China plans social credit system pilot

From borrowing books from public libraries to borrowing bank loans, personal and enterprise credit records have been increasingly valued in China.

The first demonstration zone of social credit system in China, aimed to promote benefits of good credit, is planned for the Yangtze River Delta region, encompassing Shanghai Municipality, Jiangsu, Anhui and Zhejiang provinces.

The national pilot plan approved by the National Development and Reform Commission is expected to help nurture a sound business and social environment in the region and regulate individual behavior based on credit records.

Under the system, trustworthy entrepreneurs and individuals will be rewarded, while infringers will be discredited.

The Yangtze River Delta region has benefitted from growth in enterprise credit and intellectual property rights (IPR) protection.

Since 2015, provincial-level governments have launched joint campaigns against cross-region and cross-industry IPR infringement and counterfeits.

By using big data, public security departments in the region have been able to work together on Internet business fraud.

Cases of infringement and counterfeit in the region are listed via the government website ipraction.gov.cn, with detailed information open for examination.

"A collaboration on cracking down on fake and shoddy goods has helped mitigate barriers of local protectionism," said Lin Haihan, who is in charge of the trademark division in Shanghai Administration for Industry and Commerce.

In the tourist sector, an online tourist information center was launched on a test run in November, to give updates of bad records of tourist agencies.

Jin Xingming, deputy secretary general of Shanghai municipal government, said the unified credit system of the tourist market in the delta region is a "breakthrough" in the linkage of the overall credit system.

"The credit system can deliver market-oriented penalties through blacklisting discredited entrepreneurs. The system can join the efforts of social, government and market supervision," said Jin.

Zhao Qiang, an entrepreneur from Anhui Province, had a taste of the benefits in 2016. The entrepreneur needed only three days to borrow 7 million yuan (about 1 million U.S dollars) from the Lai'an Rural Commercial Bank, when his stationery manufacturing company was in urgent need of cash.

The bank said the swift loan approval was due to Zhao's credit rating.

In Shanghai, citizens with good social credit now can get a "credit card" in Shanghai Library and borrow books for free.

However, the phenomenon still lack regulation. Without a transparent social credit system, rewards and penalties can not be given fairly.

"The social credit system pilot should break up small-scale credit reward and punishment initiatives in different cities, and provide a systematic and unified measure, which can be extended to a national practice," said Wang Ningjiang, director of the Zhejiang Provincial Credit Center.

He said the pilot should prioritize blacklisting firms with bad records for causing environmental damage or food safety problems.