Modernizing Charity Law in China (2009)

(ProQuest: ... denotes non-US-ASCII text omitted.)I. INTRODUCTIONThe charitable sector1 is emerging in mainland China. Ironically, this expansion has come as a result of the remarkable economic growth in the urban cities, which has exacerbated the social and economic inequalities between rural and urban China.2 Natural disasters (e.g., the snowstorm crisis and the Sichuan earthquake in the spring of 2008) that hit the poorer western part of the country have brought the shortcomings of the bureaucratic Chinese government starkly into focus, creating the opportunity, and indeed the necessity, for the charitable sector to thrive.3 The charitable sector thus plays a crucial role in mobilizing economic wealth to provide social relief, narrowing regional disparities, and, ultimately, catalyzing social and political changes.However, despite the growth of charitable organizations and a rich tradition of philanthropy, China's existing legal framework fails to support an effective charitable sector. This failure has three primary causes. First, there is no comprehensive law governing charitable organizations in China; the existing laws remain disparate and obsolete, notwithstanding a few recent attempts at reform. Second, the existing legal rules often fail to facilitate the operation of the charitable sector or incentivize charitable giving. Third, the charitable sector is plagued by inefficient bureaucratic modes of operation and governance.In light of these weaknesses, the Ministry of Civil Affairs (Minzhengbu ...) has been commissioned to draft China's first Law (Cishanfa ...) to facilitate and regulate the philanthropic movement.4 Although the details of this law have yet to be unveiled, it is expected to be promulgated in the near future. 5 Therefore, now is a momentous time for the charitable sector in China. Part II of this Article argues that as new modes of funding, operation, and governance have evolved amongst charitable organizations, a new paradigm of charitable operation has emerged, giving rise to facilitative and regulatory issues of charity operation and governance. However, the current legal framework governing charitable organizations in China is under-developed and runs the serious risk of hindering future developments in the charitable sector. Parts III and IV examine in detail the ways in which a full code of charity law may enhance the development of charitable activities: after reviewing the current legal framework, Part III provides suggestions for modernizing China's existing legal framework governing charitable operations; whereas Part IV outlines a possible regulatory regime for charitable governance. Hopefully, in drafting the Charity Law, the Ministry of Civil Affairs will respond to the needs of the modern charity paradigm, in particular the facilitative and regulatory rules that are needed to sustain it. Part V concludes by suggesting that the way that the government uses the law to shape the charitable sector will reflect, at least in part, how China will grapple with the issue of state-society relations in the face of political realities and interests.II. THE PARADIGM OF A MODERN CHARITY REQUIRES MORE THAN THE CURRENT LEGAL FRAMEWORK GOVERNING CHARITABLE ORGANIZATIONS IN CHINA OFFERSThe emergence of a charitable sector is undeniably one of the most impressive social accomplishments in China in recent history.6 However, the working relationship between the charitable and the public/private sectors has created tensions.7 In order to understand how the charitable sector can be developed, one must first understand the modern charity paradigm, stakeholders' competing and intersecting demands upon charitable organizations, and the rules necessary to balance these demands. This paradigm exhibits two common elements necessary to an effectively supported charitable sector: facilitation and regulation.8 The recent attempts to reform the legal framework supporting China's charitable sector have not gone far enough to embody these two elements. …