Social Credit System for Foreign-Invested Enterprises in China: Imminent Challenges?

Überblick


The comprehensive establishment of China’s Social Credit System (SCS) has already started. In July 2019, the State Council again issued Guiding Opinions to accelerate the establishment of the SCS and a credit-based new regulation system. The SCS is scheduled to be fundamentally completed in 2020 and ideally fully implemented at the end of 2020, so having an adequate knowledge of SCS becomes more urgent than ever.

Besides the other two Chinese credit systems, which include credit system of the People’s Bank of China and the non-governmental third-party credit system (similar to Schufa system in Germany), the SCS is meant to be the most comprehensive credit system operated by the Chinese central government. The SCS applies to all Chinese enterprises, social organizations and individuals.

This article will focus on Foreign-invested Enterprises (FIEs) in China, which have been hoping for a more transparent and fair competition environment in the Chinese market. However, although there are many potential benefits, complications and challenges could also lie in wait. How should FIEs understand the SCS-related policies in a thorough and right way and benefit from them? This article will shed some light on these points.