China plans to launch controversial social credit rating system for 33 million firms

Author: South China Morning Post (Hong Kong), Published on: 25 September 2019

“China pushing ahead with controversial corporate social credit rating system for 33 million firms”, 17 Sep 2019

China is moving forward rapidly its plans for a controversial social credit rating system that will include 33 million companies… The National Development and Reform Commission (NDRC) is pushing ahead with social credit-based supervision of all commercial entities from large firms to small, independently owned and operated business…

The social credit rating will include court rulings, tax records, environmental protection issues, government licensing, product quality, work safety and administrative punishments by market regulators…

Firms will be labelled as having excellent, good, fair or a poor credit rating, with the initial assessment used as “basic proof” to allow the government to conduct varying degrees of supervision. For any business deemed to have a poor credit history, the management will be called in by local officials for a detailed review, which will include plans to correct the problems.

The NDRC has already completed its assessment of travel service companies, coal mining firms, long-distance bus providers, natural gas suppliers and home services…

The NDRC did not elaborate on the business credit rating methodology, but said that it will solicit public feedback before the end of October…

In a report… the European Chamber of Commerce in China warned that data collected under the corporate social credit system could be weaponised to target foreign firms…

Chamber president Jorg Wuttke said there were concerns that the submission of sensitive data could put firms’ intellectual property at risk – a long-standing grievance in China by both US and European businesses.

“For example, particularly with banks, insurance and health care companies, to what extent can you disclose information to the local government?” he said.

Lian Weiliang, deputy chairman of the NDRC, said that the assessment would not used directly for punishment. Instead, punishments would be meted out in accordance with joint memorandums by different government agencies that follow a “strict procedure”…

“For severe violations, especially those endangering life and property, harsh punishment will be adopted, such as a temporary or even permanent ban on market entry.”…

[Also referred to Huawei and FedEx]

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Related companies: FedEx Huawei Technologies