Cor­po­rate so­cial credit sys­tem cre­ates level play­ing field for firms

Global Times US Edition - - BIZUPDATE - By Yang Kunyi Page Editor: [email protected]­al­

A na­tional cor­po­rate so­cial credit sys­tem (SCS), which aims to be fully implemente­d as early as late 2020, can cre­ate a more trans­par­ent and level play­ing field for multi­na­tional and do­mes­tic com­pa­nies as long as there is con­struc­tive di­a­logue, the Euro­pean Union Cham­ber of Com­merce in China (EUCCC) said on Wed­nes­day.

Since the sys­tem as­sesses the be­hav­ior of all com­pa­nies in China through big data and pro­duces al­go­rithm-based rat­ings, it can lead to a fu­ture where all com­pa­nies are treated more equally, re­gard­less of own­er­ship struc­tures, said Ja­cob Gunter, pol­icy and com­mu­ni­ca­tions man­ager of the EUCCC, cit­ing a re­port re­leased by the cham­ber.

“What the SCS can do is actually re­move lo­cal of­fi­cials’ ef­fects in many ways,” Gunter said.

“By hav­ing a lot of the data go­ing di­rectly to the cen­tral data­bases, and th­ese cold, dis­pas­sion­ate al­go­rithms rat­ing it, you re­move lo­cal of­fi­cials’ abil­ity to either ac­ci­den­tally or in­ten­tion­ally mis­use th­ese reg­u­la­tions. In that as­pect the sys­tem is pro­vid­ing a more level play­ing field.”

The SCS has been de­scribed by Jo­erg Wut­tke, pres­i­dent of the cham­ber, as the most com­pre­hen­sive sys­tem cre­ated by any govern­ment to im­pose on a self-reg­u­lat­ing mar­ket place. It will be built based on ex­ist­ing credit data in­fra­struc­tures, in­clud­ing the Na­tional Credit In­for­ma­tion Shar­ing Plat­form, Cred­itchina, Na­tional En­ter­prise Credit in­for­ma­tion Pub­lic­ity Sys­tem and other pri­vate plat­forms, the re­port said.

The level of data in­tegrity em­bed­ded in the sys­tem means that the sys­tem will solve the prob­lem of stranded in­for­ma­tion for both lo­cal and in­ter­na­tional com­pa­nies. The shar­ing of in­for­ma­tion will im­prove equal treat­ment for all com­pa­nies in China and dras­ti­cally im­prove the ef­fi­ciency of do­ing busi­ness, said Feng Liguo, a re­search fel­low at China Min­sheng Bank’s re­search cen­ter.

“It is never in the in­ter­est of China to put off for­eign busi­ness by un­fair treat­ment,” Feng said. “The sys­tem can pro­vide a bet­ter busi­ness en­vi­ron­ment rather than scar­ing for­eign in­vest­ment away.”

For the sys­tem to work to its full po­ten­tial, con­ver­sa­tions will need to re­main open and trans­par­ent, and re­lated laws and reg­u­la­tions con­cern­ing the ac­cess and han­dling of sen­si­tive data will need to be en­forced, said Mir­jam Meiss­ner, direc­tor of Si­nolyt­ics, a part­ner with the cham­ber in the re­port. “The Chi­nese govern­ment is very in­ter­ested in getting into di­a­logue and has al­ready done so. It shows an am­bi­tion to not only en­gage but also to ex­plore parts of the ideas of the so­cial credit sys­tem.”

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