The new document outlines 23 policies for improving transparency and accountability in the business environment, covering a broad range of industries, including consumer goods and services, government contracts, foreign trade, and more.
China’s social credit system , first proposed in 2014, is a national credit rating system and blacklist system that rewards and punishes individual, corporate, and government behavior.
For businesses, the system focuses on ensuring that they follow laws and regulations and pay taxes in an appropriate and timely manner, though product and service quality are also be measured.
Whereas previous policy documents on the SCS have focused on clarifying the scope of responsibilities of businesses and explaining punishments for bad behavior and non-compliance, this latest document seeks to use the SCS as a tool to boost consumption and economic activity.
The opinions provide 23 policy measures for improving trust in society across a wide range of fields and industries.
In addition, the opinions propose the creation of a list of “seriously untrustworthy entities in the social insurance field”, to punish and keep track of companies that fail on the social security obligations for their employees.
In the past, false or incorrect reporting of environmental statistics has been a significant obstacle to reducing environmental damage and ensuring compliance with environmental regulations.
Furthermore, the opinions seek to improve cooperation with overseas traders.
The SCS will play a key role in this by unleashing its capabilities to identify, monitor, manage, and dispose of financial risks.
The opinions also provide some insight into how the government plans to implement the SCS.
The opinions also encourage local governments to formulate local laws and regulations to enhance the effectiveness of the SCS and adjust it to the needs of their localities.
Moreover, the opinions call for better transparency in how the SCS works and what the consequences are for entities that fall foul of the system.
Finally, the measures state that the disciplinary measures must be proportionate to the nature and severity of the dishonest behavior to ensure the punishments are not excessive or too light.
Finally, the opinions also highlight the need for strict data protection of the information shared through the SCS.
These requirements fall in line with China’s existing cybersecurity and data security regulations, underpinned by the Personal Information Protection Law , the Data Security Law, and Cybersecurity Laws as well as regulations categorizing data into different levels of sensitivity.
The focus on building trust among all members of society solidifies the government’s stance that the SCS will be used as a tool for boosting the economy and enacting positive social change, rather than simply a way of expanding supervision and punishing bad behavior.
Regardless of whether the SCS will be enough to counter other factors holding back economic growth in 2022, the government will continue to use every tool at its disposal to achieve stability, including the SCS.
The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative.