China considers boosting credit system
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E-mail Xinhua, March 7, 2014
"Credit is productivity," said Alibaba chairman Jack Ma, when commenting on the government's pledge this week to boost the credit system.
China will accelerate building a social credit system, promote government information sharing and set up a blacklist system for enterprises that have violated market competition rules and consumers' rights, according to a government work report delivered at the opening of the annual session of the National People's Congress (NPC) on Wednesday.
It will work to discourage enterprises with bad credit and encourage the good ones, the report said.
"I believe credit has its value... It is the largest fortune," said Ma.
Ma's beliefs have been put into practice in his e-commerce empire, Alibaba.
Alibaba's third-party payment vehicle helps people who do not see each other to do business. The quality of goods or services can be determined through consumers' online comments.
Meanwhile, online shops can get loans based on their business data and consumer comments, helping relieve the difficulties small and medium-sized enterprises have in raising funds.
But the credit system in the real world is still incomplete.
Environmental pollution, tainted food, fake products and commercial fraud have hurt Chinese consumer confidence.
It is extremely urgent to boost credibility and integrity now, said Liu Hongyu, a lawyer and an NPC deputy.
"Commercial fraud can be cracked down through government supervision. But it is a pity that some local governments choose to turn a blind eye to fraud out of their own interests," said Qian Xueming, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).
As there is no blacklist system shared across the country, offenders can move from one place to another without being seriously punished, Qian said.
A key difficulty in boosting the credit system is information sharing, Liu said.
Banks have credit systems and blacklists, but outsiders cannot easily access them, Liu said.
Many regions have been building their own blacklist systems.
In northeastern China's Liaoning Province, businesses that have violated environmental protection laws will not only be blacklisted by environmental watchdogs, but also by financial institutions.
In January, the State Council announced it would further improve its social credit system.
It urged setting a national standard for information gathering and management to share local credit data and increase the transparency of the social credit system.
He Ping is the boss of Taizhou Hengyida plastics company in Zhejiang Province. Two years ago, his factory was engulfed by a fire on the same day he needed to pay back loans he got online.
The next morning, he managed to pay back the loans anyway.
He explained to the small-credit lender about his one-day default. The lender continued to give him new loans based on his good records of credit, and even cut the lending rate to help him ride through the dark days.
"The Internet has made it easier to track one's credit record. I hope the building of the net of social credit system can pickup in speed," He said.
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