Chinese Social Credit System Targets International Business

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ByG. Dautovic
September 23, 2019

American companies doing business in China are receiving warnings that if they don’t toe the Communist party line, they will have to face the consequences.

At issue is China’s social credit system, a massive database in which the government rates individuals and businesses according to their support for government rules and policies.

Chinese citizens are on notice that if they attend the wrong kinds of meetings and too few of their relatives are members of the Communist Party, they may find it impossible to get a bank loan. They might lose their jobs or worse.

Now it appears that foreign corporations doing business in the People’s Republic are being subjected to the same scrutiny.

United Airlines, American Airlines, and Delta Air Lines have all received notifications that they might find themselves blacklisted if they don’t bend before the official Beijing policy.

Letters sent by Chinese aviation officials demand that the US airlines list Hong Kong, Macao, and Taiwan as part of China. Currently, the airlines treat these locations as independent territories.

The letter required that United, American, and Delta confirm changes on their websites. Although the companies have not commented on their decisions, the letters made clear that if they didn’t comply, their social credit scores would be severely hit.

Bad scores could lead to investigations, frozen accounts, limitations on employee movements, and other penalties. The companies could ultimately be banned from doing business in China.

China’s social credit system has amassed huge chunks of data on the country’s citizens, collecting both business records and private details. Court rulings, payroll data, environmental and copyright violations, and much more are included in the massive analysis system so citizens can receive rewards or punishments.

While it is presented as a ranking tool that helps conclude which companies are viable for business, the system is also a clear sign that the central government aspires to assume greater control of all aspects of the economy.

China’s central economic planning agency revealed in September that it had already evaluated 33 million businesses operating in the country, giving them ratings from 1 for excellent to 4 for poor.

Companies receiving low grades can be prohibited from borrowing money or performing other essential operations. Their owners could have their bank accounts frozen or be forbidden from traveling.

Xi Jin Ping’s Orwellian social credit policy employs face-recognition technology along with other monitoring systems. While the policy is presented as a means of reducing crime, it is also a convenient tool for silencing political dissent.

Foreign businesses have expressed concerns about how the social credit system could be used in the ongoing China-US trade war. In a recent report, the European Union Chamber of Commerce mentioned FedEx, which has already had its fair share of trouble due to the trade war. The American delivery company has faced threats of blacklisting due to a recent incident regarding a shipment of Huawei products.
About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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