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1 [1] (January 17, 2020)

handle is hein.crs/govbfzw0001 and id is 1 raw text is: 01;0i E.$~ & p\w -- , gnom goo mppm qq\ , q I aS 11LIANJILiN, Updated January 17, 2020 China's Corporate Social Credit China's construction of a nationwide social credit system has been identified as a major concern by both the executive branch and some Members of Congress, because of the broad controls such a system is likely to give the Chinese government over U.S. citizens and companies operating in China. Recent reports of Chinese officials invoking the social credit system to pressure U.S. firms to take positions that align with Beijing's interests raise questions for Congress about how to respond to the potential threat the system may pose to U.S. firms operating in China. After several pilot programs, China began constructing a nationwide social credit system in 2014, guided by a document issued by China's cabinet, the State Council, Planning Outline for the Construction of a Social Credit System (2014-2020). The plan describes the system as necessary to build trust in the marketplace and broader society, and establishes a 2020 implementation deadline. Since the plan was published, the social credit system has developed into two connected but distinct systems: a system for monitoring individual behavior, still in early pilot stages, and a more robust system for monitoring corporate behavior: the Corporate Social Credit System (SCS). Table I. Expanded Scope of China's Corporate SCS, Side-by-Side with U.S. Credit Bureaus China's Corporate Credit Bureaus in Social Credit System the United States Objective Strengthen regulatory Evaluate credit risk enforcement Institutions NDRC, SAMR, local Equifax, TransUnion, government entities; some Experian, Innovis Targets Firms, local governments, and Individuals and some individuals firms Data Data collected from firimand Public records and Collection stored centrally financial information Rating Various nonstandardized Single standardized ratings; all ratings made public score (FICO); score not public Outcomes Blacklisting; joit system of Limited access to punishments and rewards credit Source: CRS, based on State Council and NDRC Social Credit Documents; U.S. Consumer Financial Protection Bureau. The Corporate SCS is currently a network of initiatives operated by state and private actors at the national and local levels, connected by shared data platforms and the common goal of regulating corporate behavior in China. The network's overarching structure consists of three components: System Data Aggregation. A firm's social credit profile is the aggregate of potentially hundreds of data points compiled by dozens of government entities. In October 2015, the National Development and Reform Commission (NDRC), China's powerful economic planning agency, launched the National Credit Information Sharing Platform (NCISP). The NCISP, operated by the NDRC in cooperation with 45 other government ministries, serves as the data backbone of the Corporate SCS, integrating all national and local- level corporate regulatory data. To structure the database, all companies registered in China have been assigned a Unified Social Credit Code a common identifier used across all datasets linked to the Corporate SCS. Evaluation. As government departments collect information on firms, they create blacklists of firms that are found to have violated regulations repeatedly or engaged in illicit financial behavior. National and local government departments have a wide mandate to create blacklists for violations that fall under their jurisdiction. Consequently, there are hundreds of official blacklists covering everything from severe offenses, such as tax evasion and falsifying emissions data, to minor offenses such as failing to file a change of address. Some departments also publish laudatory redlists of firms with exemplary records, such as the State Taxation Administration (STA) Grade A Taxpayer List. The National Enterprise Credit Information Publicity System (NECIPS), a public online database run by the State Administration for Market Regulation (SAMR), records each time a firm is added to a blacklist or redlist and identifies businesses with irregularities. Firms placed on multiple blacklists or that commit particularly serious offenses can be added to SAMR's forthcoming heavily distrusted entities list-the closest analogue to a national blacklist. Joint System of Punishments and Rewards. The primary enforcement mechanism of the Corporate SCS is a joint system of punishments and rewards, a set of legal cooperation agreements by which government agencies enforce each other's blacklists. Under this framework, a firm blacklisted by the STA for tax offenses can be subject to customs penalties and more frequent financial audits based on cooperation agreements between the STA and China's customs and financial authorities. Firms on the STA's Grade A Taxpayer redlist, on the other hand, are not only eligible for expedited and less costly tax filings, but are also eligible for other benefits, such as customs fee waivers and low-interest loans. The system is designed, in the words of President Xi Jinping, to make everything convenient for the trustworthy, and ensure the untrustworthy cannot move a single step. Although much remains to be done and data sharing gaps persist, reports indicate that China's Corporate SCS is K~:>

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