BERD Report: A New Credit Paradigm in China
The Bloom Economic Research Division serves as a core research division within Bloom leading an open-source data approach to credit analysis. The BERD team conducts and publishes policy and economic research with the goal of leading a discussion towards a healthy global credit climate.
Fostering the credit sector’s health and long term growth cannot occur without a rigid approach to research and discovery.
We are pleased to introduce our 2nd report, covering the new credit system in China. This research is prepared by analyst Connor Hays.
The New Credit Paradigm in China
In 2014, the Chinese State Council announced plans for a new kind of Social Credit System. It is a national reputation system being developed by the Chinese government. By 2020, it is intended to standardize the assessment of citizen’s and business’s economic and social reputation, or ‘credit’.
The State Council’s report clearly states the programs’ integral place in the new political, social, and economic order:
“The social credit system is an important part of the socialist market economic system and social governance system…it establishes a culture of integrity and promotes a tradition of integrity. Virtue is an intrinsic requirement.”
Adam Greenfield, writing in The Atlantic, notes that “this framing connects the system to a long Confucian tradition of attempts to bolster public rectitude”. Thus, the system looks to quantify virtue and engender social harmony by implementing “a rewards and punishments mechanism based on trustworthy incentives and untrustworthy restraints…the purpose is to improve the integrity and credit level of the whole society.”
To achieve the long term mission, the state has started to collect all the data it can get its hands on, surveilling and cataloging consumer behavior, social media activity, legal infractions, interpersonal relationships, and business activity.
Social credit scoring takes the concept of credit to a new level, gauging not only an individual’s financial trustworthiness, but also the degree to which they observe and obey the rules of the state in both their social and political behavior. For the noncompliant, there will be punishment. For those who show obedience and deference, there will be reward.
And the edict handed down from up high is final, as Jinping himself says, “once untrustworthy, always restricted.”
Read The Full Report
You can access the full report, with data sources and cited research here.
CC BY 4.0: This is an open access work distributed under the terms of the Creative Commons Attribution License, which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
