China Has Just Released a Draft National Social Credit Law

(by Rhoda Wilson | The Expose) – On 14 November, several top Chinese government agencies collectively released a draft law on the Establishment of the Social Credit System, the first attempt to systematically codify past experiments on social credit and, theoretically, guide future implementation.

This law is formulated so as to improve the social credit system, innovate mechanisms for societal governance, optimise the business environment, standardise order in the Socialist market economy, raise the entire society’s awareness of creditworthiness, advocate the Core Socialist Values, and complete a credit reporting system that covers the entire society.

Law of the PRC on the Establishment of the Social Credit System (Draft Released for Solicitation of Public Comments), China Law Translate, 14 November 2022

The law largely follows local rules that Chinese cities like Shanghai have released and enforced in recent years on things like data collection and punishment methods – just giving them a stamp of central approval.

When the Chinese government talks about social credit, the term covers two different things: traditional financial creditworthiness and “social creditworthiness,” which draws data from a larger variety of sectors. The new draft law addresses the two types of creditworthiness with two different sets of rules.

Financial creditworthiness is a familiar concept in the West: it documents individuals’ or businesses’ financial history and predicts their ability to pay back future loans. Most Chinese policy documents refer to this type of credit with a specific word: zhengxin, which some scholars have translated to “credit reporting.” It is essentially the Chinese equivalent of Western credit bureaus’ scoring and is maintained by the country’s central bank. It records the financial history of 1.14 billion Chinese individuals, and gives them credit scores, as well as almost 100 million companies, though it doesn’t give them scores.

Social creditworthiness is what raises more eyebrows.

Social Creditworthiness

Initially, back in 2014, the plan was to have a national system tracking all “social credit” ready by 2020. Now it’s almost 2023 and the legal framework for the system was just released in the November 2022 draft law.

Basically, the Chinese government is saying there needs to be a higher level of trust in society, and to nurture that trust, the government is fighting corruption, telecom scams, tax evasion, false advertising, academic plagiarism, product counterfeiting, pollution …almost everything.

The government seems to believe that all these problems are loosely tied to a lack of trust, and that building trust requires a one-size-fits-all solution. So just as financial credit scoring helps assess a person’s creditworthiness, it thinks, some form of “social credit” can help people assess others’ trustworthiness in other respects.

Individuals, companies, legal institutions and government agencies will be held accountable. Read Full Article >