Euro businesses warning over China scheme
European businesses in China are woefully unprepared for the rollout of a corporate social credit system that "could mean life or death" for companies, the European Union Chamber of Commerce in China has warned.
China is planning to fully implement by the end of 2020 a corporate social credit system that feeds information about companies into a platform that would then assign individual credit scores to every enterprise.
"It is no exaggeration to say that the Corporate SCS will be the most comprehensive system created by any government to impose a self-regulating marketplace, nor is it inconceivable that the Corporate SCS could mean life or death for individual companies," the EU business group said said Wednesday in a report analysing the system.
China's broader social credit system will rank citizens according to various criteria, including their financial standing, contributions to their communities, or compliance with traffic regulations, according to existing pilot projects.
For companies, a high score could mean lower tax rates, better credit conditions and easier market access, while lower scores could result in blacklisting, the chamber said.
In some respects, the social credit system is "good news," as it could create a more level-playing field for foreign and domestic companies operating in China, the report said.
But in a separate statement, the German Chamber of Commerce warned about the "non-transparent algorithms" doling out the scores.
Seven out of 10 German companies in China are unfamiliar with the social credit system, the group said, while the European Chamber advised enterprises to improve their communication with the Chinese government and other stakeholders.
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