BY SUI-LEE WEE AND MEGHA RAJAGOPALAN

Foreign non-government organizations (NGOs) in China are bracing for a crackdown as the government prepares to pass a new law to regulate their activities, which critics fear could curb activism and drive out several groups.

It is unclear how strictly the government will enforce the rules, which a parliament spokeswoman said last week were necessary for national security reasons.

But rights activists say the new law is part of a broader trend under President Xi Jinping's administration to rein in dissent.

The draft law, according to a copy seen by Reuters that was obtained by a foreign NGO, bars foreign NGOs from activities that violate "Chinese society's moral customs" and from setting up branches in China.

Issued by the Legislative Affairs Office of the National People's Congress Standing Committee last December 22, the draft law says foreign NGOs will be regulated by a "business unit", the police and other authorities.

The Ministry of Public Security and provincial public security departments will administer registration of foreign NGOs, it says.

Foreign funding has to come from "legal" sources and NGOs are not allowed to raise money in China, it adds.

"This really worries me a lot," said Shen Tingting of Asia Catalyst. "It shows that the government definitely sees foreign NGOs as anti-government agents."

The National People's Congress did not respond to a request for comment.

The law aims to protect the legal rights and interests of NGOs, Yang Huanning, vice-minister of public security, was quoted by state media as saying.

Foreign NGO workers have met several times since last October to discuss how to respond, said two NGO representatives with direct knowledge of the situation.

They said they feared the law would shut them down because of the difficulty of getting permission for their activities, which could ultimately face rejection.

"The rumor we've heard is the purpose of the law is to get rid of us," said the China director of a foreign NGO, who declined to be named, because of the sensitivity of the topic.

Since last June, foreign NGOs have faced closer scrutiny. State security agents have interviewed them about funding, representatives said. Two foreigners working for NGOs recently had to leave China because they were working on incorrect visas, said three people familiar with the matter.

The sudden departures of Tim Millar, an Irish national from the Rights Practice, a human rights NGO with offices in Britain and the United States, and Jeremie Beja, a French national from China Development Brief, which studies civil society, have unnerved the NGO community.

Nicola Macbean, director of the Rights Practice, confirmed Millar's departure. Beja and China Development Brief did not respond to e-mails seeking comment.

China says it has about 6,000 foreign NGOs. Many train lawyers, judges and Chinese NGOs, and push for a cleaner environment.

China does not have laws regulating all foreign NGOs, but some foreign NGOs can register as representative offices of foundations.

But tough requirements, such as finding a government sponsor and having a substantial amount of capital, have limited registration to a very few foreign groups.

Many Chinese and foreign NGOs in China register as businesses and operate without proper authorization.