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Social Credit Action in 2025

Last week China released a Social Credit Action Plan for 2024-2025 (the Plan)..

The Plan was released by the National Development and Reform Commission (NDRC), which, together with the People’s Bank of China(PBOC), has led the establishment of the social credit system since 2014. The NDRC has focused on how credit information is used in the government’s regulation of businesses, while the PBOC has worked primarily on financial “credit reporting” (征信)systems that seek to measure lending risk.

The new Plan can be understood as a checklist of the NDRC’s priorities for social credit over the next year. It is short and written at a very general level that assumes a familiarity with the basic concepts and terminology of the social credit system thus far.. While little in it is entirely new, it provides an opportunity to review the key aspects of social credit that will be continued going forward.

  1. The Social Credit Law and Regulations

The Action Plan calls for issuing more legal authority related to the social credit system. In late 2022, a draft Law on the Establishment of the Social Credit System was released, which will become the highest level Social Credit authority if adopted. The draft was criticized, however, for being unfocused and unwieldy, and contributing little to unifying the application of social credit.

The Action Plan calls for accelerating the passage of this law in its first item (1), but, reading between the lines, it doesn’t seem like the NDRC anticipates that happening too quickly. Its very next item is a more concrete mandate for the NDRC to adopt its own authority on completing the social credit system, which will further clarify fundamental concepts such as the systems’ “meaning, goals, tasks, and institutional framework- the type of guidance one would expect from a Social Credit Law. The plan also calls for the completion of provincial-level authority across the country (See Provincial Systems Tab), and such provincial regulations are sometimes drawn on as experimental prototypes when drafting national laws in new areas. All social credit rules will ultimately need to accord with a national Social Credit Law, so if passage of that law was imminent, it would be preferable to hold off on drafting other authority rather than require future amendments.

2. Social Credit for Individuals

 

  1. Citizen Scoring

Contrary to most foreign reporting, China’s social credit system was never envisioned as a holistic citizen ranking or scoring system. The original 2014-2020 social credit planning outline didn’t mention scores at all, and even the PBOC’s financial ‘credit reporting’ system just recited borrowing history and other concrete data points in its reports, only recently adding an option to summarize this information as a score as an additional service. The social credit system has instead focussed most on businesses’ and organizations’ compliance with laws, with individuals impacted mainly due to their roles as agents of those entities.

A few local areas, most famously Shandong’s Rongcheng, did try to create detailed personal creditworthiness (诚信)scoring systems, but central government authorities quickly clarified that no penalties may be given based solely on any credit appraisal systems, and have repeatedly clarified that any penalties in the social credit system must have a clear legal basis.

Surprisingly, the Action Plan contains one of the most direct mentions of “points”(信用分) that has appeared in central government social credit authority in its item (10) on benefits for citizens and businesses. Local governments are urged to use ‘credit points’ to make social credit incentive measures more relevant, including preferential treatment in areas such as medical care, childcare, elderly care, housekeeping, tourism, shopping, and travel. In the past, benefits such as waiving deposits at libraries, discounts on public transportation, or skipping lines for public services have been offered as incentives, and the Plan likely envisions more of the same. In practice, these rewards have been implemented inconsistently, with the intended recipients and providers of these supposed measures sometimes entirely unaware of the programs.

b. Professional Practice Records:

Item (16) of the Plan contains another reference to social credit for individuals through the creation of practice records for professionals in regulated fields such as civil servants, financial workers, and lawyers. The goal here seems to be more efficient sharing of the records across regions and regulatory departments, rather than public display. One of the goals of the social credit system has been professional restrictions or prohibitions for those with serious crimes in a certain industry to prevent them from simply relocating or rebranding and repeating the misconduct.

c. Credit as Credential:

A novel application of credit records mentioned in item (10) is their use in place of ‘criminal record checks’ traditionally required to enter certain professions or gain certain credentials. This seems intuitive as social credit is largely concerned with information on violations of laws or failures to perform legal obligations, which means that any criminal history would be included, and the additional information may be relevant in some situations.

3. Credit Regulation for Businesses {the “Corporate Social Credit System”)

The most well-established aspect of the social credit system has been its use in regulating businesses, and the Action Plan indicates this will likely remain the case in items (11) and 12).

The “credit regulation”(信用监管) aspect of social credit is sometimes referred to as the ‘corporate social credit system’ in Western writing. This term is not commonly used in Chinese legal authority, and was likely coined only to distinguish the emerging credit regulation system from the largely imagined citizen scoring system that Western audiences associated with “social credit”.

Credit regulation, as used in the social credit context, generally means subjecting businesses or other organizations to differing levels of government scrutiny for inspections and government approvals, based on their history of legal compliance. In other words, those with no prior violations or failed inspections may be inspected less often and less intensively and those with records of non-compliance will face more exacting government examination. Various industries and regions currently have different ways of summarizing enterprises’ compliance histories, including grading systems.

Another aspect of credit regulation is the use of Credit Pledges (信用承诺), which are essentially promises by an entity to comply with a legal requirement. Credit pledges can be used by an entity to avoid burdensome inspections before being able to start new business, such as by making promising to have all required personnel and equipment in place before the operations begins. A pledge to correct violations discovered during a government inspection can allow a business to continue operations. Whether a pledge is credited by government regulators relates to the entity’s compliance record, but most specifically its fulfilment of previous credit pledges, and the Action Plan calls for better verification and sharing of this information in item (12).

4. Social Credit Infrastructure

a. Uniform Social Credit Codes

Data organization and integration are central to social credit. The data involved is not all-inclusive as many imagine, but is generally limited to a subset of “Public Credit Information” (PCI) – information created and collected by government agencies while lawfully performing their duties. The amount PCI generated when considering all entities across China, however, is still enormous, and records must be linked to the correct individual or entity.

The uniform social credit code is the sole identifying number for subjects in the social credit system to which all records should be associated. For individuals, it is their citizen identification number, and for businesses and other entities, it is a newly assigned social credit code. Previously, records for businesses and organizations might be arranged under a number of different identifying codes including permit numbers, business license numbers, etc., but the application of a uniform social credit code was meant to eliminate this confusion.

The Plan however suggests that there have been instances of both the same code being assigned to multiple entities and of single entities being assigned multiple codes. To stop these problems, it calls for a clarification of the procedures and authority required to assign uniform social credit codes. (3).

b. The Information Platforms.

Several online platforms are core components of the social credit system. These include the public-facing Credit China website – the primary hub for credit news and public inquiries into credit information and the National Enterprise Credit Information Publicity System which displays Public Credit Information such as licenses and administration punishment in the market regulation sector. The plan calls for increasing the use and authoritativeness of these platforms by better consolidation, integrating local and central government information and improving information security.

Information on certain offenses can be publicly displayed through these platforms. This is intended to serve as a penalty that shames the offender, but also as a reference that others might consider when interacting with the offender. The duration of the display can vary based on the seriousness and type of violation, but is often 3 years for most market regulatory violations.

Through Credit Restoration, credit subjects can often apply to stop the display of negative information early where they have stopped the misconduct and worked to fix any negative impact.

5. Additional Areas of Movement

a. Credit in Government Affairs (14)

Government Affairs creditworthiness (政务诚信)has been a part of the social credit system since the 2014 Planning Outline. In the new Plan, it seems to primarily refer to increasing transparency and accountability for government breaches of contracts with private business, to resolve these disputes. It is not clear to what extent the public will have access to information from monitoring government affairs creditworthiness.

b. Contract Fulfillment Pilots (15)

Social credit has always been focused on subjects’ compliance with laws and legal obligations- which includes the performance of contracts. Breaches of very specific types of contracts can even result in special ‘credit penalties’- such as the contract for medical students through which the government pays their tuition in exchange for a promise for future service in a rural community. Here, the plan seems to be discussing other specific types of government contracts- for public resource trading, energy contracts, and project bidding; but experimenting with a more ambitious database connecting local and national information on contract fulfillment.

c. Demonstration City Evaluations (17)

Social credit demonstration cities have been some of the laboratories for experimenting with different means of applying ‘credit’ and piloting diverse strategies. The Plan calls for these efforts to continue, and possibly expand, but emphasizes creating assessment mechanisms to evaluate them as well. What is considered a successful model is unclear.

d. Data Mixing: Credit Regulation and Creditworthiness to Inform Lending.

I have generally thought of social credit as three largely distinct systems forced under the same conceptual umbrella: (1) The PBOC financial reporting system 征信, (2) The NDRC and regulatory departments’ credit regulation system (信用监管), and (3) Creditworthiness or Integrity (诚信) propaganda campaigns. The first of these two have been discussed briefly above, the third, creditworthiness is less of an enforcement system than a government attempt to instill the values of honesty and good faith. A violation of law might reflect that this value is lacking in someone, but they could only face consequences for the violation, not for lacking the value. Nothing precludes, however, giving incentives to the “trustworthy, as mentioned above in the discussion of ‘citizen scores’.

The draft Social Credit Law, the Action Plan, and other recent authority suggest that these three pieces of social credit might not remain as discrete as I would like. Specifically, there’s been a suggestion that financial credit reporting might be informed by evaluations of PCI from credit regulation and even value-based creditworthiness information. See (8) and (9) in the plan.

It is likely that information on creditworthiness and compliance would only be available as a discretionary reference in lending (and likely ignored if not useful at predicting loan risk), but I would prefer to keep these areas distinct. Mixing the data seems contrary to efficiency and fairness; efficiency because non-financial information is only tentatively relevant to the risk of loan default, and unfair, because creditworthiness information can be subjective.

6. What’s not here?

Credit Reporting- While touched on above, it is is important to remember that there is a large body of authority on financial credit reporting. Because the Pkan is issued by the NDRC and not the PBOC, it does not provide much insight into this area.

Judgment Defaulter List- Similarly, another core area of the social credit system operated by the courts is not addressed in the Plan because it is not operated by the NDRC. The courts’ judgment defaulter list is a unique blacklist that includes persons or entities that have a valid legal judgment against them and the capacity to satisfy that judgment, but refuse to do so.

Using the courts’ power to preserve assets that might be used to satisfy a judgment, the judgment defaulter list is enforceable in part by limits on an entities spending. Many of the most sensational penalties associated with the social credit system- restrictions on plane travel, high-speed rail, even expensive private school education- are essentially exclusive to the Judgment defaulter list. Searching the most recent list of social credit penalties for ‘judgment defaulter’ will give you an idea of how unique the defaulter list is.

 

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Jeremy Daum is a Senior Fellow of the Yale Law School Paul Tsai China Center, based in Beijing, with over a decade of experience working in China on collaborative legal reform projects. His principal research focus is criminal procedure law, with a particular emphasis on protections of vulnerable populations such as juveniles and the mentally ill in the criminal justice system, and is also an authority on China’s ‘Social Credit System’. Jeremy has spoken about these issues at universities throughout China and in the U.S.; and has co-authored a book on U.S. Capital Punishment Jurisprudence for Chinese readers. He is also the founder and contributing editor of the collaborative translation and commentary site Chinalawtranslate.com, dedicated to improving mutual understanding between legal professionals in China and abroad.
He translates, writes, edits, does web-design, graphic design, billing, tech support, and social media outreach for China Law Translate.

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