China will strive to establish a social credit system nationwide to ensure sound and healthy social and economic development, China’s State Council, or Cabinet, said according China Daily (October 20th 2011). China needs to create an honest and faithful society through system improvement and enhanced education, as lack of credibility remains a prominent problem, according to a statement released after a State Council executive meeting chaired by Premier Wen Jiabao.
The statement mentioned some of the behaviors featuring lack of credibility, such as business fraud, manufacture and sale of fake products, fraudulent applications and claims, and improper academic behavior.
China will comprehensively push forward the establishment of a nationwide social credit system in the next five years, or the 12th Five-Year Plan period (2011-2015) by establishing a system to keep record of all citizens’ credit history, it said.
The country will accelerate legislation and regulation improvement concerning the credit system and push forward the construction of credit systems within industries and government departments, and at local levels, it said.
The government will also work to make the credit information be shared across the nation, develop credit rating agencies and promote use of credit products in an orderly way. Meanwhile, the government should enhance its own credibility by increasing transparency, and strengthen education on social honesty, it said. Source: China Daily
BIIA applauds this development. Nevertheless the pending regulations of credit information in China do not completely follow the call for information sharing and transparency. According to the latest consultative paper on China Credit Information Regulations, regulators intend to forbid the export of Chinese credit information across its borders.
It is the opinion of the credit granting community that such a limitation will impede not only the granting of credit across borders, but it runs counter to what is recommended by the World Bank’s General Principles of Credit Reporting. Principle 5 states that cross-border credit data transfers should be facilitated, where appropriate, provided that adequate requirements are in place. China participated in the drafting of the General Principles of Credit Reporting (so did BIIA), therefore it is somewhat surprising that Chinese regulators decided not to adopt it.
In view of the renewed calls for greater transparency BIIA hopes that the Chinese regulators will reconsider these restrictions and follow internationally accepted practices.