The Chinese communist regime is implementing a new database that will allow it to track and monitor Chinese and foreign companies both inside and outside the country, according to a new report released Aug. 28 by the European Union Chamber of Commerce in China and developed by consulting firm Sinolytics.

The document points out that the authorities of the Chinese communist regime intend to gather extensive information from domestic and foreign companies operating in China, in order to integrate them into a massive and centralized digital database.

This system will give the Chinese government the ability to track the actions of companies, as it is already doing with its citizens, “so that it can reward behaviors it likes and punish behaviors it doesn’t—the so-called social credit system” that the Chinese government expects to be fully operational by 2020, CNBC said.

“Higher scores can mean lower tax rates, better credit conditions, easier market access and more public procurement opportunities for companies. Lower scores lead to the opposite, and can even result in blacklisting,” the report notes.

In addition, the scores workers receive also affect the company’s final score.

These would be the first steps towards creating the “Corporate Social Credit System” (SCSC), the objectives of which would be “to improve national diplomatic power and international influence” and to promote “an objective, fair, reasonable and balanced international credit rating system.”

“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 study warns.

Exporting the Corporate Credit System

According to the report of the EU Chamber and Sinolytics, the Chinese Communist Party is already working to export this system beyond its borders, because it is assessing Chinese companies operating in foreign markets, to determine whether they should be blacklisted for misconduct.

“In the future it will be possible to monitor the behavior of European companies in other markets, including their cooperation and commercial relations with Chinese companies, even if they are not present in China,” the report states.

The document foresees that the beta version of the database called National System of “Internet + Monitoring” will be published in September, and the final version by the end of the year.

A fundamental piece

This corporate monitoring system would be key as it would bring together data collected by “a multitude of information collection channels that already exist in China, thereby overcoming a major hurdle for creating a nationwide social credit system by 2020,” CNBC said.

The complete social credit system will consist of three parts: A master database, a blacklist system, and a structure of punishments and rewards, according to the research and analysis company Trivium China.

Kendra Schaefer, the firm’s digital research director, warned that there is concern that the Chinese regime will use the system to “force foreign companies to operate in a manner aligned with Chinese authorities and against the interests of foreign countries.”

Once the database is activated, all companies operating in China will have to collect data internally and submit it to the government, according to the EU report and Sinolytics.

In addition, the Chinese regime also reserved the right to conduct its own inquiries in order to collect additional data from companies.

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