Discussion of a new law to specifically regulate overseas NGOs began in October last year. Legislative work began in December last year when the State Council submitted the draft law to the Standing Committee of the National People's Congress, China's top legislature, for deliberation. Fu Ying, a spokeswoman for the NPC, said at a press conference that the NPC Standing Committee deliberated the draft law during the two sessions. The draft law, if passed, would lead to overseas NGOs being managed in a quite different way from mainland NGOs.

Zhang Zhiru, founder of the Shenzhen Chunfeng Labor Dispute Service Center, recently laid off all of  his five employees due to a shortage of funding.

From the start of this year, his organization decided to stop receiving funds from the US-based International Labor Rights Forum(ILRF).

As a grass-roots organization which has no other stable source of income, that decision was hard to make. Chunfeng started receiving funding from the ILRF in 2007, and used to get 300,000-400,000 yuan ($48,090-64,200) every year to provide legal and organizational support to factory workers in their disputes with employers in the prosperous Pearl River Delta.

Zhang said he started to consider refusing overseas funds last August, when local police in Shenzhen started investigating Chunfeng. "They said that since Chunfeng receives overseas funding, our objectives are suspicious," Zhang told the Global Times. To avoid trouble, he decided to stop receiving funds from overseas altogether, including from the China Labour Bulletin, an NGO based in Hong Kong.

With no alternative sources of funding to cover the loss, Zhang was forced to move the NGO out of the rented office it had occupied and asked the five employees to leave.

A source of concern

Zhang's experience highlights the dilemma facing a lot of grass-roots organizations in China that receive funding from overseas, at a time when the Chinese government is trying to tighten its management of overseas NGOs operating in Chinese mainland.

Incomplete statistics show that more than 1,000 overseas non-governmental organizations are currently operating in the Chinese mainland, conducting up to 6,000 programs and cooperating with local Chinese organizations and activists, according the People's Congress of China, the official magazine of the  National People's Congress(NPC).

They provide hundreds of millions of dollars every year to programs related to poverty alleviation, assisting disabled people, environmental protection, healthcare and education.

Overseas NGOs bring in international funds and sophisticated technologies, however, at the same time, concerns have been growing that some overseas NGOs may attempt to influence China's politics through exerting pressure in areas such as human rights.

Wang Cunkui, a professor with the People's Public Security University of China, who has researched the history and activities of overseas NGOs in China, has openly criticized some overseas NGOs for ideological permeation using cultural exchanges and education initiatives to foster "Western agents" and political opposition in China and for fanning up discontent towards the authorities in the name of protecting human rights.

In June last year, an official document published by a township in Yuncheng, Shanxi Province, showed that the National Security Commission of the Central Committee of the Communist Party of China had initiated a nation-wide census of foreign-funded NGOs in Chinese mainland, which is seen as a sign of the rising suspicion of organization with links overseas.

However, China currently has no specific laws concerning the management of overseas NGOs, though individual articles in a number of laws and government regulations concern the management of overseas NGOs.

There is only one law in China - the Law on Donations for Public Welfare - that is related to the activities of overseas NGOs. Other regulations, like the Interim Provisions for the Administration of Foreign Chambers of Commerce in China, and the Regulation on Foundation Administration, which has provisions on the management of overseas foundations, also cover some elements of the activities of overseas NGOs.

Without a systematic legal framework, many of the activities of NGOs fall into a legal grey area and create ambiguity in law enforcement.

NGO No-nos

Discussion of a new law to specifically regulate overseas NGOs began in October last year after the Fourth Plenary Session of the 18th Party Congress ordered the authorities to better administer overseas NGOs and supervise their activities.

The legislative work began in December last year when the State Council submitted the draft law to the Standing Committee of the National People's Congress, China's top legislature, for deliberation.

Fu Ying, a spokeswoman for the NPC, said the NPC Standing Committee deliberated the draft law, but didn't give any further information.

Observers have noticed that the draft law, if passed, would lead to overseas NGOs being managed in a quite different way from domestic NGOs.

For example under the draft law, overseas NGOs would be required to register with the police, instead of the Ministry of Civil Affairs as domestic NGOs do.

In fact the law was drafted jointly by the Ministry of Public Security and the Ministry of Civil Affairs, and was approved by the State Council, which then submitted it to the NPC.

Yang Huanning, deputy minister of the Ministry of Public Security who was involved in drafting the law, said the draft law set the procedure by which overseas NGOs must register their Chinese mainland bureaus and temporary programs, and specified their legal obligations and the punishment they would face upon infringement, Xinhua reported.

The draft law also says that the source of funding of overseas NGOs must be legal in the countries where they operate, or come from other officially approved channels.

The draft law also forbids overseas NGOs from undertaking certain activities which are open to domestic NGOs. Overseas NGOs would not be allowed to raise funds or receive donations in Chinese mainland, in addition to not being allowed to participate in business activities.

According to the draft law, overseas NGOs and their representative organizations are forbidden to fund or be involved in religious activities in the Chinese mainland, but they can participate in areas like education, technology, culture, environmental protection and charity.

Other verboten activities include sabotaging ethnic unity, collecting State secrets, funding people or organizations that are involved in programs harmful to national interest or using the Internet to undermine national security.

Once the draft law is approved, overseas NGOs that do not - or find themselves unable to - register will not be allowed to operate in the Chinese mainland.

Members of the Standing Committee of the NPC almost unanimously agreed on the importance of establishing specific laws covering overseas NGOs, and some suggested that China learn from the experience of Russia, according to Phoenix Weekly.

Russia's Ministry of Justice ordered the closure of nearly 9,000 NGOs in 2013, and the federation allocated 2.32 billion rubles to fund domestic NGOs that year.

Wolves and sheep

At the same time, some NPC Standing Committees members raised different opinions. Cai Fang, deputy president of the Chinese Academy of Social Sciences, is worried that overly strict rules would hamper academic communication between the Chinese mainland and overseas. Once the law forbids Chinese organizations receiving unapproved funding, it will create barriers for Chinese mainland universities engaged in joint research programs with foreign universities.

Chen Zhu, Vice-Chairman of the Standing Committee of the NPC, told media outlets that the legislation was necessary, but at the same time "wolves" and "sheep" should be treated differently, asking the authorities to more precisely distinguish "good" organizations from the ones controlled by antagonistic forces. In order to do this, Chen suggests that a positive list of allowed activities and a negative list of forbidden activities should be made clear in the law to avoid ambiguity.

According to the current edition of the draft, some forbidden terms are still unspecified, leaving room to law enforcers to interpret what exactly constitutes an illegitimate activity for an NGO and leaving overseas NGOs unsure of what kinds of activities might land them in hot water.

Currently the law has just gone through its first review, and there will be more rounds of deliberation at the National People's Congress. There is no timetable for when it will be approved.

Many who want to avoid overseas funding and the legal ambiguity that comes with it before overseas NGOs come under closer government supervision, like Zhang Zhiru, will have to work harder in order to find funds to support their work.

Zhang said his organization now has a greater fundraising ability compared with previous years, which contributed to him making the decision to sever his ties with the overseas NGOs. But still, it's virtually impossible to get as much funding from domestic channels as the amount that for overseas NGOs can offer, he said.

But he still thinks "Chinese problems should be solved by the Chinese."