for Christian Higher Education in Asia 
is another such organization working in rural areas, helping 
rural women.
    On top of this effort, flood relief, or disaster relief, 
earthquakes and such, the government's new policy to develop 
western China to try to address the regional disparities has 
focused on attracting international resources, whether 
governmental or business or non-governmental. This has led 
these international organizations, 
including faith-based ones, to develop micro-loan projects and 
holistic community development projects all over northwest and 
southwest China, including significant work in Muslim, Tibetan, 
and other ethnic minority villages. These include Buddhist and 
Islamic organizations, as well as Christian organizations.
    I will leave for discussion a point that I want to make, 
that there has been significant impact from these outside 
organizations working in China with new ideas and new ways of 
operating. The modeling effect, in particular, has really 
started to change the way local officials are working with 
society and their own NGOs. This trend is going to accelerate 
in this decade.
    Policy implications include, first, pay attention to what 
is going on at the grassroots in China and to social and 
cultural bilateral relations, not just to political and 
economic relations. I commend the Commission for doing just 
that.
    Second, do no harm. Recognize that the role of the Federal 
Government is limited in this arena. Change does not come 
overnight. It will be driven from the inside, and the outside 
actors will be primarily non-governmental or even business 
through corporate social responsibility [CSR] and so forth.
    Third, I would just recommend the Commission pay attention 
to and even check on whether there is a ``level playing field'' 
in the use of taxpayer money for the support of civil society, 
rule of law, and democratization in China. I think there may be 
inadvertent exclusion or discrimination in programming to the 
detriment of faith-based U.S. NGOs that might support Chinese 
faith-based NGOs.
    In all the conferences on NGOs so far in China funded from 
outside, there is no mention of faith-based NGOs and their 
work. They are off the radar screen for Chinese and American 
organizers and sponsors, despite the central role of these 
faith-based organizations in our own civil society. Even the 
modeling of inclusion in such things as conferences, as well as 
projects, would in and of itself promote Chinese officials to 
take a different, more positive attitude toward the role of 
religious organizations in Chinese society.
    Mr. Foarde. Carol, thank you very much.
    Let's continue with Professor Ma Qiusha, who is assistant 
professor of East Asian Studies at Oberlin College and research 
associate at the Mandel Center for Non-Profit Organizations at 
Case Western Reserve University. An expert on Chinese NGOs and 
civil society, Professor Ma's publications include, among 
others, ``Defining Chinese Non-Governmental Organizations, 
Autonomy and Citizen Participation.''
    Welcome, Professor Ma. Thank you very much for sharing your 
expertise with us this afternoon.

   STATEMENT OF MA QIUSHA, ASSISTANT PROFESSOR OF EAST ASIAN 
STUDIES, OBERLIN COLLEGE; RESEARCH ASSOCIATE, THE MANDEL CENTER 
 FOR NONPROFIT ORGANIZATIONS, CASE WESTERN RESERVE UNIVERSITY, 
                          OBERLIN, OH

    Ms. Ma. My focus today is on the definition, 
classification, and the terminology of Chinese NGOs. Before I 
go into detail, I would like to make a very general summary 
based on my years of research on Chinese NGOs because time is 
so short.
    As you can see, the first two pages of my statement are a 
very general argument. Basically, I would like to argue if it 
is possible under China's one-party state for non-governmental 
organizations to sustain and play an important role in China. 
My answer is yes.
    On the government side, I would like to argue that during 
the past two decades the Chinese Government has played an 
important and crucial role in promoting NGOs in China, although 
it is only in certain areas. On the other hand, the condition 
of the Chinese Government's policy to promote NGOs is that the 
Chinese Government believes the state has the ultimate control 
over NGOs.
    On the NGOs side, I would like to say that these 
organizations are non-governmental organizations, although they 
are still quite close to the state. They are the most important 
instruments for the people to participate in public affairs, to 
develop their personal interests and to get their voices heard. 
On the other hand, the development is unbalanced and in the 
very preliminary stages.
    So having said that, I would like to first go directly to 
the classification of Chinese NGOs to answer the question, What 
are Chinese NGOs? I would like you to see chart 1 and chart 2.
    Let's start with chart 2. Chart 2 is, in fact, a chart 
about American NGOs. I would like you to see how the U.S. non-
profit sector is classified in chart 2, compared with the 
Chinese classification in chart 1. The difference we can see 
here is, in the U.S. classification, there are two types of 
NGOs. One is membership organizations. Basically, they serve 
members' interests. The second and bigger category is Public 
Service.
    For China, on the one hand, there are social organizations. 
On the other hand there is a newly created legal status called 
non-governmental, non-commercial enterprises, ``minban feiqiye 
danwei.''
    First, what is the difference between the U.S. 
classification and the Chinese classification? In the U.S. 
classification, foundations and funding intermediaries are 
classified as public service. So are the churches. On the 
Chinese side, those foundations are classified with membership 
associations as social organizations.
    Also, religious groups are not under either side. That 
means, according to the official classification, that religious 
groups are not NGOs. They are not managed and registered with 
the Ministry of Civil Affairs, but rather under another 
official agency.
    Before the Communist Party came to power, China had many, 
many private associations and institutions, such as private 
schools and hospitals. After 1949, first, the majority of civil 
associations were suppressed; and second, all the private 
service providers were nationalized, following the Soviet 
Union's model.
    Therefore, during that period in China there were no true 
private or non-governmental organizations of any type. However, 
social organizations continue to exist and some old social 
organizations, such as the Red Cross and other professional 
associations, remain. Although eventually they were 
nationalized, on paper they were still called social 
organizations.
    Since 1950, the Chinese Government has issued three 
official documents regulating NGOs, in 1950, 1988-1989, and 
most recently in 1998. So, during these three rounds of 
documents, the first two documents only have social 
organizations. Thus, any type of organization that is either on 
paper or actually exists is non-
governmental, is classified as a social organization.
    However after the reforms, the government did realize the 
importance of using non-governmental organizations. Social 
service 
providers, or professional service providers are under three 
major promotions. The first time was in the early 1980s. The 
Chinese Government called for ``shehui liliang banxue,'' 
generating social 
resources for education. The second time was in early 1990, the 
government had a slogan called ``da shehui, xiao zhengfu'' 
small government, big society. In the late 1990s, the 
government called for ``shehui fuli shehui ban'' social welfare 
provided by the society.
    Under these slogans, non-governmental social and 
professional service providers surged rapidly, and since the 
government had no legal term to register them, it was a big 
mess. A lot of these organizations registered as for-profit. 
Therefore, in 1998, the government created a new term called 
``non-governmental, non-commercial 
enterprises'' for these non-governmental service providers.
    I would like to compare the Chinese definition of NGOs with 
the Western definition. In the handout you see the very popular 
Western definitions of NGOs contain five features. On the other 
hand, the Chinese definitions really address: (1) not funded by 
the government; (2) these organizations should not run for 
profit; and (3) they are voluntary. So, there is no emphasis on 
non-governmental and no emphasis on self-governance.
    There are three differences between the Western definition 
of civil society and the Chinese definition of civil society. 
First, civil associations, especially political civil 
associations, are the core of civil society in the Western 
sense. However, the Chinese definition of civil society does 
not include this.
    Second, civil society theoretically or ideologically, in 
fact, citizenship, civil rights, representation, and the rule 
of law. However, Chinese civil society does not emphasize these 
aspects.
    Third, in the West, civil society represents democracy and 
sometimes confrontation between state and society. However, the 

Chinese definition of civil society emphasizes constructive and 
mutually dependent relations between the society and the state.
    Finally, the NGO terminology. There are currently six 
Chinese terms that are the equivalent of the English word, NGO. 
Most confusing are ``people's organizations'' and ``mass 
organizations.'' These organizations are high profile, well 
established, and highly government controlled. However, many 
Westerners use them to represent Chinese NGOs. Therefore, they 
neglect more grassroot or community-based NGOs.
    I would like to discuss this more in the question and 
answer session.
    [The prepared statement of Ms. Ma appears in the appendix.]
    Mr. Foarde. Perfect. Let's do that.
    Our next speaker is Karla Simon, professor of law and co-
director of the Center for International Social Development at 
the Catholic University of America. Professor Simon is also the 
co-founder of the International Center for Not for Profit Law, 
and editor and chief of the ``International Journal for Civil 
Society Law,'' and has published widely on these topics. She 
has also done extensive work on the legal framework for civil 
society organizations in China.
    Karla, welcome. Thanks for coming this afternoon.

STATEMENT OF KARLA W. SIMON, PROFESSOR OF LAW AND CO-DIRECTOR, 
   THE CENTER FOR INTERNATIONAL SOCIAL DEVELOPMENT, CATHOLIC 
             UNIVERSITY OF AMERICA, WASHINGTON, DC

    Ms. Simon. Thank you, John. Thanks to the Commission for 
inviting me. I would like to say, I am a law professor. So, 
some of this terminology may be a little bit difficult. So, 
what I am going to do is start by referring to my written 
statement. And let me just add for those who don't have copies 
of it, if you give me your card, I can e-mail it to you.
    I talk about--the topic is ``Creating an Enabling Legal 
Environment for Chinese NPOs, non-profit organizations.'' And 
when I talk about an enabling legal environment, I want people 
to think about these four different things that really need to 
exist in order for such an enabling legal environment to exist. 
And then we can talk about how the Chinese legal environment 
for NPOs measures against this.
    The first is that there should be supportive legal 
framework legislation, which is the legislation relating to the 
establishment, governance and oversight of NPOs. Second, there 
should be supportive legislation regulating NPO-state 
relations, allowing partnerships between state entities and 
NPOs to be established. And this is the crucial point, both 
with respect to service provision and with 
respect to policy development. There should be supportive tax 
legislation permitting various forms of tax relief for NPOs and 
their 
donors, thus creating an environment in which NPOs and the 
business sector can work together for the good of society. 
Finally, there needs to be other necessary legislation that 
would assist the NPO sector in its operations. For example, 
there should be good fundraising legislation.
    In the work that I have done in China--and I have also 
worked in many other transition countries and developing 
countries--it is very clear that the non-profit sector, the NPO 
sector, is one that really does create problems for the state. 
It creates problems for the state because, as both Carol and 
Qiusha have said, it is very easy to attract resources from 
outside the country into the not-for-profit sector for purposes 
of service delivery, for purposes of carrying on other 
activities.
    Second, by virtue of the fact that the non-profit sector 
does provide services frequently to parts of the society that 
are poor and under-represented, that means that the civil 
society or non-profit organizations really have access to the 
people, and thus to political power. So, the combination of the 
two things, the economic resources coming from outside and 
frequently from inside--and certainly as I'll suggest, China 
has been very thoughtful in thinking this through--the economic 
resources with the access to the people, and therefore, to 
political power makes a state that is insecure about its own 
position, and particularly a state transitioning from socialism 
very fretful--shall we say--about anything that may encourage 
the non-profit sector.
    But, I think China is not alone. When one looks at some of 
the other transition countries, Russia, in Central and Eastern 
Europe, if you look at other countries in Asia, if you look at 
countries in Latin America, in Africa, you see the same 
phenomenon. So, China is not alone in treating the non-profit 
sector with both suspicion and fear.
    On the other hand, one of the things that my research 
indicates is that China has been really smart about what it has 
been doing in terms of trying to attract the resources, 
particularly, of overseas Chinese, into the development of the 
social agenda that the state has. Carol mentioned the fact that 
there has been this development in the West. That's actually 
been happening for some period of time. One of the first big 
major NGOs that--I mean NGOs in the sense that they are very 
closely related to government--has been working in China is the 
Foundation for Underdeveloped Regions.
    So, beginning in the 1980s, when there was a loosening of 
some of the strictures that were placed on semi-governmental 
organizations--if we can use that term--through the new 
regulations that were adopted at that time, in 1988 and 1989, 
there was a real attempt to create structures along side the 
state that would be attractive in particular to overseas 
Chinese, for purposes of bringing in money from the overseas 
Chinese so that it could be harnessed for the development 
projects that the state really wanted to see happen.
    So, it is true that the regulatory mechanism began to open 
up in the late 1980s and then again in the late 1990s. But in 
large part, I think it was in trying to find ways that would 
make the resources coming in from overseas Chinese more 
available. It was also directed to creating an environment in 
which the people of China would feel that they could make 
contributions to these organizations. A very good example of 
that is Project Hope of the China Youth Development Foundation, 
which obviously, does incredible fundraising throughout the 
country and brings resources from local Chinese into projects 
that deal with poor children.
    In my work in China, I have been able to see a variety of 
different stages. One of the things that becomes very clear to 
me is that the brilliance of the Chinese Government in thinking 
these things through and in actually responding to needs that 
occur is now finally being aided and abetted by an openness to 
outside technical assistance.
    Before 1998, none of the technical assistance, none of the 
discussions, none of this was open. In the first years, when I 
started working in China, everything was done quietly and all 
meetings were held at the Ministry of Civil Affairs, and when 
Chinese 
delegations came to the United States, they were very small 
meetings and there was never any openness. But, beginning in 
1999--and this is after the 1998 regulations were published--
with a 
conference that was funded by the Asia Foundation, there was 
openness.
    My view of this is that the Chinese Government finally 
thought that it was in a position to actually take account of 
things in an open fashion. The Chinese Government sent the 
acting head of the NGO bureau to speak in the United States at 
a conference, openly. The paper was published. There have been, 
subsequent to that, several conferences held. One of the points 
that I make in my paper is that these issues of creating a 
legal enabling environment are going to be the subject of four 
conferences within the year beginning in November 2003. Four 
big conferences, two of which are paid for 100 percent by the 
Chinese Government.
    So, in my view what is happening is that there is a 
progressive move toward trying to create a more open and 
supportive legal enabling environment. However, China isn't 
there yet. In my view, one of the reasons why there is so much 
openness to the outside--I am involved right now in a 
translation project to make all sorts of legislation from all 
around the world available in Chinese. There are many things 
that they haven't been able to think through.
    I suggest some of these objectives in the end of my written 
statement. First, the state should move away from overt control 
of NPOs and their activities and toward membership and 
fiduciary government structures, with continuing government 
oversight.
    Second, more mechanisms should be provided within the law 
for transparency: Good internal reporting, record keeping and 
accounting rules, buttressed by the development of the 
governance norms previously mentioned.
    Third, there should be clear accountability, but not 
control mechanisms. This is the hardest thing for the 
government. There should be accountability mechanisms to the 
state for funds received and for programs implemented. And 
there should be accountability to the public. There needs to be 
more openness about what NPOs are doing, and the way in which 
they actually carry out their 
programs. There should be more thought given to a clearer tax 
exemption regime, as well as creating tax incentives for the 
working population through workplace giving, and to 
rationalizing the existing incentives for entrepreneurs and 
business, which are really quite good, but they are not 
terribly rational.
    Finally, there should be better regulation of fundraising 
and asset management by NPOs. That should be strengthened 
because at the present time there is an effort to move some of 
the state 
assets into the non-state sector, and there needs to be some 
clarity about how that is going to happen.
    When I spoke in 1999 at the Asia Foundation conference, I 
said at that time that the government was still viewing NPOs as 
children to be taken by the hand. However, the NPOs regard 
themselves, essentially, as teenagers. At the present time--
since 1999, the government, I think, is beginning to understand 
that perhaps they are growing up, but there is a long way that 
they need to go to have that happen.
    [The prepared statement of Ms. Simon appears in the 
appendix.]
    Mr. Foarde. Thank you very much.
    Our next panelist is Nancy Yuan. Nancy is vice president 
and director of the Washington office of the Asia Foundation. 
She works directly with the Foundation's China programs in law 
reform, U.S. relations and exchanges, and speaks regularly on 
these issues, issues relating to the rule of law and the 
development of civil society in China. Since 1979, the Asia 
Foundation has been supporting a wide range of programs in 
China, focused on law reform, civil 
society development, and U.S.-China relations.
    Nancy, welcome. Thanks for coming.

 STATEMENT OF NANCY YUAN, VICE PRESIDENT, THE ASIA FOUNDATION, 
                         WASHINGTON, DC

    Ms. Yuan. Thank you, and thank the Commission very much for 
inviting me to speak at this session. I am very pleased to do 
so. One of the benefits, I think, of being the last panelist to 
speak is that I can say much less than I had intended with 
regard to a number of these issues.
    I think in looking over the broader context of how non-
governmental organizations have developed over the course of 
time in China, we need to take a slightly broader perspective 
in looking over social-economic developments, and why the 
Chinese Government feels that the non-governmental sector is of 
benefit in China's overall economic development.
    I think the advent of economic reform and globalization has 
led to a wide variety of demands on the Chinese Government 
which they are not able to meet. The Chinese Government, like 
many other governments around the world these days, has budget 
deficits. They are downsizing the bureaucracy. Decentralization 
is taking place on a very large scale. As a result, the kinds 
of services that people are used to are in decline with reform 
of state-owned enterprises, and services related to farmers and 
the countryside, there are many services that the government 
can no longer deliver and they find it of benefit to allow the 
activities of non-governmental organizations to continue 
because they provide services, often in the health and 
education area, pilot projects for elder care, and a wide 
variety of other areas that the government is no longer, in 
some ways, able to deliver. In some respects, the collaboration 
between government and non-government organization makes the 
line a little bit blurred, in fact, in terms of who is actually 
delivering services and who is responsible for that delivery.
    As a donor organization in China--as John mentioned--donors 
who are involved in development in China tend to use standard 
criteria to look for potential partnerships to Chinese 
organizations, that is, independence from the government, 
representation of their constituents and participatory 
decisionmaking. Chinese non-governmental organizations aren't 
necessarily that far along in terms of their own independence, 
and as Carol said, many of them are informal organizations, 
sometimes family associations, sometimes just groups of people 
in villages that get together and see a need. So, they are not 
organized under Western criteria with a board, a mandate, and a 
budgetary process in the way that most organizations in the 
West are.
    That creates a dilemma for donors as we look at 
organizations that we may want to partner with. What it 
requires is an on-the-ground knowledge of exactly who these 
organizations are, whether or not they can be accountable or 
responsible for the programs that they deliver, and in fact, if 
they are delivering the services that they say they are going 
to deliver. There is a healthy skepticism, I think, among 
donors in addition to wanting to be supportive of the non-
governmental sector, in general.
    I have been asked to talk about both what international 
organizations and donors are doing in China, as well as what 
they might consider doing in the future. The non-governmental 
sector has developed very quickly over the course of time. The 
China Development Brief--which many of you may be familiar 
with--looks at non-governmental activity in China. They 
concluded that China is receiving well over $100 million each 
year in project funding directly from, or channeled through 500 
international NGOs and foundations. It is an enormous amount of 
money. If you look at gifts-in-kind, which includes books and 
equipment and other kinds of donations, that adds substantially 
to the total.
    There are also large numbers of organizations according to 
the China Development Brief. Seven-hundred different types of 
grant making foundations, advocacy groups, humanitarian 
organizations and faith-based organizations that are providing 
assistance to NGOs in China.
    The Asia Foundation has been providing assistance over a 
long period of time to non-governmental organizations and has 
now turned its attention to groups like the China NPO Network, 
which acts as a clearinghouse for Chinese NGOs, providing a 
monthly NGO forum, which they do with Foundation support, that 
brings together officials, business, and NGO leaders to talk 
about legislative issues, collaboration and problems that NGOs 
face in China.
    One of their most recent efforts is to look at self-
regulation and what that means in terms of standards and ethics 
for the non-profit community. The Tsinghua University NPO 
Center has also received a lot of attention with regard to 
their research on regulatory issues facing NGOs, as Karla 
mentioned in the conference the Foundation supported.
    In addition to international donor organizations, which I 
will come to in a minute, multinational corporations have also 
supported civil society development in the spirit of corporate 
social responsibility. These include companies like Nike, 
Adidas, Reebok, Levi Strauss, Microsoft, Ford Motor Co., 
General Motors, and the U.S.-China Business Council, which 
support a wide range of activities in health and education, 
rule of law, poverty alleviation, and sometimes in policy 
research as well. So, it is true that there is a fairly 
substantial commitment from the private sector to civil society 
development in China.
    What more can we do to support the non-governmental sector? 
International organizations can play a significant role in 
strengthening human resources capacity, in program development, 
in providing opportunities for conferences, networking and 
exchanges, and while donors should not overestimate the ability 
of NGOs to work in sensitive or political areas, the efforts of 
NGOs to operate more independently and push the envelope in 
some fields are 
worthy of support.
    In addition to strategic planning, looking at program 
implementation, which are sort of the jazzy things for 
international organizations to support, one thing we should be 
looking at is the 
operational aspects of how NGOs really work. How do they 
account for their funds? How do they do budgets? How do they 
decide what their mandate is going to be? Those kinds of nuts 
and bolts activities will enable them to better report to 
donors, to be sustainable over time in attracting other 
funding, as well as to comply with international ethical 
standards. International organizations can help to improve the 
enabling environment for NGOs, as Karla said, this includes 
providing support for NGO law and improving the overall 
regulatory environment, as well as support for research and 
interaction with like-minded organizations.
    There are quite a number of university-based research 
centers for the non-profit sector. Fudan University has a new 
one. Tsinghua University, of course. There are two different 
organizations, centers at Beida, Peking University. And there 
is one in Guangdong University, and at Zhongshan University, 
where there is research going on in the not-for-profit sector.
    Important for you to know as members of the staff of the 
Commission, all of these have international donor support. None 
of it is American. Which brings me to my last point.
    In terms of official assistance to Chinese NGOs, the U.S. 
Government has lagged behind other donors. We've seen this in 
the case of rule of law efforts previously, but this is also 
the case in terms of official assistance to the non-profit 
sector. The only two American organizations with a resident 
presence and a long track record of supporting civil society 
organizations in China are the Ford Foundation and the Asia 
Foundation. Faith-based organizations have had a long history, 
as well as other foundations, but they are not all present in 
China, in terms of being resident in China, and their 
activities are sporadic depending upon their focus.
    There is a marked absence of American groups working 
consistently on the ground to develop the capacity of Chinese 
organizations. On the other hand, other international donors, 
namely the European Union, Canadian International Development 
Agency [CIDA], and Australia Aid [AusAid] each provide more 
than a half a million dollars a year in multi-year grants to 
support civil society development in China. These donors, among 
others, have a commitment, not only to the civil society 
sector, but they also provide funding as well as attention--and 
by attention, I mean they have dedicated staff in the embassies 
who follow civil society development.
    Official U.S. assistance to the civil society groups, as I 
said, has been limited. If the U.S. wants to support the 
positive trend toward NGO development, funding should be 
provided to knowledgeable groups to do so.
    Thank you.
    [The prepared statement of Ms. Yuan appears in the 
appendix.]
    Mr. Foarde. Thank you very much, Nancy.
    Four excellent presentations and lots of food for thought. 
We will go directly to our question and answer session.
    Exercising the prerogative of the chair, I would like to 
begin with a question to Professor Ma, if you would please. I 
am very interested in the link between existing Chinese NGOs 
and government organizations at the national, provincial, and 
local level. How strong, in your view, are those continuing 
links? And what types are they? Are they financial? Or in terms 
of policy guidance? In terms of personnel? How do those links 
work? I take it that for some NGOs, those links are more 
tenuous than for others. And I would like your views on all of 
those questions, if you would, please.
    Ms. Ma. There are high profile NGOs. In fact, we call them 
GONGOs. They have close relations with the government. 
Basically, like in the term, they are people's organizations, 
and the mass organizations. At the national level, there are 19 
of them, and nationwide 200 of them. These organizations still 
get full funding from the government. Also the personnel get 
all the fringe benefits of civil servants--this treatment is 
equal to that of government 
employees.
    Other organizations founded by the government in the 1980s, 
like many foundations--the so called non-governmental 
organizations. Now the government has pushed them to what they 
call a financially self-sufficient, self-governing, and self-
recruiting status. These GONGOs use a Chinese saying ``pigu zhi 
hui naodai,'' meaning that wherever one sits determines what 
one thinks. The government right now has a policy called 
``sannian duannai,'' meaning wean in 3 years. So these 
organizations right now have to find a way to survive, to 
sustain themselves. Therefore, they are beginning to think 
differently than the government's perspective.
    However, personnel-wise, there is a very complicated policy 
for the people who work at NGOs. For example, if you came to 
work in these organizations before a certain number of years, 
you will continue to receive your pension, your free 
healthcare, and your government subsidized housing. However, if 
you are a new employee, everything starts new. You work on a 
contract. Most NGOs do not provide a pension plan, healthcare, 
or insurance. So, there is a wide range of autonomy or 
closeness with the government. I should say for those like the 
All China Women's Federation and All China Federation of Trade 
Unions, these organizations will continue to be fully funded 
and very closely under the government's control. However, other 
organizations such as the trade unions, previously official 
industrial management agencies, will eventually leave 
government and serve their constituents more.
    Mr. Foarde. Very interesting. Carol, do you have a thought 
on that, because I have a minute or so.
    Ms. Hamrin. I just wanted to add something to that. I think 
that in the section that Professor Ma has called the People's 
Organizations, these eight big organizations, that is where the 
religious organizations also fit in. The point being that the 
Party controlled all of society through overtly Party-
controlled organizations, like trade unions, and women, and 
youth. There was secret party control over organizations such 
as religions, which really shouldn't be run by the Party.
    But it's the same kind of setup--very vertical control from 
the Party, to the government, to these social organizations. 
That has been changing. The dynamic there has been changing, in 
that even those tightly controlled organizations are spawning 
their own NGOs. Like the Communist Youth League setting up the 
Youth Foundation, which has done this Project Hope effort, and 
is part of the China NPO Network.
    As they are forced to seek other sources of funding, other 
than government funding, which they are being told they have to 
do, then they gain autonomy. They have to start pleasing 
donors, not just the government and so forth. So, the market 
dynamic is what is driving greater autonomy, even though it is 
still very differentiated. But the dynamic is the same. 
Operating even under these really tightly controlled 
organizations.
    Mr. Foarde. Thank you. A good point. Let me go on to my 
friend and colleague, Dave Dorman, for a question or two if you 
have one. Please go ahead.
    Mr. Dorman. Thanks, John. As John pointed out before, this 
is my first day on the job. I, frankly, can't think of a better 
way to spend my first day than to participate in a roundtable 
on a topic as important as this one, in front of a panel like 
this. Listening to you share your knowledge, your research, and 
your learning on this topic has been invaluable. And I thank 
you for that.
    This is a question for anyone who would choose to address 
it. I wanted to start with a quote from Professor Ma, which I 
found very interesting. I saw nods of agreement, so I think 
there was a consensus on this. Professor Ma stated that NGOs 
are the most important vehicle for individuals in China to 
express their views. That suggests to me that there may, 
perhaps, be a difference in the ability of individuals to 
express their views through NGOs, as opposed to individually or 
through other means. Is that, in fact, the case? Does your 
research show that?
    Ms. Ma. You want to know, besides NGOs, are there other 
mechanisms that people can use to express themselves?
    Mr. Dorman. Is an individual's ability to express 
themselves through an NGO somehow freer than other means? In 
other words, as opposed to speaking individually? Are these 
NGOs set apart somehow remarkably?
    Ms. Ma. Yes, especially the autonomous NGOs. They can 
express their opinions, or deliver their opinions to the 
government. For example, there is an NGO for big companies. 
These organizations are very interesting. The organization, 
itself, is independent. However, all of their members are 
large, state-owned companies.
    After the state gave them more independence, these 
companies developed different interests, other than the state's 
general economic policy. However, individually, they cannot 
tell the prime minister, ``I disagree with your opinion.'' As 
an organization, they can organize and invite experts to come 
and discuss very important economic policies, and then prepare 
a report for the State Council to show we think this way, and 
your requirement is unreasonable. And the state will, somewhat, 
adjust to their opinions.
    Ms. Simon. I think that's true everywhere in the world. I 
think that individual voices may have some power, but certainly 
voices in association have more power.
    One of the interesting things that has happened in the 
regulations is that previously in China, prior to 1998, the 
only way to set up an NGO was top-down. The state determined 
that it was something that needed to be done, and that was 
really the only way that citizens could participate in 
activities.
    Now, clearly if you had an idea, you could go to your local 
party boss and say, well, I want to do this. But, it was much 
more difficult. In the 1998 regulations, for the first time, 
they recognized that citizen action to come together to form an 
association is appropriate. Now, they require 50, and having 
written a couple of books about what is good practice in the 
area, 50 individuals is far too many, but there is a greater 
awareness of the notion that citizens should be able to come 
together for citizen action, albeit not public advocacy, but at 
least for a variety of different kinds of citizen 
activities.
    Mr. Foarde. Let's give Nancy a chance to make a point.
    Ms. Yuan. I think it also depends on what area of interest 
you are talking about. For instance, a program that the 
Foundation has done that relates to migrant women workers, the 
problems of migrant women workers in Guangdong Province are 
substantial. And people know that the factory conditions are 
bad. They know their health services are bad. They know because 
they are illegal migrants, they don't have any legal rights in 
those areas. They don't have rights to housing. There are a 
wide variety of problems.
    So, I think the non-profit groups that work with them 
inevitably have to work with government. And the government 
sees it in its interest to listen to what these women say 
through these non-governmental organizations. Otherwise what 
ends up happening is, you end up with instability, which is 
definitely what the Chinese Government doesn't want.
    So, if it's in the interest of the government, I think, in 
terms of the environment, in terms of health policy, in terms 
of broader issues, I think certainly NGOs have a voice. If your 
question is leading to whether or not that leads to say, worker 
associations, or labor associations, or those kinds of things, 
I think those things are probably not on the table in terms of 
whether or not you have an individual voice that will make a 
difference.
    Ms. Hamrin. However, I would add that this is something 
that develops in stages. What's happening in China right now is 
that for the first time, people can organize voluntarily around 
personal interests and express their creative side and their 
organizational side. Right now it has to be fairly non-
political. But that's new for China. In the past, any private 
personal interests were considered bourgeois. And you couldn't 
join the local bird-watching club, or anything.
    So, the explosion of associations of all kinds that are 
voluntary is just a major liberation for individuals and 
community groups in China. Studies of development of civil 
society and democratization elsewhere in the world would 
suggest that this trains people. It helps people learn how you 
work together, how to organize, how to make your voice heard, 
how to get to the media, and how to raise funds. Then that 
develops into advocacy.
    Sometimes just when the government steps into your 
business, then you are forced to defend yourself. Other times 
when you decide it's time to go stop the Three Gorges Dam. So, 
it's a step in development.
    Mr. Dorman. Thank you very much.
    Mr. Foarde. Very interesting. I would like to go on and 
recognize a colleague who represents one of our Commission 
members, Senator Carl Levin. Her name is Andrea Yaffe. Andrea, 
do you have a question or two? If you do, speak right into the 
microphone.
    Ms. Yaffe. Thank you for coming to speak today. Dr. Hamrin, 
I think you spoke a little about this, but I am wondering from 
the others, what kind of role Congress or the executive branch 
can provide in encouraging the further development of NGOs or 
the legal framework that you spoke about? Professor Simon.
    Ms. Simon. Well, I think Nancy made some suggestions. One 
of the problems that exists is that there is not adequate 
funding for civil society development in China. And as Nancy 
suggested, the United States is basically not a player at all, 
at the present time. Now, there are a variety of reasons for 
this as we know historically. But, I think it is time that the 
United States recognizes that it is in its best interest to 
begin funding in this particular area.
    Nancy has some suggestions about the kinds of things that 
should be done, using U.S. intermediary organizations, for 
example. But, it is sort of embarrassing when one goes to China 
and does all of this work in China, and everybody else's 
government is paying for things, and our government is not. So, 
I would definitely recommend that it happen.
    Ms. Hamrin. Could I just add a thought on the funding 
issue. When I was still in the State Department in the early 
1990s and we were talking about a civil society initiative and 
rule of law initiative, many in Congress and in the media did 
not want to fund anything in China, unless it was truly non-
governmental, truly independent, completely independent.
    I think at that time we were kind of ignoring the fact that 
civil society has these other attributes of being voluntary, 
being grassroots and so forth, that are important for us to 
take into account when we are deciding those things. Also, I 
think that at that time we were influenced by civil society 
analyses, from Europe's experience after the fall of Communism, 
where we viewed civil society in opposition to the state, and, 
you know, civil society is going to rise up and overthrow the 
state. That was our paradigm.
    But, that has changed enormously in research, thinking, and 
writing about civil society. And I think Lester Salomon at 
Johns Hopkins is one who has made the point that government 
funding of NGOs is huge in America, and even more so in other 
countries. So, you've got business, NGO, and government 
partnerships going all of the time in civil societies in the 
West. So, why is that a bad thing in China or other countries?
    So, I think we are coming closer together, the Chinese 
learning more about the importance of civil society and 
autonomy, but the rest of us realizing, well, it isn't totally 
black and white either.
    Ms. Ma. May I add something?
    Mr. Foarde. Yes, please. Go ahead.
    Ms. Ma. Because I am the one who grew up in China and 
experienced the Cultural Revolution and early stages of 
democratic 
movements--I've seen it from a Chinese perspective and I'm a 
historian--so, from a Chinese historical perspective. I think 
it is crucial for the U.S. Government or policymakers to 
realize that we have to understand Chinese civil society and 
Chinese NGOs, as well as their relations with the state and the 
government, under China's historical and cultural 
circumstances.
    That is, China has its own deep-rooted concept, which is 
rather different from the Western concept of civil society. 
They do not see the government and society as opponents or 
separate, but, the two as a unit. Also in China, there is a 
different concept of citizenship. In America, if you ask any 
person about citizenship, the first thing you will hear is 
``What my rights as a citizen are.'' For a Chinese citizen, the 
first thing is your responsibility for being a good person, 
following the government, doing things for society.
    So this is a difference. There are many things. China may 
never reach the stage that the state and society as Western 
countries. So, that's why I introduced the Chinese concept of 
civil society, which is constructive, mutually dependent 
relations. Thus, if the U.S. Government does not grow out of 
the mentality of seeing civil society only in terms of human 
rights, then it will not be a positive player in promoting a 
Chinese civil society.
    I think this is very crucial. First you have to see the 
whole landscape. The human rights record is only part of the 
Chinese reality. Another part is the monumental change in the 
grassroots of communities. I visited communities where they 
said, ``Now that we have the right to vote on, `Do we build a 
fence around our neighbor, or should we plant trees?' And `What 
do we do during the summer?' `What kind of program we can 
organize for our children.' '' These were all government 
controlled in the past. So, these kinds of things are really 
developing the concept in the people's minds, of what is a 
civil society, what are human rights. That is why I think that 
is very important.
    Mr. Foarde. Thank you. Very useful. Also representing one 
of our Commission members, Under Secretary of Commerce Grant 
Aldonas, is Tiffany McCullen. Tiff.
    Ms. McCullen. Thank you, John. I would like to thank the 
panelists for providing us with so much useful information 
today. I have a question if Professor Simon might want to 
start, and the other panelists would like to answer, I would 
appreciate that.
    Noting that the regulations governing Chinese NGOs are 
supposed to be revised soon, do you think it will change the 
management of foreign NGOs in the areas of taxes, hiring 
procedures, legal status, or their ability to open branch 
offices in other areas?
    Ms. Simon. Well, a couple of things are happening. When 
they promulgated the new regulations, there were three, in 
1998. They did not promulgate regulations in the area of 
foundations or in the area of foreign organizations. They had 
drafts of each of these. They took them off the table.
    Let me just say about foundations. There has been some 
activity in that area. They had a conference in that area in 
December and there--as I was talking about other forms of 
fiduciary obligation, I think there is going to be some 
progress. There is nothing that has come forward anytime 
recently that I know of that anybody even thinks that there is 
a draft with respect to foreign organizations.
    In large part, that is because the regulations that they 
had originally promulgated were ones that distinguished foreign 
organizations from domestic organizations, and the legal 
experts throughout the government say, ``Well you can't do that 
now, because of our obligations under WTO. We have to have a 
`level playing field' between the domestic organizations and 
the foreign organizations.''
    That called a false stop to the attempt to get the 
regulations out. And where they are on that, I've been trying 
to find out, and I literally have no idea. So, it is very hard 
to answer your question. It is something that I am quite 
interested in as well, and I haven't been able to get any 
answer from anybody. And, I know a lot of knowledgeable people 
there, and nobody seems to know.
    So, I suspect that what they are trying to do is do 
something that won't over-regulate the foreign organizations, 
will permit foreign organizations to set up branches, but that 
is some ways down the road.
    Ms. McCullen. OK. Thank you.
    Ms. Ma. My most recent e-mail communications with Chinese 
officials indicate they are trying to give foreign NGOs an 
equal status with Chinese NGOs. Previously, there was no law 
for foreign NGOs. The foreign NGOs, in fact, have to follow 
basically every Chinese regulation used for Chinese NGOs, plus 
something else. So, right now it's sort of like an unofficial 
channel--they said the new regulation will treat all current 
foreign NGOs exactly as Chinese NGOs. That's what I heard 
recently.
    Ms. McCullen. Thank you.
    Mr. Foarde. Our practice at these roundtables has been to 
invite our own CECC staff colleague who is most responsible for 
the issue being discussed to ask a few questions, and so I am 
delighted to call on our friend and colleague, Andrea Worden, 
who was the chief instigator of this particular event, and did 
all of the heavy lifting. Andrea.
    Ms. Worden. Thank you, John. Thank you all for coming. It 
was fascinating to listen to each of your presentations. You 
all seem to be in agreement that we need to understand civil 
society differently with respect to China, compared with how we 
might understand the concept in the United States, or in 
Western and Eastern Europe. That is, civil society does not 
include a confrontational relationship with the state. But, I 
am curious about political limits, if you will, of NGOs 
functioning in China.
    For example, we are all aware of Wan Yanhai, the AIDs 
activist and leader of an HIV/AIDs NGO, who was detained last 
summer for about a month and then released. I am curious if you 
all might address this question of the political limits of 
activism in NGO civil society. Are you aware of any other NGO 
activists who have been detained, or imprisoned, or if any NGOs 
have been de-registered for political reasons? I address this 
question to all of you.
    Ms. Hamrin. One of the problems with the very vague legal 
and regulatory environment is that it leaves a lot of 
discretionary power in the hands of government officials. And, 
they can sort of arbitrarily decide what is permitted and what 
isn't on a case by case basis. Sometimes it's purely a matter 
of what is happening around the world or in China.
    For example, the National People's Congress, or the Party 
Congress is going to be held, and so someone who published 
embarrassing information at that time is in trouble, but they 
might not have had trouble if they have done it the year 
before, or a couple of months later. It is so arbitrary. And 
that is one of the things that is really hampering the 
development of this whole sector, because you are always 
playing guessing games and playing ping-pong politics. You 
know, graze-ball politics. You want to hit it on the edge of 
the table and press the envelope, but stay on the table.
    So, that is one of the reasons that I think the NGO 
community is very insecure. They are being told they should 
provide more social services. The government is just heaving 
off its responsibilities to social forces, but not providing 
the environment they need to really survive and succeed. How 
can you raise funds to do what the government tells you you now 
should do? It's really a mess.
    Ms. Yuan. It is really a mess. I think for organizations 
that work in China, one of the most important things you have 
to do is to listen to your partners. People who work in this 
area and have to live with these political dynamics really know 
how much risk they want to take at any given time. Sometimes 
they move a little bit forward, and sometimes they pull back.
    I think as you talk to people who either pursue lawsuits or 
are engaged in some kind of activity that could be sensitive 
related to labor or the environment, they have a tendency to 
know when the time is going to be right, or it is not going to 
be right. And if they miscalculate, they are the ones who are 
going to suffer. So, I think there is just so much that we as 
foreigners can push. But at the same time, I think there are 
some very courageous people who are going to be out there and 
they are going to get their hand slapped.
    Ms. Simon. I have been impressed at the openness in the 
four that I was talking about, of people being willing to 
criticize the government's policies with respect to NGOs. It 
was really quite astonishing to sit in this conference in 
November where I made a lot of the same points that I made here 
and Chinese lawyers and civil society activists were getting up 
and making the same points. They were saying, as Professor 
Simon said, we should do this. Very openly. Very strongly. So, 
I think it just depends on, as Nancy says, what the issue is.
    One of the things that is also true is that, former 
government officials who are now in the private sector working 
for NGOs, or working for universities are very strong critics 
of the government's policy--Yan Mingfu, for example. People 
like that who have credibility are out there criticizing the 
government for what it is doing in this area, and not paying 
attention to the freedoms that are necessary. There is even 
going to be a freedom of association seminar at Beida in May.
    Ms. Ma. I agree with Nancy and all the panelists. The 
timing and the issue is very crucial. In certain times, for 
example, the anniversary of Liu Si [June 4] that is definitely 
a taboo. It is not just the timing, but timing is an important 
factor, because it was the time that Canada issued him an 
award. It is also the same time China has the CCP's Central 
Committee meeting.
    Also, the issue is crucial. For example, for a while the 
Ford Foundation was in trouble because the Ford Foundation made 
a statement about a sensitive issue. So, there are certain 
issues you 
cannot touch.
    Fortunately, most Chinese NGO leaders--fortunately and 
unfortunately--know the rules of the game. They grew up in that 
environment. They know not to touch the grenade. They know 
where the wrong button is.
    When I interviewed these people, they said there are just 
so many things we can do. For example, an activist for the 
Chinese environment, when I interviewed him, said that when he 
founded the Friends of Nature, his first intent was to 
influence government environmental policy. Later, he thought, 
if that is our mission, we will accomplish nothing. Therefore, 
we decided we wouldn't do that. Then we switched to education, 
educating children, and educating the public, to be more aware 
of the environment. Therefore, they do accomplish a lot in that 
area.
    Unfortunately, it is too practical of Chinese. So there is 
not great achievement of them in the political and policymaking 
area.
    Mr. Foarde. Thank you very much. I would like to go on to 
our friend and colleague, Steve Marshall, senior advisor with 
the Commission staff. Steve, do you have a question for the 
panel?
    Mr. Marshall. I found all of this extremely fascinating, 
and there are some recurrent themes that keep coming up over 
and over again: Paradox, contradiction, differentiation--I will 
try to break away from that, even though it fascinates me so 
much.
    Dr. Hamrin, you specifically mentioned western regions, 
which also interest me a lot, Tibet, Xinjiang, areas that are 
very poor, very much in need of outside support in just about 
every area. Yet, these are the most politically sensitive areas 
as well, where any support, for example, from the U.S. 
Government, might raise eyebrows. Can you suggest to us how we 
could put a positive foot forward in terms of helping local 
people, but not cause anyone trouble or risk in doing so?
    Ms. Hamrin. The sensitive issue there is the independence 
of Tibet. Independence advocates, when they mention Tibet, 
usually are talking about a different entity than the 
autonomous region of Tibet today. They are talking about the 
former kingdom of Tibet which took in large areas of five 
provinces, current provinces of China. I think many Americans 
aren't fully aware of that.
    So, there are many organizations working with Tibetan 
areas, both in Tibet and in these other provinces of Tibet. I 
found it quite amazing how much is actually going on in terms 
of anti-poverty work, health, education and so forth. These are 
considered non-political, and they are considered anti-poverty. 
The officials that you end up dealing with are people whose job 
it is to get something 
accomplished in these areas, and it seems that there is a lot 
more that can be done.
    Now, whether the U.S. Government can do something on that 
front, it's work for non-governmental organizations to do, 
primarily. I don't fully understand the funding connections 
between government and non-governmental organizations, but it 
does seem to me that when we put together our policies, 
bilateral political policies with China, when we decide on our 
Tibet policy, that we have to take into account all of these 
things that are going on that we normally are not aware of and 
factor that in. And make sure that whatever policies we have 
are not going to pull the rug out from under those efforts.
    Mr. Marshall. What if you add religion into the mix, 
whether it is in Xinjiang or Tibet? That would, of course, make 
things a bit more sensitive, but by rights that should be non-
political. Would you agree with that?
    Ms. Hamrin. As I understand it, U.S. Government policy has 
never been to officially promote independence of Tibet 
politically, but has been exactly based on human rights 
concerns. We want to see that the culture of these areas, 
including Tibet, is preserved, and that means religious culture 
for almost all of these ethnic 
minority areas: Tibetan Buddhist, or Muslim, or there are some 
Christian minority groups as well. So, you can't distinguish 
between culture and religion.
    One of the reasons that our religious freedom policy is so 
sensitive in China, is that Chinese think of religion as the 
ethnic 
minority group's religion. And so, it touches on their worry 
about separatism in those areas. So, it seems to me that the 
international religious freedom and human rights policy that we 
have, in general, should be very front and center to our policy 
in talking about these areas, that we could make a distinction 
between that and promoting independence or separatism. Usually, 
we don't make that very clear.
    Mr. Marshall. Thank you.
    Mr. Foarde. I would recognize our friend and colleague, 
Lary Brown, who is our specialist on labor issues. Lary, do you 
have a question or two for the panel?
    Mr. Brown. I do. Both Professor Hamrin and Ms. Yuan made a 
passing reference to the impact of U.S. companies, corporate 
social responsibility programs on the NGO sector. I was 
wondering if either of you or the other panelist would care to 
elaborate on what you think the impact of the money U.S. 
companies are spending on CSR is having on the development of 
NGOs and civil society in China, and in particular, whether you 
think it is going to have a substantial impact?
    Ms. Yuan. The support is not usually given to develop civil 
society in China. It is usually given for a program that 
advances some particular interest that the company happens to 
be interested in. I think, indirectly, it supports civil 
society. Usually, it is given directly to a Chinese NGO, or it 
is given to an intermediary organization like the Asia 
Foundation to work with the Chinese NGO.
    It's to do something very specific with funding, so they 
have to do the project, plan for the project and report on the 
project afterward to show how they've used the funding. That in 
and of itself is developing the capacity of the organization. 
But, I would not say that it is necessarily directly to support 
civil society development.
    Now, whether or not it has a broader impact is very hard to 
tell at this stage. I would say that in theory it does--
whatever the project is, it does something good at the time. 
That they deliver the service or whatever it happens to be and 
it is a good project, whether it has broader implications for a 
trend or movement in any way depends on whether or not it is 
going to be a one-off project, or it is part of a series of 
projects.
    It depends on what the goal or objective was for the 
project to begin with, whether it had a broader goal, such as 
improving the rights of women in China, or if it was to help 
these particular women in this particular factory to improve 
their air quality. So, it really depends on the circumstance.
    That said, I think it is all to the good. Anything that 
companies want to do in this area, I think, helps the 
environment showing that American companies care about Chinese 
organizations, that they care about the Chinese people, and 
that they actually want to improve the environment in which 
they do business.
    Ms. Hamrin. I've just started to look into this area a 
little bit, so I don't know enough about it yet. But, I did see 
some statistics that show American and Japanese monies going 
into China are heavily weighted toward educational scholarships 
and fellowships, and areas that would then help provide good 
future employees like the IT [information technology] companies 
putting money into IT departments in universities and so forth.
    I was with a foundation executive in January, in Beijing 
and Shanghai, and we met with committees in both Chambers of 
Commerce, American Chambers of Commerce, to talk about this 
issue, and I was fascinated. It seems to me that there is some 
new thinking going on there. That they want to do things 
differently, not just these ad hoc, goodwill sorts of efforts, 
but they really are beginning to see that they could do more 
and have a bigger impact. This executive I was with gave a 
speech in Shanghai at their monthly luncheon and was suggesting 
there was a lot more that they could pass on, besides funding, 
like their expertise in so many areas, how to run an NGO, how 
to do accounting or auditing. They were very interested in 
cooperating with that kind of training effort in the NGO 
community. So, I think they are just starting, and there are 
going to be two events going on, one in Beijing and one in 
Shanghai in May in this area.
    So, I believe the Department of Commerce is going to be 
involved. I think perhaps the DRL [Democracy, Human Rights, and 
Labor] at the State Department is involved.
    Ms. Simon. Yes, I have the agenda for the Beijing 
conference with me. I can give it to you.
    Mr. Brown. Thank you.
    Mr. Foarde. Our time is getting very short here. So, I 
would give the last set of questions to Andrea Worden, if you 
want. And then, perhaps, each of the panelists would say a 
final word before we adjourn. So, Andrea, you have 5 minutes 
for questions, and then we will get a final statement from 
everyone.
    Ms. Worden. I think each of you has addressed the issue of 
funding; that funding for NGOs in China is inadequate. Besides 
international funding, and Chinese Government funding for NGOs, 
where do Chinese NGOs get their funding? Is there a sense of 
philanthropy in China; are there individual donors? How does 
that all work?
    Ms. Ma. In terms of state funding, there is a very 
interesting twist to understanding what the meaning of NGO is. 
Both the Chinese Government, as well as Chinese NGOs, whenever 
they emphasize the autonomous nature of NGOs, they will say 
there is no government funding. So, in this case, that means 
that the Chinese Government does not fund real NGOs. This is a 
big problem for Chinese NGOs.
    However, international funding is crucial for the 
grassroots and the real NGOs. The real key is here. I recently 
studied Yunnan NGOS, and I also visited many NGOs in other 
areas. Lots of NGOs emphasize that their biggest problem and 
difficulty is funding. However, none of the Yunnan NGOs said 
they have a problem of funding, because international NGOs want 
to give money to Chinese NGOs. As Nancy said, they need to find 
the right partner.
    Right now, Yunnan NGOs' development is under that kind of 
culture. They understand international grants distribution 
organizations. They need a good partner. They need a good 
project. As long as you have good projects, you can get 
international funding. Right now there is $100 million dollars 
from private resources internationally that go to China. There 
are a lot of independent NGOs that are almost 100 percent 
funded by international sources, which is not healthy. However, 
that is the only way they can get money.
    Ms. Simon. I think that the law in China, the donations law 
and the tax law really do encourage donations by entrepreneurs, 
and there is a lot of money coming in from locally based 
entrepreneurs. In my experience, projects that are extremely 
worthwhile--I mean, Project Hope did have a scandal. But, back 
when Project Hope was really a good project, a lot of just 
ordinary Chinese people contributed.
    There was recently an article in China Daily, which members 
of the Tenth National Peoples' Congress-Chinese People's 
Political Consultative Conference talked about these issues. 
So, I mean this is becoming a big deal, and people are becoming 
more and more aware of the fact that it is important to have 
legislation and also that it is part of the social system that 
people do it.
    Ms. Hamrin. For the most part, there hasn't been domestic 
fund raising until very recently, and it is still very 
difficult. Even the donations law which says that you can 
donate to charity doesn't actually say that charities can raise 
funds. Can you go ask, or is that illegal? Do you have to wait 
until somebody sends you a check? There are all kinds of little 
glitches like that that catch you up. And, there hasn't been 
much tax benefit for giving. It's something like maybe 30 
percent for individuals, but only 3 percent for corporate 
donors. So, it is small. There are a lot of glitches in trying 
to make it actually function.
    But, I also think that there are only a certain limited 
number of national large GONGOs, trusted groups that are really 
allowed to do this kind of nationwide fundraising. So a lot of 
the philanthropy that has come into China has been through 
overseas Chinese, global networks of all kinds, including 
faith-based networks where 
people are following traditional channels of philanthropy and 
giving to their hometowns and their schools and so forth. So, 
there is a lot of that.
    Hong Kong has been a major channel of funding for NGOs. It 
is a base for many of the international NGOs operating in 
China. And it has been a real big model to show the Chinese 
what can be done in this area.
    Mr. Foarde. Let us draw this to a close by giving each 
panelist about a minute to make a final comment if you would 
like to. And maybe we will start with Nancy Yuan, if you would. 
I can come back to you, if you like.
    Ms. Yuan. Two seconds.
    Mr. Foarde. OK.
    Ms. Yuan. I wanted to thank you all for doing this. I think 
it is a very useful activity to be able to get these ideas all 
on the table, get it on the record and have an opportunity to 
clarify some of these issues. I think there is a lot of 
misunderstanding about the development of civil society and 
NGOs in China, and I think that this is very helpful. Thank 
you.
    Mr. Foarde. Carol.
    Ms. Hamrin. I would just say that when we look at the 
picture in China, if we look from the top-down, we see a lot of 
abuses, where the government is restricting the development of 
civil society, restricting religion and so forth. And that is 
part of the truth.
    But, if we look at the bottom of society and look bottom-
up, we suddenly discover all kinds of things going on as people 
push back. So, we've got to have both parts of the picture when 
we are looking at policy, and we need to keep in mind our 
social and cultural relations with China, which are not 
governmental, but which the government is duty-bound to try to 
promote or defend.
    Mr. Foarde. Karla.
    Ms. Simon. I would also like to thank the Commission for 
doing this. I think it is extremely important and we do need to 
clear out a lot of the cobwebs in our thinking about these 
issues.
    But, I think also there is just a tremendous amount of 
really hopeful stuff happening. The government is going one 
step forward, two steps back consistently in this area as well 
as in others. But, there is just no connection between working 
there 10 years ago and working there now. It is just completely 
different. Much more open. Much more willing to engage.
    And I think that that message is a message that the members 
of our government and the Members of the Congress really need 
to know. The American people don't know it yet, but hopefully 
Members of Congress can find out and that would, I think, 
change some of the attitudes about funding for China.
    Mr. Foarde. Professor Ma.
    Ms. Ma. Yes, I think the period from 1995, when the World 
Conference on Women was held in Beijing, to 1998, the most 
recent Chinese Government regulation, should be considered as 
the turning point in Chinese NGO development. Right now, I 
suggest, as Karla said, a lot of really positive things are 
happening. The U.S. Government and Congress should seize the 
opportunity to be an 
active and positive player, and I think Chinese people--from 
the Chinese NGOs perspective, they like not just money--they 
call donations blood transfusions, rather, they like the 
technical help, the theoretical training, capacity training, 
those kinds of new perspectives, which not only work in the 
U.S. and other developed countries, but it is very effective in 
developing countries.
    Mr. Foarde. Thanks to all four of our panelists, and on 
behalf of the Chairman and Co-Chairman of Congressional-
Executive Commission on China, Congressman Jim Leach, and 
Senator Chuck Hagel and all of the members of the CECC, thanks 
to the panelists, to the staff panel, and to all of those who 
attended, particularly those who waited the extra half hour 
because of our evacuation glitch. Thank you for coming. We look 
forward to seeing you next Tuesday afternoon at 2:30 in this 
room for another issues roundtable. Thank you.
    [Whereupon, at 4:40 p.m. the roundtable was concluded.]
                            A P P E N D I X

=======================================================================


                          Prepared Statements

                              ----------                              


                    Prepared Statement of Qiusha Ma

                             march 24, 2003

   Nongovernmental and Nonprofit Organizations and the Evolution of 
                         Chinese Civil Society

                           1. general summary
    What are Chinese NGOs? Is it possible that, under China's one-party 
state, nongovernmental organizations can sustain and play important 
economic, social, and political functions? My answer is Yes. The last 
two decades have witnessed the dramatic increase of Chinese NGOs in 
number, size and influence. Barely extant before, these new 
organizations carry out many social, economic, and cultural tasks 
previously controlled or neglected by the government, from establishing 
centers for abused women and abandoned children, to organizing 
community recycling programs. These institutions are by far the most 
powerful instruments through which Chinese people participate in public 
affairs, develop personal interests, and make their voices heard; they 
indicate a more active and engaged citizenry than ever before. The 
development of NGOs in the past twenty-odd years is a key step in the 
evolution of a civil society in China.
    Given China's current political condition and her historical 
background, its development of NGOs is very unbalanced and still in the 
preliminary stage. This is reflected in the uneven growth of NGOs in 
different regions and subjects. Though NGOs and civil associations are 
very active in economic development, poverty alleviation in poor 
regions, and community building, others in politics, religion and 
advocacy play an insignificant role in the overall rise of NGOs. Their 
involvement in 
policymaking is also very limited.
    Under China's current political system, without the government's 
approval and encouragement, the upsurge of nongovernmental 
organizations would be impossible. Since the opening of China in 1978, 
the government's policy toward NGOs has 
generally been positive. Understanding the political consequences of 
NGOs, the government is still convinced that NGOs, with the support of 
the general public, private sector, and international nonprofit sector, 
can provide much needed social and professional services, as well as 
intermediary mechanisms for economic and social transformations. By 
legalizing and promoting NGOs, especially those related to the economic 
and social development, the government has played a crucial and 
positive role in NGO growth in China.
    However, during these years, the official attitude toward NGOs has 
been inconsistent and self-contradicting, volleying between 
encouragement and restraint. A requirement of the government's 
promotion of NGOs is its belief that the State has ultimate, especially 
political, control over NGOs. The Chinese Communist Party (CCP) and the 
government's concern about the political risk of promoting NGOs has 
been intensified during different periods and as related to different 
issues, and the government has not hesitated to suppress these 
organizations or their activities if it believes they form a threat to 
national interests and security. All NGOs have to follow political 
principles in order to legally exist. In this sense, all NGOs, no 
matter how grassroots or self-reliant, do not enjoy complete autonomy. 
Yet, we must recognize the significant gap between the rhetoric of the 
party-state's intention and what actually can be enforced by the 
government. In reality, the NGOs in China enjoy much greater autonomy 
than may appear on paper.
    In the following sections, this article will discuss China's 
official NGO classification, definition and terminology, based on 
Chinese official documentation, the author's interviews of Chinese 
officials, NGO leaders and scholars, as well as English and Chinese NGO 
literature.
             2. the official classification of chinese ngos
    What are the Chinese NGOs according to China's legal documents and 
official policy? Many western as well as Chinese studies of 
nongovernmental organizations in China have taken the term ``social 
organization'' to be equivalent to the western term ``NGO'' or ``NPO'' 
without recognizing that Chinese ``social organizations'' constitute 
only part of the full range of the country's NGOs. This is largely 
because until most recently the Chinese government itself used ``social 
organization'' as a unified term for organizations that are NGOs in the 
Western sense and refused giving legal status as NGOs to a vast number 
of private not for profit service providers such as non-state-run 
schools, hospitals or other professional institutions. In a recent 
study of Chinese NGO law, the authors still state: ``NGOs are usually 
defined as `social organizations' '' \1\ (Xin and Zhang, 1999, 91).
---------------------------------------------------------------------------
    \1\ Xin Chunying and Zhang Ye, ``China,'' in Thomas Silk, ed., 
Philanthropy and Law in Asia. (San Francisco, CA: Jossey-Bass 
Publishers, 1999), p. 91.
---------------------------------------------------------------------------
    Not until 1998, were a great proportion of private nonprofit 
organizations in China excluded from the official classification of 
non-governmentally run organizations. The latest Chinese government 
regulatory documents, issued in 1998, provide by far the most 
comprehensive system in PRC history, covering a highly diverse 
nongovernmental sector; they are the key documents establishing the 
Chinese definition of NGOs.\2\ According to the new official 
classifications, NGOs include two 
general categories: social organizations (SOs, shehui tuanti, or 
shetuan), and nongovernmental and noncommercial enterprises (NGNCEs, 
minban feiqiye danwei). (See Chart 1.) \3\ Under these two general 
categories, Chinese NGOs are officially 
divided into different types according to either their organizational 
forms or professional missions. The SOs are academic, professional or 
trade associations, federations and foundations, while the NGNCEs are 
divided into ten general types: 
education, health care, cultural, science/ technology, sports, social 
welfare, intermediary services, employment service, legal service and 
others.\4\
---------------------------------------------------------------------------
    \2\ These documents are: ``Regulations of Registrations of Social 
Organizations (SO)''; ``Temporary Regulations of Non-governmental and 
Non-commercial Enterprises (NGNCE, minban feiqiye danwei)''; and ``The 
Temporary Regulations of Non-commercial Enterprises (shiye danwei).'' 
According to the author's interview with an official in the Bureau of 
Nongovernmental Organizations, 2001, Beijing, China, a revised document 
on regulation of the foundations and a new executive document on 
foreign NGOs in China are forthcoming.
    \3\ The NGNCEs are income-making institutions that do not produce 
products but provide services. The 1998 Regulations for the 
nongovernmental and noncommercial enterprises clearly stipulates that 
the NGNCEs must be established with non-state funds, and engage in not 
for profit social services.
    \4\ The Ministry of Civil Affairs, ``The Provisional Measurements 
of Registration of Nongovernmental and Nonprofit Enterprises.'' Dec. 
1999.
---------------------------------------------------------------------------
    Since the establishment of the People's Republic of China, the 
government has, in 1950, 1988-1989, and 1998, issued three rounds of 
documents regarding the classification, registration and regulation of 
organizations outside of the government system. The first two rounds 
classified all types of associations and institutions that are 
nongovernmental into a single category: social organizations. In the 
early 1950s, the government--following the Soviet Union model--
nationalized all private schools, hospitals, charitable organizations 
and other service providers. From then on until the dawn of the reforms 
in 1978, no private nonprofit service providers existed in China. 
Therefore, before the reforms, social organizations were basically 
membership associations. Then, starting in the mid-1980s, the 
government founded a number of ``nongovernmental'' foundations and 
charitable organizations to generate international and Chinese private 
money for certain public causes. As there was no existing category for 
this type of organizations, they were, and still are up today, 
officially classified as social organizations, even though they are not 
membership 
entities.
    The term NGNCE was created by the government in 1998 to provide 
legal status and unify the official management of rapidly growing 
private nonprofit service institutions. After the opening reforms of 
1978, there was a pluralization of cultural, social, and economic 
interests, which created large-scale needs that the government was no 
longer able to deliver. It has since become clear that state-owned 
schools, nursing homes, healthcare and social welfare providers, as 
well as research institutes no longer suffice. With the state's 
permission and encouragement, all kinds of non-state-owned or private 
social and professional institutions emerged to fill the gap.

           Chart 1: China's Official Classification of NGOs 


    Under China's current dual registration system, all private 
organizations have to have a supervising government body in order to 
register with the Ministry of Civil Affairs (MOCA). Chinese NGOs call 
these bodies ``mothers-in-law.'' Both social organizations and NGNCEs 
are required to register with MOCA and its local branches. According to 
the 2001 official statistics, 136,841 social organizations of all 
levels registered nationwide. Although officials at MOCA estimate that 
there are about 700,000 NGNCEs in China, in 2000, only 20,000 were 
registered with MOCA.\5\ As many private providers and institutions 
have difficulty finding appropriate bodies to serve as their mothers-
in-law, they have to either register as for-profit enterprises under 
the bureau of industry and trade, or as non-corporate organizations. It 
was due to this inadequate classification system that the government 
created the NGNCE category in 1998. This classification is similar to 
the category of ``public service'' in the United States. (See Chart 2.)
---------------------------------------------------------------------------
    \5\ Guojia tongjiju ed. (national bureau of statistics), Zhongguo 
minzheng tongji nianjian (China's civil affairs statistical yearbook) 
(Beijing: China Statistics Publishing House, 2001). Also, private 
interviews with MOCA officials, Beijing, 2001.
---------------------------------------------------------------------------

              Chart 2: Anatomy of the Nonprofit Sector\6\


              3. defining ngos and civil society in china
    The term ``NGO'' is widely used to refer to various types of 
organizations outside of State systems, including advocacy 
organizations, nonprofit service-providing institutions, religious 
groups and social welfare organizations. Lester Salamon and Helmut K. 
Anheier, two leading authorities on international NGOs, list the key 
features of NGOs as follows: they are formal, private, non-profit-
distributing, self-governing, and voluntary.\7\ This set of 
characteristics includes the most important and generally recognized 
features that distinguish the private nonprofit sector from the 
governmental and the for-profit private sectors. Within different 
cultures and political systems, the meaning of the term ``NGO'' varies. 
In Western Europe, for example, an NGO often refers to a nonprofit 
advocacy or service organization that is 
active internationally. In East European countries and republics of the 
former 
Soviet Union, NGO tends to designate all charitable and nonprofit 
organizations.\8\
---------------------------------------------------------------------------
    \6\ This chart is taken from Lester M. Salamon ``Scope and 
Structure: The Anatomy of America's Nonprofit Sector,'' in J. Steven 
Ott, The Nature of the Nonprofit Sector (Boulder, CO: Westview Press, 
2001), p. 24.
    \7\ Lester M. Salamon, & Helmut K. Anheier, ``In search of the 
nonprofit sector I: the question of definitions,'' Voluntas, 3.2 
(1992): 134.
    \8\ Julie Fisher, Nongovernment: NGOs and the Political Development 
of the Third World, (West Hartford, CT: Kumarian Press, 1998), p. 5.
---------------------------------------------------------------------------
    What are the nongovernment and nonprofit organizations in China 
today, and how does the Chinese government define them? This question 
is the very first step toward our understanding of Chinese NGOs, and 
two major aspects need to be clarified. As the next section will 
further explain, according to the 1998 official regulatory documents of 
the NGOs, the Chinese government classifies all institutions into two 
general categories: social organizations and nongovernmental and 
noncommercial enterprises (NGNCE). In ``The regulations of 
registrations of social organizations''(1998), the government offered a 
definition of social organizations. ``Social organizations,'' it 
states, ``are nonprofit organizations that are voluntarily founded by 
Chinese citizens for their common will and operated according to their 
charters.'' \9\ Another official document in the same year announced 
that, ``nongovernmental and noncommercial enterprises are social 
entities engaging in nonprofit 
social service activities, and they are founded by for-profit or 
nonprofit enterprises, social organizations, other social forces or 
individual citizens, using non state-owned property or funds.'' \10\
---------------------------------------------------------------------------
    \9\ Zhonghua renmin gongheguo guowuyuan (the State Council of the 
People's Republic of China), ``Shehui tuanti dengji guanli tiaoli'' 
(the regulations of registrations of social organizations), People's 
Daily. Oct. 26, 1998. p. 3.
    \10\ Zhonghua renmin gongheguo guowuyuan (the State Council of the 
People's Republic of China), ``Minban feiqiye danwei dengji guanli 
zhanxing tiaoli (the temporary regulations of non-governmental and non-
commercial enterprises. People's Daily. Oct. 26, 1998. 3.
---------------------------------------------------------------------------
    Comparing the Western and Chinese NGO definitions, the most obvious 
distinction is that the Chinese official definition of NGOs does not 
mention self-governance, a key criteria of Western nongovernmental 
organizations. Still, we should give the Chinese government credit in 
their effort to catch up with the international standard in their 
governance of NGOs. First of all, for a long time, the government did 
not know what the definition of social organizations should be. Thus, 
instead of giving a clear definition, the 1989 official regulation only 
listed all types of associations and institutions that the government 
recognized as ``social organizations.'' \11\ The 1998 documents, for 
the first time, provided not only a clear description of the meaning of 
``social organizations,'' but also created a new legal status--NGNCEs--
for private service providers. Second, even though the Chinese official 
definition of NGOs did not include self-governance, the Ministry of 
Civil Affairs (MOCA), since the 1990s, has been pushing the ``three 
selves of polity'': financially self-sufficient, self-governing, and 
self-recruiting (sanzi zhengce).\12\ Yet, one must recognize the gap 
between ``talking the talking'' and ``walking the walking.'' As 
mentioned earlier, how much autonomy Chinese NGOs enjoy is still the 
most controversial issue.
---------------------------------------------------------------------------
    \11\ Private interviews with a former director of the Division of 
Social Organizations at MOCA, Beijing, 1996.
    \12\ Private interview with the vice director of the Division of 
Social Organizations at the MOCA, Beijing, 1996.
---------------------------------------------------------------------------
    In the time span of several hundred years, many philosophers and 
thinkers have left their marks on civil society, and the debates 
continues today over the definition, meaning and function of civil 
society. The conceptual evolution of civil society in the West has left 
a great profusion of interpretations and models. This concept today is 
used, in a simplified form, to indicate people's expression of their 
opinions and interests, usually via civic associations, and the 
mechanisms that enable them to participate or influence policymaking. 
In their study of Chinese civil society, Gordon White, Jude Howell, and 
Shang Xiaoyang define civil society in general as

          An intermediate associational realm situated between the 
        State on the one side and the basic building blocks of society 
        on the other (individuals, families, and firms), populated by 
        social organizations which are separate, and enjoy some degree 
        of autonomy from, the state and are formed voluntarily by 
        members of society to protect or extend their interests or 
        values. . . . The political conception, which derives mostly 
        from the Anglo-American liberal tradition of political theory, 
        equates `civil society' with `political society' in the sense 
        of a particular set of institutionalized relationships between 
        State and society based on the principles of citizenship, civil 
        rights, representation, and the rule of law.\13\
---------------------------------------------------------------------------
    \13\ Gordon White, Jude Howell, & Shang Xiaoyang, In Search of 
Civil Society: Market Reform and Social Change in Contemporary China. 
(Oxford: Clarendon Press, 1996), pp. 3-4.

    Contrastingly, Deng Zhenglai and Jing Yuejin, two leading Chinese 
scholars of civil society, describe a Chinese civil society as ``a 
private sphere where members of society engage in economic and social 
activities voluntarily and autonomously, according to the rule of 
contract. It is also a nongovernmental public sphere where people 
participate political and governing activities.'' \14\ The concept of 
civil society in the West has a long history of representing democracy 
and the confrontation or even antagonism between the State and society. 
However, it is widely agreed among Chinese scholars who participated in 
debates during the 1990s on building a Chinese civil society that the 
relationship between the State and (civil) society in China should be 
constructively and mutually interactive.
---------------------------------------------------------------------------
    \14\ Deng Zhenglai and Jing Yuejin, ``Jiangou Zhongguo de shimin 
shehui'' (build a Chinese civil society), in Deng Zhenglai, Guojia yu 
shehui (the state and society) (Chengdu, China: Sichuan People's 
Publishing House, 1997), pp. 1-22.
---------------------------------------------------------------------------
         4. chinese equivalents of nongovernmental organization

                   Table: Chinese Terminology of NGOs
------------------------------------------------------------------------
                                                          Examples of
          English Term               Chinese Term        Organizations
------------------------------------------------------------------------
Social Organizations............  Shehui tuanti.....  A general term for
                                                       member-serving
                                                       associations and
                                                       foundations.
People's Organizations* (19 at    Renmin tuanti.....  ``The eight big
 the national level).                                  organizations,''
                                                       such as: All
                                                       China Federation
                                                       of Trade Unions,
                                                       Chinese People's
                                                       Friendship
                                                       Association, All-
                                                       China Federation
                                                       of Returned
                                                       Overseas Chinese.
Mass organizations*.............  Qunzhong zuzhi....  All-China
                                                       Federation of
                                                       Trade Unions,
                                                       Chinese Communist
                                                       Youth League, All-
                                                       China Women's
                                                       Federation.
Folk Organizations..............  Minjian zuzhi.....  All-China General
                                                       Chamber of
                                                       Industry and
                                                       Commerce, China
                                                       international
                                                       Chambers of
                                                       Commerce.
Nongovernmental Organization      Fei zhengfu zuzhi.  Usually referred
 (NGOs).                                               to as foreign
                                                       NGOs, but some
                                                       Chinese NGOs
                                                       adopt this term.
Nonprofit Organization (NPOs)...  Fei yingli zuzhi..  New term for
                                                       Chinese SOs and
                                                       NGNCEs.
------------------------------------------------------------------------

    Shehui tuanti or shetuan (social organization) is the most commonly 
adopted term for organizations outside the state. In classical Chinese, 
``she,'' ``hui,'' and ``tuan'' all mean associations or groups. The 
term ``social organization'' predated the establishment of the PRC, and 
some scholars believe that the earliest forms of Chinese social 
organizations can be traced back to the Spring-Autumn period (770-476 
B.C.). However, the term refers primarily to modern forms of private 
associations that first appeared at the beginning of the 20th century. 
Since 1949, the PRC government has continued to use this term, and 
three of its regulatory documents on this subject (1950, 1989 and 1998) 
all use the term shehui tuanti for entities that outside the State 
system.
    Whereas ``social organization'' is adopted by the government as a 
general term for organizations outside of the state, the remaining four 
terms are also used officially, but more specifically. Renmin tuanti 
(people's organizations) appeared in the 1954 and 1982 Constitutions 
and other government documents. Though Qunzhong zuzhi (mass 
organizations) has never been used in any legal or official regulatory 
documents, it has been used officially on many occasions. Only a small 
number of prominent organizations have ever been classified as either 
``people's organizations'' or ``mass organizations.'' The so-called 
``eight big organizations'' (ba da tuanti) are all people's 
organizations, and some of them are also mass organizations.\15\ The 
two terms are not exclusive, and the Chinese Communist Party (CCP) uses 
them according to its political agenda. The All-China Federation of 
Trade Unions (ACFTU), the Chinese Communist Youth League (CCYL) and the 
All-China Women's Federation (ACWF) are mass organizations in 
structure, but they are also referred to as people's organizations to 
indicate their prestigious status. These two types of organizations, 
although are also categorized as social organizations, do not register 
with MOCA, nor are they under MOCA's supervision.\16\
---------------------------------------------------------------------------
    \15\ The eight organizations are All-China Federation of Trade 
Unions, the China Communist Youth League, All-China Women's Federation, 
China Federation of Literature and Art, China Association of Science 
and Technology, China Writers Association, China Law Association, and 
All-China Journalists Association. The first three organizations were 
established during the revolution period and have been the most loyal 
to the CCP ever since; others were also close to the CCP before 1949.
    \16\ The people's organizations and mass organizations are under 
the direct management of the Central Committee of the Chinese Communist 
Party. Currently, there are 19 of them. See, ZJBWB.
---------------------------------------------------------------------------
    The questions here are: what are the meanings of these two terms? 
Why are they still in use today? Why do we need to know about those two 
types of organizations? Chiefly because they help us understand the way 
the Chinese government employs social organizations as tools of 
political struggles. The people's organizations and mass organizations 
have significant political implications and historical backgrounds, 
although no official documents have ever defined them. One must turn to 
China's contemporary history and the CCP's political vocabulary. The 
term ``people's organization'' was created by the Nationalist Party 
(Guomindang) in the 1920s and is still used in Taiwan today. After 
1949, the PRC government accepted the term, but employed it, especially 
in the early period of the PRC, to refer to organizations that 
participated in the First Chinese People's Political Consultative 
Conference (CPPCC) in September 1949, a month before the establishment 
of the PRC.\17\ In fact, the CCP organized quite a few organizations 
around that time to unify various political forces joining the 
revolutionary cause. They have been China's most influential 
organizations ever since, and are the backbone of the United Front 
represented by the CPPCC.
---------------------------------------------------------------------------
    \17\ ``The Temporary Regulation of Registration of Social 
Organizations'' (1950) clearly classified these organizations as 
people's organizations.
---------------------------------------------------------------------------
    In contemporary CCP political vocabulary, the word ``people'' is 
the opposite of the word ``enemy'' or ``CCP's enemy,'' and its meaning 
changes from one political period to another, depending on the specific 
targets of the revolution. For instance, during the anti-Japanese War 
(1937-45), the landlord class was included in the category of 
``people,'' while during the land reform movement (late-1940s to early-
1950s), they shifted to ``enemy.'' Shortly before the establishment of 
the PRC, Mao Zedong published an important article, ``The Dictatorship 
of the People's Democracy'' (1949). ``Who are the `people?' '' Mao 
asked. ``At the present stage in China, they are the working class, the 
peasant class, the petty bourgeoisie, and national bourgeoisie. Under 
the leadership of the working class and the Communist Party, these 
classes united together to form their own State and elect their own 
government [so as to] carry out a dictatorship over the lackeys of 
imperialism--the landlord class, the bureaucratic capitalist class, and 
the Kuomintang [Guomindang] reactionaries.'' Mao continued, ``The 
democratic system is to be carried out within the ranks of the people, 
giving them freedom of speech, assembly, and association.'' 
Consequently, the Chinese (and all organizations as well) are divided 
into: leading classes, the United Front (classes that are the CCP's 
allies), and the enemy.
    The CCP wanted to enlist ``people's organizations'' in the fight 
against the Guomindang, and support from non-CCP organizations helped 
convince the Nation that the CCP truly represented the people. As a 
reward and to ensure future support, the CCP offered many political 
privileges to the organizations, including exemption from registering 
with the government.\18\ Since this term carries substantial political 
weight, very few organizations have obtained this title later on. When 
organizations do use this title, their missions are usually related to 
the United Front. For instance, during the early 1950s, the former 
chambers of commerce and other merchant and entrepreneurial 
associations were joined in the All-China Federation of Industry & 
Commerce (ACFIC). The ACFIC is a ``people's organization;'' its 
purpose, as stated in its charter, is to strengthen the United Front.
---------------------------------------------------------------------------
    \18\ ``The 1950 Regulations'' particularly stated that all people's 
organizations did not need to register with the government. This 
practice has continued even though the new regulatory document (1989) 
has no such item.
---------------------------------------------------------------------------
    The term ``mass organizations'' also carries significant political 
implications. The word ``qunzhong'' means ``groups of individuals'' or 
``the majority.'' But in the CCP's political vocabulary, the word 
conveys several specific meanings. First, it is used to distinguish 
people as either non-party members (qunzhong) or CCP members (dangyuan) 
and thus directly affects people's political status and their daily 
lives. Whether one is a dangyuan or a qunzhong has significant 
consequences in matters such as academic or job opportunities, and in 
how one is treated politically as well as socially. Second, in the 
CCP's ideology, the masses and the Party are two essential elements in 
a ``union of contradiction.'' The CCP recognizes the masses as the 
foundation of its rule, the object of its service, and defines its own 
actions as the ``cause of the masses,'' ``mass movement,'' or ``mass 
struggle.'' At the same time, the Party requires the masses to follow 
its lead as the head of the revolutionary cause.
    Accordingly, the political meaning of ``mass organization'' is 
twofold. On the one hand, it indicates the position of mass 
organizations in the CCP's political system. The CCP defines itself as 
``the vanguard of the working class'' and ``the core force of the mass 
movement,'' with mass organizations on the periphery around the Party. 
Since the Party represents the people's interests, these organizations 
should follow the Party's leadership. It does not allow mass 
organizations to challenge its authority. The political struggle 
between the ACFTU's leaders and the CCP during the 1950s over the 
independence of trade unions set a clear example for other mass 
organizations on the periphery around the Party. By 1949, Chinese 
industrial workers had experienced thirty years of autonomous union 
actions, so Chinese workers in major cities understood the meaning of 
solidarity and unionization. Many unions were non-Communist 
organizations. This tradition was the first casualty of the CCP's 
policy toward the mass organizations after 1949.\19\ Union leaders who 
made assertions about the workers' unique interests and the unions' 
independence were criticized as ``anti-party'' and ``anti-people,'' and 
many were punished severely by the Party.\20\
---------------------------------------------------------------------------
    \19\ Alan Liu, Mass Politics in the People's Republic: State and 
Society in Contemporary China, (Boulder, CO: Westview Press), p. 91.
    \20\ Wang Yongxi, ed., Zhongguo gonghui shi (A history of the 
Chinese Trade Unions) (Beijing: Publishing House of History of Chinese 
Communist Party, 1992), pp. 345-379.
---------------------------------------------------------------------------
    On the other hand, the CCP relies on mass organizations to reach 
out to different groups of people; this was true during the 
revolutionary period and is still the case today. These organizations 
provide a bridge between the CCP and the people. Before 1949, many mass 
organizations were grass-roots organizations fighting directly for 
their members' interests. After 1949, the CCP became the ruling party, 
and workers unions, women's federations and youth leagues became 
governmental organizations entirely dependent on and closely controlled 
by the government. The interests of their members have been ignored, 
or, in the CCP's phraseology, individuals obey the State and Party's 
interests, and their duties switched to that of propagating Communist 
ideology, assisting the Party, and recruiting CCP supporters. The 
government has entrusted them with important administrative functions 
and has accorded them the privileged status of government agencies.
    In short, the term ``people's organization'' implies a mission for 
the United Front, and the term ``mass organization'' indicates a close 
but subordinate relationship with the Party. From a historical 
perspective, these classifications reveal the CCP's notion of non-party 
organizations and its changing agenda in different periods. Although 
the conditions of nongovernmental organizations have altered 
tremendously since the 1980s, the official policy toward these two 
types of organizations remains almost unchanged. In order to downsize, 
in recent years the government has pushed previously government-funded 
organizations to become self-sufficient. However, the people's and mass 
organizations are too important to the CCP's political power to grant 
them independence. Instead, the government continues to furnish them 
with financial and personnel support.\21\ This situation has created a 
major dilemma for the government in its effort to apply a uniform 
regulatory and managerial policy to all social organizations. This is 
also an important reason for the reluctance to formulate a clear social 
organization law (shetuan fa).\22\
---------------------------------------------------------------------------
    \21\ In the past two decades, the real value of government funds to 
these organizations has fallen considerably due to serious inflation. 
Thus, they are under strong pressure to seek other financial resources. 
Like all social organizations (except the foundations), these 
organizations also are allowed to run for-profit businesses to 
supplement their incomes. But government funds are still their major 
revenue. For example, the Youth League is a fully funded government 
organization, but the government allows it two for-profit enterprises 
with 1,150 employees.
    \22\ Interviews with a participant in drawing up a ``social 
organization law,'' 1996, Beijing, and an official in the Bureau of the 
nongovernmental organizations, MOCA, 2001.
---------------------------------------------------------------------------
    Two other terms for nongovernmental organizations, minjian zuzhi 
and feizhengfu zuzhi, too, have their own origins and political 
connotations. In Chinese, minjian means `` As a rather old Chinese 
term, minjian zuzhi is an antonym of ``governmental organization'' 
(guanban or zhengfu zuzhi) and highlights the very nature of self-
organizing. In the early 1950s, nine religious organizations (minjian 
zongjiao tuanti) and their branches nationwide were identified as 
``anti-revolutionary secret societies'' and officially banned. As a 
conspicuous political event, the dismissal of the minjian zuzhi sounded 
a clear signal, and eventually ``minjian zuzhi'' vanished in China. 
From then until the 1980s, this term was only used to refer to foreign 
nongovernmental organizations that functioned as very important 
channels between China and the outside world. Not until the 1990s was 
the term minjian zuzhi revived. In 1999, the governmental agency in 
charge of all national NGOs under MOCA was renamed Minjian Zuzhi 
Guanliju (literally translated as, the Managing Bureau of Popular 
Organizations, though its official name is the Bureau of the Management 
of NGOs).\23\
---------------------------------------------------------------------------
    \23\ The original name of the agency was the Division of Social 
Organizations. It was not just renamed; the rank of new agency was also 
escalated from a division (chu) to bureau (ju).
---------------------------------------------------------------------------
    The term fei zhengfu zuzhi is not authentic to the Chinese language 
but is a transliteration from English ``nongovernmental 
organizations.'' When China hosted the 1995 Fourth World Women's 
Conference (WWC) in Beijing, the Nongovernmental Forum made this term 
well known to the Chinese. To prepare Chinese women's organizations to 
understand the meaning and practice of fei zhengfu zuzhi, the All-China 
Women's Federations launched a campaign to train women leaders at all 
levels. Over 8,000 workshops and seminars nationwide trained 1,910,000 
women leaders and activists, most of whom learned the term fei zhengfu 
zuzhi for the first time.\24\ Since then, ``fei zhengfu zuzhi'' , and 
later, ``fei yingli zuzhi'' (nonprofit organizations) have become 
formal terms in the Chinese political vocabulary.
---------------------------------------------------------------------------
    \24\ Ibid.
---------------------------------------------------------------------------
    Foreign NGOs are commonly called fei zhengfu zuzhi; Chinese social 
organizations, however, are reluctant to call themselves fei zhengfu 
zuzhi. In Chinese, the word ``fei'' means ``not,'' but also ``wrong'' 
or even ``anti.'' For example, during the May Fourth Movement (1919), 
the Chinese name for the ``Great Federation of Anti-Religion Movement'' 
used fei for ``anti.'' The same held for the ``Federation of Anti-
Christianity.'' \25\ Instead of choosing fei zhengfu to indicate their 
nature, many new Chinese NGOs prefer to use NPOs (nonprofit 
organizations.)
---------------------------------------------------------------------------
    \25\ The Chinese names for these organizations were ``fei zongjiao 
da tongmeng'' and ``fei jidujiao tongmeng.''
---------------------------------------------------------------------------
                             5. conclusion
    In summary, since the late 1980s, the government has undertaken 
substantial measures to improve the legal and political environment for 
the growth of NGOs and to strengthen governmental control over them at 
the same time. The promulgation of a series of regulatory documents 
since 1998 indeed has provided a much clearer and unified status to 
most organizations outside of the State system. However, these efforts 
are not without obstacles and costs. While new organizations are 
seeking more autonomy, many well-established social organizations are 
reluctant to change. People's organizations and mass organizations 
stand to lose political power, privilege, and security with a 
fundamental change in the status quo. At present, the government is 
rethinking the roles and statuses of these two types of organizations, 
which number 200 nationwide.\26\ However, these political bodies are 
too important to the CCP's power to let them become independent.
---------------------------------------------------------------------------
    \26\ There are two hundred of these types of organizations 
nationwide, including 19 national organizations fully funded by the 
government. Several of them were organized after the 1980s; the most 
well known are the Soong Ching Ling Foundation and the China Federation 
of Handicapped People. See, ZJBWB (1996).
---------------------------------------------------------------------------
    The confusion and inconsistency in the classification of social 
organizations is reflected in the uncertainty of the government's 
policy towards NGOs as a whole. This reveals problems more profound 
than the clarification of categories or social organizations 
terminology. The government faces a great challenge in letting 
organizations become autonomous in financial and managerial matters and 
takes the political risk of losing control entirely. Without a 
comprehensive and long-term policy, how can the government define the 
term ``social organization,'' change the status quo of the people's 
organizations and mass organizations, or offer Chinese social 
organizations the rights that international NGOs enjoy? The future 
roles of the Chinese organizations remain in doubt.
                                 ______
                                 

                  Prepared Statement of Karla W. Simon

                             march 24, 2003

        Creating an Enabling Legal Environment for Chinese NPOs

    An ``enabling legal environment'' for the non-government, not-for-
profit (NPO) 
sector--also known as civil society--in any country consists of the 
following:

           Supportive ``legal framework'' legislation--the 
        legislation relating to the 
        establishment, governance, and oversight of NPOs;
           Supportive legislation regulating NPO-state 
        relations, allowing partnerships between State entities and 
        NPOs to be established (both with respect to service provision 
        and policy development);
           Supportive tax legislation, permitting various forms 
        of tax relief for NPOs and their donors, thus creating an 
        environment in which NPOs and the business sector can work 
        together for the good of society; and
           Other necessary legislation affecting NPOs and their 
        operations (e.g., fund raising legislation).

    Most developing and transition countries have struggled with the 
issues involved in creating such an enabling legal environment, in 
large part because they are fearful of the consequences of creating a 
truly independent NPO sector, with economic resources as well as access 
to the people by virtue of meeting important social needs (in other 
words, possible political access coupled with economic resources). 
Thus, China has not been alone in dealing with NPOs out of suspicion 
and fear.
    Yet the Chinese government has been very clever in seeking step-by-
step to create a more open and supportive legal environment for NPOs. 
Since the late 1980s the government has had in place policies to 
encourage certain types of NPOs to come into being. Although these 
organizations have at times been affiliated with the Chinese Communist 
Party (CCP) structures, such as the All China Youth Federation and the 
All China Women's Federation, many of them have also been independent 
of the CCP, if not the state. In fact, in the 1980s the government made 
a clear decision to encourage certain semi-independent organizations to 
come into being, by adopting regulations that permit both associations 
(social organizations) and foundations to be formed, albeit with rather 
stringent government control and oversight.
    The types of organizations that were created in those years (top-
down, rather than bottom-up) include the various foundations for the 
poor and for struggling communities (such as a Foundation for 
Underdeveloped Regions, the China Charity Federation, the China Youth 
Development Foundation) as well as such organizations as the Amity 
Foundation, a Chinese Christian organizations that supports rural 
development, one of the few organizations that can claim a sort of 
independence from the state. These various foundations and federations 
were perceived from the outset as a means to attract donations from 
overseas as well as PRC-based Chinese to help the State implement 
programs it perceived to be necessary; for example, to raise funds to 
help victims of the Yangtze floods (China Charity Federation) or to 
develop resources to support school children in poor communities 
(Project Hope of the China Youth Development Foundation). While not 
true NPOs or civil society organizations because of their linkage to 
the State and their top-down creation, many staff members who work for 
these entities nonetheless have become powerful spokespersons for the 
creation of more independent entities, which might grow away from state 
control.
    Most recently the government has begun to experiment with 
regulations that permit more autonomy for NPOs. While the 1998 
regulations on associations (social organizations) and non-state, non-
commercial institutions have continued the dual oversight structure 
present in the 1980's regulations, they at the same time show that the 
government and the CPC are beginning to be aware of the need to free 
such organizations from overly stringent types of controls. The 1998 
association regulations permit, for example, 50 citizens to come 
together to form an association--something that was never allowed in 
the past, when top-down creation of organizations was the norm. In 
addition, more has been made about ``self-management'' by NPOs, 
something that received little emphasis in the past. And, perhaps most 
significant in terms of the evolution in government/CPC thinking, 
recent discussions of possible new foundation regulations suggest that 
the state and the CPC are moving in the direction of freeing such 
entities from invasive government oversight by recognizing more Western 
forms of fiduciary responsibility.
    A further sign that the government has an interest in a more 
enabling legal framework for NPOs can be seen in the adoption of laws 
that allow better tax incentives for charitable giving. This goes hand-
in-hand with the awareness that China's increasing private wealth (made 
possible under Deng Xiaoping Theory) should be better harnessed to 
contribute to social and economic development. At present, the 
Donations Law and the Income Tax Law permit deductions of up to 30 
percent of net income for individual entrepreneurs and up to 3 percent 
for corporate donors--both domestic and China-based foreign donors. 
More recently, members of the 10th National Committee of the Chinese 
People's Political Consultative Congress (CPPCC), were quoted in China 
Daily as being in favor of more broadly based incentives for charitable 
giving. In addition, the government is aware that it must create more a 
more appropriate tax exemption regime for NPOs.
    There is also more openness to input from other countries about the 
way in which the legal system can be more enabling for NPOs; this is 
true despite the ``Falun Gong setback'' in 1999.\1\ In 2003-2004 the 
government will have organized or participated in four conferences or 
workshops to discuss various aspects of NPO regulation and governance 
(two in fall 2003 and two in spring 2004), and the International 
Society for Third Sector Research (ISTR) plans to hold its Asia Region 
meeting in Beijing in October 2004. After publicly opening up to 
foreign technical assistance in this area in 1999 at Asia Foundation 
and Ford Foundation/UNDP sponsored conferences (there had been a great 
deal of pre-1999 technical assistance, but it was never discussed in 
public fora), the government seems to have become increasingly aware of 
the need to develop a legal framework that will give more freedom to 
NPOs. In fact the two events held in the latter half of 2003 were paid 
for solely with government funds and involved significant non-Chinese 
participation.
---------------------------------------------------------------------------
    \1\ Falun Gong scared the Chinese government--it is a non-
government organization that operates outside the normal regulatory 
structure. Thus, government attitudes toward Falun Gong briefly 
affected thinking about how government should deal with NPOs and civil 
society more generally.
---------------------------------------------------------------------------
    What this all will lead to is not clear. It may all be ``eye-
wash,'' but I doubt it. The government knows full well that it must 
relinquish controls and create more independent civil society partners 
if it is going to survive. The social and economic problems China 
currently faces cannot be solved by government alone--but how fast or 
slowly the changes occur will depend on many factors that have nothing 
at all to do with technical legal reform efforts. Nevertheless legal 
reform is necessary, because without it many organizations will remain 
in a legal twilight, described in a recent US Embassy-Beijing briefing 
paper--to avoid the strictures surrounding registration and oversight 
as an NPO (association, social organization) many register as 
``corporations'' under current law. While this has been tolerated for 
organizations that are not particularly sensitive from a political 
standpoint, such organizations are still subject to corporate tax and 
may face other difficulties.
    Recent developments suggest that the government has become aware 
that legislation is needed, not just regulations, which have a more 
temporary character and are not tied into the proposed new Civil Code. 
But the underlying theoretical issues remain: how should the legal 
reforms take account of increasingly troublesome social and economic 
realities; how should they reflect the need to modernize Chinese 
society, to make it more fully participatory? Certain objectives are 
clear:

          1. The State should move away from overt ``control'' of NPOs 
        and their activities and toward membership and fiduciary 
        governance structures, with 
        continuing government oversight;
          2. More mechanisms should be provided within the law for 
        transparency (good internal reporting, recordkeeping, and 
        accounting rules) buttressed by the development of the 
        governance norms previously mentioned;
          3. There should be clearer accountability (not ``control'') 
        mechanisms--to the State for funds received and programs 
        implemented; and to the public and beneficiaries as well, 
        because they should have ultimate oversight of these issues;
          4. There should be more thought given to a clearer tax 
        exemption regime for NPOs as well as to creating tax incentives 
        for the working population (through workplace giving) and 
        rationalizing the existing incentives for entrepreneurs and 
        businesses; and
          5. Regulation of fund raising and asset management by NPOs 
        should be strengthened, so as to protect the public and the 
        non-state assets devoted to its welfare.

    In addition to these crucial aspects of the written law, it is also 
essential that the laws (or the current regulations) be applied in a 
fashion that supports rather than stifles civil society. Naturally that 
involves a change in mind-set for many government bureaucrats--
principally those in the NGO Bureau of the Ministry of Civil Affairs--
but recent experience suggests that such a change is occurring. In the 
first place, government personnel from all over China came together in 
November 2002--in a public setting for the first time--to discuss the 
issues I am raising here today. Second, the government is earnestly 
seeking to train its personnel so as to engender more supportive 
attitudes among them. Younger staff members of the NGO Bureau of the 
Ministry of Civil Affairs have attended trainings in the United States 
and other countries, which expose them to ways of looking at civil 
society that are more open than what they see at home. Third, the new 
upper echelons of the Ministry, both in Beijing and the provinces, seem 
determined to learn about how they can work more closely with more 
independent NPOs--they are seeking training and access to more 
information about how this is accomplished in other countries.
    Writing in 1996, one of the chief American scholars on civil 
society in China, Dr. Richard Estes of the University of Pennsylvania 
noted as follows:

          Chinese legislative authorities simply have not had 
        sufficient time, nor have they accumulated sufficient 
        administrative experience, in knowing how to frame an 
        integrated [set of laws] that effectively deals with the 
        various roles, functions, tax status, accountability 
        procedures, and similar issues [for] a rapidly developing, 
        quasi-independent, social sector.

    In the intervening years, administrative practice has become much 
more developed, and knowledge of the ways in which the laws and 
oversight of other countries address NPO legal issues has increased 
immeasurably. In July 1999, at the Asia Foundation sponsored conference 
in Beijing, with government officials (from MOCA as well as other 
oversight agencies), legal academics, and NPO leaders in the audience, 
I suggested that the regulations and regulators view Chinese NPOs as 
little children that need to be led by the hand. NPOs, on the other 
hand, view themselves at least as teenagers and want to be allowed to 
do things on their own. It may still be that the view of NPOs as 
children--and possibly unruly children at that--remains. But my sense 
is that the government is slowly coming to the realization that the NPO 
sector is in fact growing up. And it is my hope that the next few years 
will be ones in which the essential issues--both of the law and of its 
application--are addressed so that the legal environment for China's 
civil society can become truly enabling.
                                 ______
                                 

                    Prepared Statement of Nancy Yuan

                             march 24, 2003
                               background
    China has become Asia's fastest rising economic power. Two decades 
of economic liberalization and now entry into the WTO, have resulted in 
improved economic indicators, a growing trend toward legal reform, and 
an expanding influence throughout Asia. Economic growth and reform has 
also had a significant impact on China's domestic social and political 
development, creating more opportunity and prosperity, but at the same 
time, daunting challenges.
    Large scale unemployment as a result of State owned enterprise 
reform, and rural unrest among farmers as a result of falling prices 
and rising corruption by local 
officials, has led to well publicized demonstrations in some parts of 
China. Without adequate social safety nets, unemployed workers are left 
without basic health care, education or housing, all formerly provided 
by their employer. Income disparity has widened sharply between China's 
coastal areas and the western provinces, accentuating the gap between 
the rich and the poor. The official estimate shows that between 1990 
and the end of 1999, household income of the wealthiest 20 percent in 
China increased 4.2 times more than that of the lowest 20 percent. 
Other problems include environmental degradation and pollution, public 
health issues such as HIV/AIDS, and corruption among officials.
    While there are some signs of democratic progress, albeit small, in 
the election of village committees, experiments with township elections 
and even public hearings in provincial and municipal legislatures in 
selected areas, fundamental political reform is not truly on the table. 
It is true however, that while economic progress has not necessarily 
led to more democracy per se, there is a developing rights 
consciousness among Chinese citizens, and a better awareness among 
government officials that they must be more responsive to the rights 
and material needs of the people. While circumstances vary across 
China, given the size of the country and the differences between 
regions, it is clear that the government must address these problems, 
or risk instability and chaos.
                     current state of china's ngos
    One of the most significant developments in China over the past two 
decades has been the emergence of civil society organizations. In 1949, 
when the Chinese Communist Party came to power, all independent civil 
society groups were eliminated, and all remaining social organizations 
were brought under the Party's control. China's rapid economic reforms 
have led to a fundamental change in the relationship between the party 
and the state. The population is weary of ideological campaigns, and 
there is an increasing gap between the party and the functions of 
state, as well as between the State and the general population. China's 
modernization and economic liberalization combined with a growing, more 
educated middle class, and serious income disparity between the coastal 
and interior provinces, have led to citizen demands for more services, 
less corruption and more accountability in government. As such, China 
has gradually moved toward a more pluralistic society, with increased 
decentralization of authority and services managed by lower levels of 
government, and recognition of the rule of law, including the rights of 
the individual to protection under the law. These developments have 
left space for other actors, thus laying the basis and need for civil 
society organizations.
    There are many reasons why the Chinese government has come to see 
some benefit in the development of a civil society sector in China. As 
Nick Young, editor of China Development Brief, notes in an August 2001 
special report on China's NGOs, ``government faces a daunting mix of 
service gaps, increased demand and fiscal constraints.'' The CCP places 
the highest priority on national cohesion and stability, and while 
still nervous about the unharnessed power of civil society, it has 
still come to the conclusion that civil society organizations can 
contribute toward this goal.
    There are many types of nongovernment organizations (NGOs), with 
few completely independent or structured under laws as defined in 
Western countries. Progress in legal regulation of NGOs in China has 
been uneven and the application and enforcement are often guided by 
political imperatives, such as the restrictive rules that were passed 
post-Tiananmen in 1990, and most recently, enforcement of more 
restrictive regulations because of concerns over the Falun Gong. Donors 
engaged in development efforts in China tend to look for NGOs that are 
independent of government, representative of their constituents and 
participatory in their decision making as qualifications for 
partnership. While these concerns are pertinent to China's situation, 
no single definition is sufficient in characterizing the current State 
of China's NGOs. Chinese NGOs cannot yet be defined as an ``independent 
sector,'' but should be seen in the broader socio-economic development 
perspective of China's changing social and political dynamics.
    Under Chinese law, laws and regulations exist to govern application 
and registration processes, and guide the scope of activities of NGOs. 
These require NGOs to register with the Ministry of Civil Affairs or 
its provincial or municipal affiliate. This supervisory role of 
government over NGOs encourages a close link to government. However, 
because of the lack of enforcement and underdevelopment of the legal 
system, some NGOs have bypassed this rule and instead registered with 
the Bureau of Industry and Commerce as enterprises, so they do not fall 
under the same reporting rules or supervisory standards. Today, in 
Beijing alone, there are dozens of NGOs that have registered as for-
profit commercial entities or claim to be second tier organizations 
under a government agency. These groups are playing an increasingly 
important function, which is sometimes different from those 
organizations involved in humanitarian activities. These include groups 
such as the China Non-Profit Organization (NPO) Network, which acts as 
an umbrella group that serves the nongovernmental sector; environmental 
groups such as Global Village Beijing which raises awareness of 
environmental issues; or Rural Women Knowing All, affiliated with Rural 
Women Knowing All Magazine and Rural Women's Training School, which 
provides education for rural women in both economic subjects and legal 
education.
    Over the last decade, there has been a transformation of 
traditional mass based government sponsored organizations, such as the 
All China Youth Federation and All China Women's Federation, from party 
instruments to organizations that increasingly represent the interests 
of their constituents. In addition, the space created by the economic 
reforms of the 1980s allowed the development of more players. While 
these organizations have traditionally had an affiliation with 
government in order to operate, and despite the fact that they must 
register with the government agency, many have become more independent, 
both in program and funding, and are more active in representing the 
needs and interests of their constituents through active programs that 
address issues of their local communities. Even the largest national 
organizations, such as the China Charity Federation and Poverty 
Reduction Foundation have ties to the government. These government 
organized NGOs (GONGOs) are becoming more independent in management and 
fundraising. These are often supported through local ``donations,'' 
indigenous philanthropy through community, and even overseas Chinese 
resources. Because of their ability to deliver services at the local 
level, there is a growing recognition of their positive role in 
society. Nongovernmental organizations are seen as filling gaps left by 
government budget shortfalls, providing social and other welfare 
services at local levels, such as elder care, education, and health 
care services. On occasion, organizations come together to collaborate, 
particularly in service delivery to the poor and disadvantaged. 
Regardless of the status or affiliation of the organization, 
nongovernmental groups nonetheless perform an important, and 
potentially critical function in the context of a changing Chinese 
society.
                the role of international organizations
    The nongovernmental sector in China has evolved quickly. Through 
technology and globalization, they have been able to make contacts with 
many international NGOs, either those working in the same field, or 
those looking to provide financial and technical support. This includes 
a wide range of donors, private foundations, private corporations 
operating in China and other like minded NGOs. China Development Brief 
concluded that China is receiving well over $100 million each year in 
project funding directly from or channeled through over 500 
international NGOs and foundations. Gifts in kind, such as hundreds of 
thousands of books and equipment, add substantially to that total. As 
of 2000, there were at least 700 grant making foundations, 70 advocacy 
groups, 200 humanitarian organizations and 150 faith based charitable 
groups, all foreign, operating in China.
    Over the course of China's history, international organizations 
have played a supporting role in the development of social 
organizations and civil society in China. After normalization of 
relations between the U.S. and China in 1979, American foundations with 
historical links to China returned to support Chinese institutions. 
These included the Rockefeller Foundation, China Medical Board and the 
Lingnan Foundation, the Luce Foundation , the Ford Foundation and The 
Asia Foundation. Faith based organizations also reestablished 
relationships, such as the United Board for Christian Higher Education 
in Asia, and other church based or denominational organizations, such 
as the Mennonites and Maryknoll Brothers.
    The Asia Foundation began supporting nongovernmental entities over 
two 
decades ago, supporting the development of human resources, program and 
research activities and building capacity through grants. This included 
early grants to social organizations and NGOs such as Rural Women 
Knowing All, as well as recent efforts to encourage linkages between 
NGOs in China. The China NPO Network 
conducts a monthly NGO forum with Foundation support, which brings 
together officials, business and NGO leaders to discuss legislative 
issues, and to promote collaboration between organizations. Recently, 
the NPO Network has worked with other organizations, including foreign 
NGOs, on understanding standards for NGO self-regulation. The Tsinghua 
University NPO Center is another organization that has recently 
received considerable attention for its research on regulatory issues 
facing NGOs. The Foundation has provided support for the first 
international conference on the non-profit sector and development at 
Tsinghua University in 1999, as well as their research on professional 
associations. The Foundation has, with other organizations, provided 
input on NGO law and registration issues based upon its active role in 
the Asia Pacific Philanthropy Consortium, a regional group which 
promotes Asian philanthropic giving and better understanding of legal 
and regulatory frameworks governing NGOs in Asia.
    In addition to international nonprofit groups and foundations, 
multinational corporations have made major investments in China's civil 
society organizations in the spirit of corporate social responsibility. 
These include companies such as Nike, Adidas, Reebok, Levi Strauss, 
Microsoft, The Ford Motor Company, General Motors, Microsoft, and the 
U.S. China Business Council, among others. Companies support a wide 
range of activities from health and education programs, to rule of law 
efforts, poverty alleviation projects and policy research.
    Another role that Chinese NGOs can play relates to cross-straits 
relations. With common language, culture and single State systems, 
organizations in Taiwan and Mainland China have many similar concerns 
and have collaborated on activities. These include research activities 
on economic development, disaster relief and 
humanitarian aid, and exchange programs. The Asia Foundation in Taiwan 
has funded several delegations of academics, NGO leaders and 
legislative officials from Taiwan to China to discuss issues including 
NGO legislation, internal governance and fundraising strategies.
        what more can international organizations and donors do?
    International organizations can continue to play a significant role 
in strengthening civil society organizations, and building capacity in 
human resources, organization and program development. China's economic 
growth and reform will likely 
accelerate in the coming years, leading to increased pressure on 
government 
resources, with more and more responsibility for social welfare 
devolved to lower levels of government. Chinese NGOs have taken 
advantage of the space available for independent action by providing 
needed services at local levels, filling gaps in education, health, 
eldercare, legal aid and education, and many other areas. Future 
support will continue to be necessary for Chinese NGOs to begin to 
develop the 
capacity to sustain their activities, conduct programs that meet the 
needs of the population that they serve and eventually, act as 
advocates for the causes they 
represent.
    International organizations and donors can also continue to help 
try to improve the environment in which NGOs operate, opening up more 
space and providing more opportunities for expansion into different 
fields. This includes support for changes in the NGO law and the 
overall registration process, as well as support for research and 
networking with like-minded organizations both in and outside of China. 
For instance, university centers focused on civil society research and 
development have proliferated in recent years. All receive 
international support. These 
include Fudan University's new Social Development and NGO Research 
Center (funded by the Himalayan Foundation in Taiwan), three NGO 
research institutions at Beijing University, the Research Center for 
Volunteerism and Welfare (funded by UNDP), The Non-Profit Law Research 
Centre (funded by the Ford Foundation and Oxfam) housed in the Law 
School, and the Center for Civil Society Studies, housed in the 
Institute of Political Development and Governance. Zhongshan University 
also has a new Center for the Study of NGOs, housed in the Zhongshan 
University Research Institute for Guangdong Development. It is a joint 
venture with the 
Chinese University of Hong Kong.
    International support for the development of China's 
nongovernmental sector is important to its future. In addition to a 
friendly regulatory environment under the law, other areas require 
support. The recent scandal related to Project Hope China has given 
donors pause. How do donors determine the credibility and financial 
accountability of Chinese nongovernmental organizations? Donors must be 
assured through due diligence that the organizations that they fund are 
genuine in their mission and delivery of services while at the same 
time, Chinese organizations will have to ensure that funds and programs 
are managed responsibly. In order for this to happen, international 
assistance can, and should, not only support strategic planning and 
program implementation, but also the operational aspects of 
nongovernmental organization management in China. Chinese NGOs need 
training to raise and account for their funds, commit to transparency 
in all aspects of operations, 
report to donors and comply with international standards. This 
increased and recognized role of NGOs creates an opportunity for reform 
that will improve the environment for NGOs through clearer legal 
status, more transparency and accountability in their operations, and 
progress toward a more meaningful independent sector in China.
    In the category of assistance to China's NGOs, U.S. Government 
assistance has lagged behind other donors. The only American 
organizations with a resident presence and long track record in 
supporting civil society organizations have been the Ford Foundation 
and The Asia Foundation. There is a marked absence of American groups 
working on the ground to develop the capacity of local organizations. 
Official American assistance programs for civil society groups in China 
has been extremely limited. The European Union, the World Bank, UNDP, 
Canadian International Development Agency (CIDA) and Australia's aid 
program (AusAid) provide levels of funding from half a million to 
several million dollars for civil society development in China. These 
donors, among others, have made a commitment to support and advance the 
growth of China's civil society organizations, not only in the 
significant amount of funding they provide, but also in the attention 
they give to their programs, by setting up small grant funds to be 
given directly to NGOs (not through government agencies) and 
designating specific staff to focus on civil society developments. If 
the U.S. wants to support the positive trend of NGO development in 
China, funds should be provided to knowledgeable groups who can help 
build the capacity of Chinese organizations.

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