China will step up building its social credit system by rolling out new market regulatory measures, the State Council announced at the latest executive meeting chaired by Premier Li Keqiang.
The Chinese government puts strong emphasis on the building of a social credit system. President Xi Jinping stressed the need to set it in an institutional framework, establish a cross-sector, inter-agency mechanism of reward and penalty for acts of good or bad faith, and promote the accessibility and sharing of credit information. Premier Li Keqiang urged improving the credit-based regulatory framework and applying an inter-agency approach in penalizing those acting in bad faith.
"Credit-based regulation is crucial for the sound workings of market institutions. In developing a socialist market economy, the government must reform its functions and foster an enabling business environment. While streamlining administration and delegating powers, we will enhance oversight where necessary. And credit-based regulation is the foundation of this endeavor," Premier Li said.
It was agreed at the meeting that the country will establish, in accordance with the law, authoritative, unified and accessible credit records of all market players based on their unified social credit codes. Government departments are required to share the information as permitted by law to break the information monopoly and information storing. No government agencies should repeatedly ask market players to provide the same information that can be shared.
The mechanism of credit pledge by market players should be promoted, in which applications under certain government review items will be processed right away when applicants pledge to meet eligibility requirements and submit documentation.
A credit "blacklist" system will be further developed with standards to be used in determining which entities are to be put on the list, in order to enhance inter-agency punishment for those acting in bad faith. Strict penalties, including denying market access, will be meted out in accordance with laws and regulations.
Tiered credit-based regulations will be promoted through inspections by randomly selected inspectors against randomly selected market players and prompt release of inspection results. The ratio of inspection targets and frequency of inspection will be decided according to the credit records of market players.
"The effective tool of penalties for acts of bad faith must be fully harnessed. The price to pay for institutional violations, breach of rules and even legal offenses now is too low. That is the underlying reason that some market players choose to cross the line," the Premier said. "We must establish and enhance a cross-sector, inter-agency mechanism to deal with such actions."
The meeting also called for applying the Internet Plus model and technologies such as big data to make regulation over acts of bad faith more timely, precise and effective. The government will safeguard credit information security and stringently protect trade secrets and individual privacy. Any leakage, falsification or exploitation of credit information for personal gain will be seriously dealt with.
"We need to follow the laws of the market," Premier Li said. "Punitive measures such as blacklisting actors of bad faith and denying them market access can also help motivate market players to abide by the law. This will improve our social credit system and market environment."