Karla Simon

In recent weeks websites and newspapers in China have heated up with news about coming developments regarding government downsizing, civil society, and the easing of restrictions on registration. For example, the influential news outlet Caixin wrote ‘in 2010, the Guangzhou government gave its civil affairs department a green light to examine and approve registrations. That same year, the city created a special fund to help social organizations: some 5 million yuan from a local lottery was funneled to groups engaged in public service. Thanks to local reforms, as of December some 645 organizations in Shenzhen were registered and actively pursuing various altruistic causes without government agency sponsors.’ 

In addition, in an opinion piece in the English-language China Daily (Asia Pacific Edition), it is noted that direct registration is needed because ‘[t]he issue is clear: competent civil groups should not be forced to work “in the shadows”. Nor is the public served by the cumbersome regulations: given that the majority of them are unregistered, the public lacks information about which groups seek to help and which groups seek to exploit.’ A slightly related piece discusses the no man’s land in which foreign CSOs find themselves in China – while foreign foundations are in fact permitted to register (with difficulties, as noted in the piece), foreign CSOs have no clearly applicable legal rules except in Yunnan Province.

In a story carried by Radio Free Asia in Chinese (来源：新快报), the relationship of direct registration of CSOs to the shrinking of the state was featured. A researcher for the State Council Development Research Center, Zhao Shukai, described the fact that the provision of public services is the most basic of government functions because it has the taxing power and the right to public administration. He noted, however, that government can only provide the most basic, most general public services; many public services are beyond the reach of the government, such as relief for special populations and services for vulnerable groups. He stated that governments alone certainly cannot serve the entire people. He pointed out the advantages of civil society organizations providing specialized services, saying they can provide personalized, quality service, beyond the reach of the government departments, and that government functionaries find it difficult to cover.

When it comes to charitable donations for such things as disaster relief, money coming from social organizations is often higher than the government funds the services are more professionally provided and have more influence. Interestingly (and consistent with a more Western analysis of the role of civil society), Zhao Shukai noted that that in the United States there are dedicated organizations providing assistance or living services for the homeless. These services are financed though the outsourcing by government to social organizations the implementation of living assistance for the homeless. These social organizations reduce the burden on the government at a lower cost to government.

In that context the central government and the highest party organs in China have now issued a ‘roadmap’ for reforming the public institutions (shiye danwei) that currently provide social services. The expectation is that by 2020 the state sector will be reformed by transitioning many of these organizations into CSOs. These include, for example, social enterprises such as private schools and hospitals, which will take on the legal form of minban fei qiye danwei (min fei) or not-for-profit enterprises (these are akin to charitable enterprises in England and the US), which charge fees for service.

The aim of the reforms now being set out is to provide better social services than are currently available from the state. They meet a problem, however, because of the large CSOs, which many Chinese people see as ‘remote arms of government agencies, with the same scope for rent-seeking and outright corruption’, according to a recent analysis in China Policy Brief. This discussion points out the important aspect of coupling down-sizing with ‘de-bureaucratisation’. As the China Policy Brief notes, in China ‘many agencies have fingers in the typical bureaucratic pie – creating layers of uncertainty and setting up minefields of competing jurisdiction. [For example, t]he Ministry of Health’s aim to reform health access is compromised before it begins because of other empires with a stake in hospitals.’ One aspect of the de-bureaucratisation reforms was also recently mentioned in the Beijing local media, where it was said that government officials are to exit more than 7,000 social organizations in Beijing.

Can the direct registration of social organizations, which aims to remove the sponsor agency from the registration process, really achieve a process that would reduce bureaucracy? There are several issues to unpack. One is the fact that the former sponsor agencies are to remain as advisors. That surely will not entirely eliminate vested interests, such as the social welfare department at the Ministry of Civil Affairs (MoCA). Further, if this de-bureaucratisation is to be accomplished in China, where social service outsourcing is accompanied by tremendous red tape, it will be necessary to completely rethink the processes used for outsourcing. This means that the ministries involved will need to learn new roles in oversight as opposed to service delivery and allow CSOs to participate in advocacy for possible new approaches to delivery. Finally, the role of the tax authorities in granting charitable status, noted above, will need to be clarified.

Returning to the reforms in Guangdong Province, there is some hope with regard to the issue of determining charitable status. The civil affairs authorities in Shenzhen are moving in the direction of having a process of direct registration of CSOs followed by a ‘certification’ for those that are charities. Much like the 2006/2008 reforms in Japan, which created a ‘Public Benefit Certification Commission’ patterned on the Charity Commission for England & Wales, this process would be centered in MoCA, which deals directly with CSOs. Such a process would reduce bureaucracy by reducing the role of the tax authorities in overseeing issues of charitable status.

This is a role they are not carrying out very well at the present time, and many grass roots organizations are finding it difficult to obtain charitable status so as to be able to issue donation receipts. Without the ability to issue donations receipts, CSOs will not be able to attract funds from the private sector in adequate quantity to make it possible for them to provide the needed services. With all this talk of downsizing, government is definitely not looking to provide sufficient resources in the future. Thus, it behooves the national government to establish a policy that will provide incentives to civil affairs authorities not only to allow CSOs to directly register as such but also allow them to certify charities without significant bureaucratic red tape.

Karla Simon (奚文雅)  is professor of law and director of faculty development at the Catholic University of America and has worked in China for over 16 years