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Carol Yang

China has further solidified its decade-long social credit initiative by unveiling 23 new guidelines, including plans for government and enterprise credit ratings, along with rewards and punishments.
The document, issued by the State Council on Monday, is designed to create a “fair and orderly competitive market environment”, building on the social credit system first outlined in 2014.
Compared with traditional financial creditworthiness, the concept of social credit encompasses a much broader scope, covering not only individuals and companies but also government agencies and judicial administration, said Zhao Zhanling, a partner with Beijing Javy Law Firm.
“The system is designed to improve the overall creditworthiness of society by enforcing reward and punishment mechanisms based on credit records,” he noted.
To an extent, China’s social credit system is similar to the US’ credit scoring system, with the use of credit information dictating access to services and opportunities, but China’s system is more comprehensive – at least in theory.
The range of included data in China’s system extends beyond financial records to encompass various types of misconduct, including violations of laws, Zhao said.
To better serve a unified national market, the guidelines pledge to build a social credit system covering all types of entities, while improving the credit disclosure of state-owned enterprises on the condition that the information’s security is ensured.
Governments will also be subject to credit evaluations. Misconduct in areas such as public resource trading and enterprise-related charges will be recorded, resulting in restrictions on funding applications and performance ratings, according to the guidelines.
The guidelines also establish a “seriously discredited entities” list for sectors including real estate and the internet. Entities on this list would face restrictions or bans on issuing stocks and bonds.


Ever since 2014, the plan – aimed at creating a system to reward actions that build trust in society and penalise those that do the opposite – has often been misunderstood or deemed controversial. Originally, the plan was to have a national system tracking all “social credit” in place by 2020. But the long-anticipated draft law for the system was not released until November 2022. And the amended guidelines reflect how the initiative is still evolving.
The platform economy has also been included in the new guidelines, which call for strengthening the credit regulation of online streamers, influencers and online content distributors.
A comprehensive social credit system will enhance the efficiency of all society by replacing various rating reports or certificates with widely recognised credit ratings, thereby facilitating governance and transactions, according to Zhao.
However, he said: “It’s a huge task that requires coordination among numerous departments, and extensive data sharing, which may take years to complete.”
The social credit system has long raised concerns about information security and the risk of privacy invasion.
In a Xinhua report, the National Development and Reform Commission addressed these concerns by vowing to combat excessive information collection and illegal disclosures, as well as the processing, sale or use of personal information.
The new guidelines also pledged to establish a traceability mechanism for credit-data security management and an accountability system for infringement.
China also plans to promote cross-border credit data sharing and enhance cooperation with major emerging national economies – such as those that fall under the Brics bloc, as well as with participants in China’s Belt and Road Initiative – for the mutual recognition of credit products. And the aim is to develop globally competitive credit-rating institutions. But no details were revealed in the guidelines.


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Guidelines also establish ‘seriously discredited entities’ list for specific sectors – and those on the list could face restrictions or bans on issuing stocks and bonds


Guidelines also establish ‘seriously discredited entities’ list for specific sectors – and those on the list could face restrictions or bans on issuing stocks and bonds.
