In 2014, the State Council of China (PRC) launched an initiative to establish a social credit system (Notice on the Plan for the Construction of the Social Credit System (2014-2020) (社会信用体系建设规划纲要 (2014 – 2020年)) (Plan). This social credit system, especially its corporate aspect (known as the corporate social credit system, or CSCS) has since caught the attention of market players.
In this article, written for Practical Law, I provide an overview of the CSCS. I outline the data infrastructure of the system, including its interplays with the Chinese government's internet plus and big data initiatives.
I also introduce the mechanisms for credit information collection and publicity, types of credit rating and rating indicators at state and local levels, consequences of credit rating, and credit repairing channels.
Finally, I look at the impact of the CSCS on the business community, and offer practical guidance on how companies can tackle the compliance challenges brought by the fast-evolving CSCS system.