Social credit system in the pipeline

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Last updated at: (Beijing Time) Tuesday, January 20, 2004

Social credit system in the pipeline

Plans are in the pipeline to set up a high-level commission to supervise the construction and regulation of the nation's first social credit system, sources said.

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Plans are in the pipeline to set up a high-level commission to supervise the construction and regulation of the nation's first social credit system, sources said.

Although the concept of building a China Credit System Regulatory Commission remains in its initial stage, it will, once adopted, speed up the construction of the badly-needed system and put an end to competition between government agencies to become the emerging industry's watchdog.

The National Office of Rectification and Standardization of Market Economy Order, a transitional agency authorized to oversee the nation's efforts to build a social credit system, will supposedly be responsible for putting together the new commission, if the government decides to go ahead with the idea, the sources said.

"The national office will certainly play a leading role, but various ministries will need to contribute personnel," said one source, who declined to be named.

A number of government agencies, including the State Development and Reform Commission, the Ministry of Commerce, the Ministry of Public Security and the State Administration for Industry and Commerce, are reportedly drafting their own social credit system plans in a bid, insiders say, to win the leadership of the country's massive campaign to building a social credit system.

Such a huge system will cover everything from database compilation and business credit management to fostering a credit-valuing culture and drawing up related legislation.

Analysts say a social credit system is badly needed in China, a nation where defaulting debts are commonplace and many companies have a "gimme-a-good-rating-and-tell-me-how-much-you-want" attitude toward credit rating firms.

The Ministry of Commerce appears to be leading the race. The National Office is headquartered in the ministry, but is facing resistance from other government agencies and ministries, insiders said.

The People's Bank of China, the nation's central bank, is also in a good position. The bank is building a huge Enterprise and Individual Credit Management System that covers all bank records of the nation's corporate and consumer credit borrowers.

In a statement published on its website at the end of last year, the bank explicitly defended its role in supervising the social credit system by citing a decision by the State Council, China's cabinet, and the newly amended Law on the People's Bank of China.

"Although the Law on the People's Bank of China does not explicitly state that the People's Bank of China performs the responsibility of regulating the credit management industry, regulating that industry remains one of the bank's legal duties," reads the statement.

But that is just the bank's own development plan, said Pu Xiaolei, deputy director of Credit Management Department under the Chinese Academy of International Trade and Economic Co-operation, the Ministry of Commerce's think tank.

"The dominant view is that responsibility for managing the credit information of financial institutions and consumer credit borrowers should go to the central bank," he said. "But the government did not assign it the national leadership, giving this to the National Office. That is quite clear."

China's credit management industry is growing fast alongside the rapid development of the market economy, but the estimated 500 credit management firms have been frustrated by the long absence of an industry watchdog and related legislation.

"Everybody is our supervisor now," said a senior manager at a major Beijing-based credit management company. Currently, his firm needs to ask for approval from a multitude of government agencies, including the Ministry of Commerce, the State Administration for Industry and Commerce and the China Securities Regulatory Commission, to name but a few.

Source: China Daily

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