The corporate social credit system was originally dreamed up two decades ago, but it has since expanded into an ambitious national project that is now taking shape, according to a new, 95-page report from the consulting firm Trivium China for the US China Economic & Security Review Commission. The CSCS effort gathers information on companies from at least 44 state agencies and their branch offices in every province across the country.
The system could enhance China's ability to craft effective policy, possible giving it a geopolitical edge globally. "It's possible that corporate social credit is one day leveraged as a trade war weapon, either in an unsanctioned capacity by local regulators, or in a tacitly sanctioned capacity by the central government," said Kendra Schaefer, head of digital research at the Trivium China in Beijing and the report's main author. "But it's not what the designers say the system was initially designed to do.
CSCS uses Public Credit Information that's generated or collected by government bodies or legally-authorised administrative bodies in the performance of their duties. It includes information from across around 20 categories including basic company registration, tax records, what administrative penalties a company has had to pay and whether the company appears on any blacklist or redlist.
The CSCS could form the basis for a new Chinese-led credit-rating model, presenting over the long-term a challenge to US ratings agencies such as S&P and Moody's.