Building a High-Trust Society Through the Social Credit System
On March 29, 2022, the General Office of the Central Committee of the Communist Party of China (CCCPC) and the General Office of the State Council released a document titled Opinions on Promoting the Construction of a Social Credit System with High-Quality Development and Promoting the Formation of a New Development Pattern (the opinions”).
China’s social credit system (SCS), first proposed in 2014, is a national credit rating system and blacklist system that rewards and punishes individual, corporate, and government behavior. The SCS is broadly split into three categories targeting different pillars of society: one for citizens, one for businesses and other organizations, and one for government officials.
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. The goal, according to the government, is to create a fair, transparent, and predictable business environment.
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. A higher trust society, the thinking goes, will make consumers, investors, and businesses feel more confident and secure in spending their money. Furthermore, the new opinions serve to clarify the function of the SCS as a force for positive change and growth in specific areas of the economy and society, rather than simply as a means of keeping record of individuals’ and companies’ actions.
The opinions provide 23 policy measures for improving trust in society across a wide range of fields and industries. They aim to enhance areas such as consumer and investor confidence, foreign trade, guiding the financial industry to provide better support for market entities, improving the overall business environment by reducing by streamlining bureaucratic procedures, and even helping China reach its carbon reduction targets, among other goals.
Building trust for consumers, investors, and other stakeholders
Improving consumer trust
One of the main ways the SCS can help improve consumer confidence and trust is ensuring product and service quality. The main ways the opinions suggest achieving this is by enhancing transparency of markets and supply chain holding companies that violate consumer trust and rights to account.
To this end, the opinions offer a few different mechanisms to ensure consumer trust:
Building a product traceability system for online and offline consumption.
Exploring the implementation of the SCS in areas such as healthcare, elderly care, family affairs, tourism, and shopping.
Combating the production and sale of counterfeit goods, illegal advertisement, and the spread of false information and strengthening the supervision of prepayments.
Punishing illegal acts that infringe on consumers’ rights and interests and imposing market bans on entities that have repeated violations despite receiving multiple punishments and fines.
Ensuring labor rights and social security duties
The SCS will also be used as a means of ensuring companies fulfill their obligations to the state and to their employees, by meting out punishments and keeping track of companies that renege on their tax obligations or violate the rights of their employees. Among other things, the opinions propose:
Implementing a credit commitment system for tax declarations to enhance taxpayers’ awareness of creditworthiness.
Cracking down on fraud in minimum living security funds, social insurance benefits, and affordable housing in accordance with the law.
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