China’s social credit system ‘could be used against companies in international trade disputes’
- EU Chamber of Commerce report says data collected could be used to compile blacklist of ‘unreliable entities’
- Companies will be subject to series of rewards and punishments and they have been told ‘no one should be naive about this’
Foreign companies have been warned that China’s social credit system could become a weapon to be used against them in international trade disputes.
A report from the EU Chamber of Commerce in China published on Wednesday warned that data collected under the system could be used to compile a blacklist of companies, with one contributor to the research adding that companies should not “be naive” about its possible uses.
The system, which is due to be fully implemented by the end of next year, will use technology to monitor and assess the behaviour of both businesses and individuals using a system of rewards and punishments to incentivise them.
The report warned the corporate social credit system would cover all aspects of a company’s business in China. Their behaviour in a number of fields – such as tax, customs, environmental protection and product quality – will be rated as will their compliance with the government’s requirements.
For companies, higher scores will mean lower tax rates, better credit conditions, easier market access and more public procurement opportunities, but lower scores could lead to sanctions and blacklisting.
The Chinese authorities are taking a number of other steps to strengthen their control over foreign companies.