The government of China debuted an onerous list of 23 new measures this week intended to strengthen the pervasiveness of its “social credit system” to regulate its citizens’ behavior.
The measures include provisions to strengthen Chinese government control over “all types of entities,” the state-run Xinhua News Agency explained. The Hong Kong newspaper South China Morning Post noted that among the several “entities” the updated guidelines intend to more closely regulate are local governments within China.
The “social credit system” is a program in which the government assigns a “score” to every individual in the country based on the value of that person in the eyes of the Communist Party. Billions of people, as well as foreign and domestic companies, receive a “social credit score” from the government that can either expand their privileges in the country or limit their access to social services, travel, banking, and other actions. The Chinese government debuted the system in 2018 and loudly boasted of its success in banning individuals with “bad credit” from traveling, prompting condemnation and horror in the West, and slowly expanded the system to include corporations. Beijing reserves the ability to grant a citizen a bad “social credit” score for almost any reason, from committing grave crimes to littering to criticizing the Communist Party or believing in any religion.
The Xinhua report announcing the 23 new measures claimed that the “social credit” system suffered from “inconsistent regulatory frameworks and limited sharing and openness of credit information,” requiring the facilitation of sharing information that could improve or hurt an individual’s or entity’s “social credit” score. The reforms would expand the system to “all types of entities,” including state-owned companies and government offices, and allow for various arms of the Communist Party to more rapidly share private information on the individuals monitored.
Government agencies would, Xinhua relayed the Communist Party promising, make these changes while respecting the “principle of safeguarding information security and individual rights while preventing excessive data collection and illegal or improper activities related to information disclosure, processing, sale or use.”
The Morning Post translated some of the reforms announced on Tuesday as directly affecting local governments and corporations. Among the provisions mentioned are “improving the disclosure of state-owned enterprises,” apparently to allow the general public to make more informed decisions on doing business with these companies, and local governments.
“Governments will also be subject to credit evaluations,” the newspaper reported. “Misconduct in areas such as public resource trading and enterprise-related charges will be recorded, resulting in restrictions on funding applications and performance ratings, according to the guidelines.”
This latest measure appears to be part of genocidal dictator Xi Jinping’s broader campaign against corruption within the Communist Party, which has focused heavily in the past year on the military. The Communist Party has charged two of its past three defense ministers with corruption and disappeared its former foreign minister, Qin Gang, from the public eye after rumors began spreading of an alleged affair with a television presenter. Qin ultimately resurfaced working at a bookstore.
Chinese local governments have been the subject of scrutiny not just as a result of corruption purges but due to their poor economic performance in the past half decade. Hit hard by the massive expenditures created by the Wuhan coronavirus pandemic and subsequent lockdowns – and forced to spend to keep the devastated real estate market afloat – local officials have required more aid from Beijing.
“The system is designed to improve the overall creditworthiness of society by enforcing reward and punishment mechanisms based on credit records,” Beijing lawyer Zhao Zhanling told the Morning Post.
In addition to expanding control of individuals and companies, the newspaper noted that one of the reforms is the creation of a list of “seriously discredited entities” that would not have similar access to financial resources as credited companies. This also appeared to be a response to the plummeting real estate market, which suffered primarily as a result of the collapse of the real estate giant Evergrande.
Evergrande, once the most powerful real estate corporation in the country, began struggling to keep up with the construction of homes it had preemptively sold nationwide in 2021 and 2022, leading to protests from mortgage-payers who refused to continue paying into a system with no guarantee that they would have a house in the foreseeable future. Evergrade’s value dropped $2 billion in the Hong Kong stock market in one day in 2023 and ultimately filed for bankruptcy protection in the United States.
The Chinese securities regulating agency accused Evergrande in early 2024 of committing fraud by dramatically overstating its revenue – by as much as $78 billion.
Companies such as Evergrande would presumably suffer from significantly low “social credit” scores and potentially land on the “seriously discredited entity” list.
The Global Times, a Chinese regime newspaper, asserted in its report on the reforms on Monday that they were necessary to “reward credibility and penalize dishonesty, refining credit-based regulatory and governance mechanisms, and enhancing the marketization of the credit system.”
“By enhancing credit evaluation, the measures are expected to address challenges such as debt defaults and liquidity issues, to support the country’s high-quality development goals,” it added.
It added that the reforms also allow for a “rehabilitation” process for those with low “social credit” scores, without elaborating on the nature of that process.
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