UPDATE ON RELEASE: "China releases reform activists," by Kathrin Hille, The Financial Times

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August 23, 2009

China has released two prominent reform proponents in a twist following its recent crackdown on activists.

Xu Zhiyong, a law scholar and organiser of one of the country’s largest legal aid groups, who had been accused of tax evasion, and Zhuang Lu, his assistant, were released on bail on Sunday.

Ilham Tohti, an economist who belongs to the Uighur ethnic group and who was detained shortly after the July 5 riots in Urumqi, capital of the western region of Xinjiang, also returned home.

The detentions of Mr Xu and Mr Tohti drew widespread criticism because, although outspoken, both academics are committed to reform within the system.

Mr Xu’s lawyers say the charge of tax evasion lacks evidence but is connected to the fact that his non-government organisation, the Open Constitution Initiative, is registered as a company and has been accused of failing to pay its taxes properly.

China’s opaque legal system, where decisions in cases regarded as important or politically sensitive are frequently made by Communist party officials rather than judges, makes it hard to tell whether Mr Xu’s release lowers the risk of prosecution.

Li Xiongbing, a lawyer working with the Open Constitution Initiative, said he believed that it was now much less likely that Mr Xu would be indicted. But Zhou Ze, one of Mr Xu’s lawyers, said: “We don’t know what will happen to the case.”

The authorities' unusual move indicates that the government is seeking to avoid unnecessary damage to its reputation from the recent crackdown.

Mr Xu had been taken from his home by police on July 29, but his employer had only received notice of his formal arrest on charges of tax evasion last Monday.

The Open Constitution Initiative was closed last month after tax authorities fined the group Rmb1.4m ($205,000, €143,000, £124,000), saying it had failed to pay its taxes. Many non-governmental groups in China choose to register as enterprises to avoid the difficulties of getting official approval as an NGO. This imposes a heavier tax burden on them and makes them vulnerable to accusations on accounting errors.

Mr Xu rose to prominence for his fight against detention without a legal basis and other cases where the state violates or fails to protect an individual’s rights.

Lawyers working with the Open Constitution Initiative have tried to sue for compensation on behalf of parents of children who died or fell ill from melamine-tainted milk powder.

If found guilty of tax evasion, Mr Xu could face a sentence of up to seven years.

Mr Tohti was detained the week after the July 5 race riots that killed close to 200 people, most of them members of the majority Han group, according to the government.

He has done consultancy work for the government before. On his blog, he had criticised the government’s economic and social policies in Xinjiang, the Uighur minority’s home region.