[vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” padding_top=”50″ css_animation=””][vc_column][vc_column_text]<\/p>\n
[\/vc_column_text][\/vc_column][\/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”center” background_image_as_pattern=”without_pattern” padding_top=”50″ padding_bottom=”50″ css_animation=””][vc_column css=”.vc_custom_1517373139965{background-image: url(http:\/\/asiallians.com\/wp-content\/uploads\/2018\/01\/Picture1.png?id=18554) !important;}”][vc_empty_space][vc_column_text]Latest update on Corporate Social Credit System in China<\/span><\/strong>[\/vc_column_text][vc_empty_space height=”70px”][\/vc_column][\/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” padding_bottom=”100″ css_animation=””][vc_column][vc_column_text]Much discussion about the China\u2019s Social Credit System (\u201cSCS\u201d) has focused mainly on the potential impact for individuals, while far less has been said about how it will affect business in China. According to J\u00f6rg Wuttke, the president of European Union Chamber of Commerce in China (\u201cEUCCC\u201d), \u201cit is no exaggeration to say that the Corporate SCS will be the most comprehensive system created by any government to impose a self-regulating marketplace, nor is it inconceivable that the Corporate SCS would mean life or death for individual companies.\u201d1<\/a><\/sup><\/p>\n Currently, the corporate SCS in China is still fragmented (although it is supposed to be fully implemented by end of 2020). For your better understanding of the system, we hereby brief you the following:<\/p>\n Regulatory Documents Released on the Corporate SCS in China<\/strong><\/p>\n Regulatory documents in relation to Corporate SCS in China are a complex combination of more than 1000 legislations enacted by more than forty governmental authorities. Among the huge legislations package, the first legislation is released in 2014.<\/p>\n In 2014, the State Council published the Guideline of the Construction of Social Credit System (2014-2020)\u00a02<\/a><\/sup>, outlining the key goals, logic and mechanisms of the SCS, and provided a first indication of the timeline \u2013 the SCS is to be implemented by 2020. However, this fixed time spot can be misleading, as the implementation of the Corporate SCS is continuously expanding and evolving.<\/p>\n Since 2013, China\u2019s governmental authorities have published approximately 350 regulations, laws and policies at the central level and more than 1,000 documents at the local level defining the Corporate SCS.3<\/a><\/sup>\u00a0Now in 2019, many of its mechanisms are operational, collecting large amount of data and rating companies\u2019 performance.<\/p>\n These months have seen vital documents published to boost the implementation of Corporate SCS. In June 2019, after the executive meeting chaired by Premier Li Keqiang, the State Council announced that China would step up the building of its SCS by rolling out new market regulatory measures.4<\/a><\/sup>\u00a0In July 2019, Amendment on Draft of the Measure for Lists of Heavily Distrusted Market Entities5<\/a><\/sup>\u00a0was released by the State Administration for Market Regulation (\u201cSAMR\u201d) on 10th July, and Guidelines for Accelerating the Building of the Social Credit System and Building a Credit-based New Monitoring System6<\/a><\/sup>\u00a0was publicized by the State Council on 16th July, both of which have pushed forward the implementation of Corporate SCS into the decisive stage.<\/p>\n Major Data Infrastructure of the Corporate SCS in China<\/strong><\/p>\n The government is visioning to set up one central database that tracks, records, publishes and shares all rating results and detailed records on companies. Aiming to set up such centralized database, it is reported that the government is endeavoring to establish a new metadata base \u2013 National \u201cInternet+ Monitoring\u201d System (\u56fd\u5bb6\u201c\u4e92\u8054\u7f51+\u76d1\u7ba1\u201d\u7cfb\u7edf) as of September 2019 to integrate data of government and private companies. However, till now the centralized database has not yet been implemented, and the data infrastructure is still scattered across numerous platforms. We take few examples below:<\/p>\n (1) National Enterprise Credit Information Publicity System \uff08\u56fd\u5bb6\u4f01\u4e1a\u4fe1\u7528\u4fe1\u606f\u516c\u793a\u7cfb\u7edf\uff09<\/p>\n http:\/\/www.gsxt.gov.cn<\/p>\n The National Enterprise Credit Information Publicity System (\u201cNECIPS\u201d) is the go-to platform for detailed information on companies\u2019 Corporate SCS records. Run by SAMR and set up in December 2016, NECIPS provides the most comprehensive overview of companies\u2019 SCS information, as it collects data from various governmental sources, including taxation, customs, employment, environmental protection, and court proceedings.7<\/a><\/sup><\/p>\n On 19th July 2019, SAMR published a Notice on Further Optimizing the Use and Management of NECIPS8<\/a><\/sup>, of which the goal is to realize a unified collection and disclosure of information on enterprises at all levels. The local branches of SAMR need to record the required information to achieve \u201cone national network\u201d for information disclosure of enterprises covering all aspects of market supervision.<\/p>\n (2) CreditChina \uff08\u4fe1\u7528\u4e2d\u56fd\uff09<\/p>\n www.creditchina.gov.cn<\/p>\n CreditChina is the web portal of the National Credit Information Sharing Platform, a central database and the backbone of SCS. Online in June 2015, it is managed by the National Public Credit Information Center under the guidance of the National Development and Reform Commission and the People\u2019s Bank of China (\u201cPBOC\u201d).\u00a09<\/a><\/sup>The website collects data from various regulators and courts and publishes key credit information on companies as well as on individuals, including a \u201cRedlist\u201d and a \u201cBlacklist\u201d.<\/p>\n (3) Credit Reference Center of PBOC (\u5f81\u4fe1\u4e2d\u5fc3)<\/p>\n http:\/\/www.pbccrc.org.cn\/zxzx\/index.shtml<\/p>\n Credit Reference Center of PBOC provides enterprise credit reports based on voluntarily filings made by companies at local PBOC branches. It also obtains data from financial institutions and other regulators focusing mainly on financial creditworthiness (debts, repayments, tax arrears, social insurance compliance, etc.)<\/p>\n (4) Privately-run credit information platforms (Qichacha\u4f01\u67e5\u67e5, Tianyancha \u5929\u773c\u67e5and many others)<\/p>\n A significant number of private companies run commercial platforms that make use of the company records published via the NECIPS. In comparison with the state-run platform, these websites are more user-friendly and easily accessible. In addition to company credit records, these platforms also integrate data regarding patents, trademarks and court proceedings. Currently, from the practical point of view, for companies who want to conduct business in China, it is possible for them to perform a background checking on a potential Chinese partner via different corporate CSC platforms released.<\/p>\n New Moves to Upgrade the Corporate SCS<\/strong><\/p>\n Until now, ratings of Corporate SCS mainly cover areas like tax, customs authentication, environmental protection, product quality, work safety, e-commerce and cybersecurity. A recent released draft regulation regarding strengthening the management of internet information service provider or user shows that online speech may fall into the next target of China\u2019s Corporate SCS. To be specific, the draft regulation concerns Administrative Measures for Credit Information on Seriously Dishonest Subjects Offering Internet Information Services (Draft for Comment) issued by the Cyberspace Administration of China on 22th July 2019, which aims to blacklist individuals and legal entities for their serious online dishonesty (e.g. fabricating and spreading information online in violation of social morality or business ethics, etc.). Once blacklisted, such data will go publicized on the website \u201ccreditchina.gov.cn\u201d.<\/p>\n In sum, the Corporate SCS is no longer just a vision. Its implementation is well on track as it has already collected large amounts of data, rated companies\u2019 performance and significantly impacted companies\u2019 daily operations in many ways. But the final implementation phase of the Corporate SCS has just started and only parts of the SCS plan have been realized. We assume that new plans will be released soon and there is a lot of new developments to be expected in the near future.<\/p>\n <\/p>\n 1.<\/a>\u00a0See EUCCC\u2019s report \u201cThe Digital Hand \u2013 How China\u2019s Corporate Social Credit System Conditions Market Actors\u201d, p.1. 2.<\/a>\u00a0See official legislation via\u00a0http:\/\/www.gov.cn\/zhengce\/content\/2014-06\/27\/content_8913.htm<\/a><\/p>\n 3.<\/a>\u00a0See EUCCC\u2019s report \u201cThe Digital Hand \u2013 How China\u2019s Corporate Social Credit System Conditions Market Actors\u201d, p.3.<\/p>\n 4.<\/a>\u00a0See\u00a0http:\/\/www.gov.cn\/premier\/2019-06\/12\/content_ 5.<\/a>\u00a0See\u00a0http:\/\/www.moj.gov.cn\/news\/content\/ 6.<\/a>\u00a0See\u00a0http:\/\/www.gov.cn\/zhengce\/content\/2019-07\/16\/ 7.<\/a>\u00a0See EUCCC\u2019s report \u201cThe Digital Hand \u2013 How China\u2019s Corporate Social Credit System Conditions Market Actors\u201d, p.17.<\/p>\n 8.<\/a>\u00a0See\u00a0http:\/\/gkml.samr.gov.cn\/nsjg\/xyjgs\/201902\/t20190219_290619.html<\/a><\/p>\n
\nThe EUCCC\u2019s report was released by EUCCC, partnered with Sinolytics. It is named \u201cThe Digital Hand – How China\u2019s Corporate Social Credit System Conditions Market Actors\u201d, generally introducing the mechanism of the Corporate SCS, giving hints about the implications for companies\u2019 daily operations and outlining how to ensure companies\u2019 compliance and preparing for its planned rollout in 2020.<\/p>\n
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